Market Intelligence as a Strategic Weapon

Transcription

1 PESA SUPPLY CHAIN SEMINAR FEBRUARY 18, 2015 Market Intelligence as a Strategic Weapon Edward J. Koval Chief Procurement Officer & Vice President Global Supply Chain & Procurement Spectra Energy

2 Agenda Spectra Energy at a Glance The Transition to Category Management Attributes of World Class PSCM Organizations Critical Skills Needed Our Process and Examples of MI & BI Leveraging Market Intelligence as a Competitive Advantage Spectra Energy Case Studies Q&A Market Intelligence as a Strategic Weapon 2

3 Spectra Energy at a Glance Spectra Energy, a FORTUNE 500 company, is one of North America's leading pipeline and midstream companies For nearly a century, Spectra Energy and its predecessor companies have developed critically important pipelines and related infrastructure connecting supply sources to premium markets Approximately 5,700 employees Market Intelligence as a Strategic Weapon 3

4 The Power of Our Portfolio Natural Gas Transmission Pipe: 19,000 mi Natural Gas Storage Capacity: ~300 Bcf Natural Gas Gathering Pipe: 70,000 mi Crude Transmission Pipe: 1,700 mi NGL Transmission Pipe: 1,500 mi SE Gas Processing Capacity: 3.7 Bcf/d 4Q14 DCP Gathered and Processed: 6.7 Tbtu/d 4Q14 DCP NGLs Produced: ~450 MBbl/d Distribution Pipe: 39,900 mi Union Gas Retail Customers: 1.4 million Gas storage facility Gas processing plant Propane terminal NGL storage Shale gas formations Crude storage Major oil pipeline terminal Market Intelligence as a Strategic Weapon 4

5 The Transition to Category Management PSCM organizations continue to evolve and seek out new ways to extract value from their supply activities Increasing Organizational Value Transactional Buying PSCM As Order Taker TCO and Strategic Sourcing Introduction of consistent go-to-market process Leveraged spend and buyer influence Focus on value Category Management Continual process improvement Cross-organizational collaboration Deep market knowledge and dynamic value taking Advanced Strategies Supplier Relationship Management Demand Planning Dynamic Sourcing PSCM: Procurement and Supply Chain Management Future Market Intelligence as a Strategic Weapon 5

6 The Promise of Category Management Aligns PSCM activities with enterprise stakeholder objectives Maximize impact on the enterprise via total cost vs. price, speed vs. reliability, cost vs. quality Allows supply chain to react effectively to market events Dynamic and volatile markets require real-time adaptive solutions that Category Management can provide - The Hackett Group Ensures that supply chain is leveraging all weapons Utilize SRM, demand planning, market intelligence, etc., rather than relying exclusively on Strategic Sourcing Increased Business Unit engagement Positions PSCM as a core member of the team, orchestrating activities to deliver maximum value Market Intelligence as a Strategic Weapon 6

7 World Class PSCM Attributes of World Class PSCM organizations who have adopted a category management approach: Centers of Excellence/ Expertise & Market Intelligence Category Segmentation SRM Sector Strategies Governance PSCM Competencies SRM: Supplier Relationship Management Market Intelligence as a Strategic Weapon 7

8 Critical Skills Needed 1. Ability to engage and influence stakeholders 2. Experienced in conducting research 3. Solid foundation in technical and analytical skills Subject Matter Expert Industry Products/Services Cost drivers Market conditions Supply Base Regulations Strategic Business Acumen Supply Chain Management Financial and market analysis Creativity/Innovation Planning Relationship Manager Credibility Active listening ability Consensus-Building Influencing Interpersonal Communication Market Intelligence as a Strategic Weapon 8

9 Our Process Analyze information and test hypotheses to identify business value, risks and develop strategic options Identify Need Determine Requirements & Market Conditions Conduct Sourcing Implement Contract Sustain Category Transition Category Management/ Strategic Sourcing drives the process The Business retains control Examples of Market Intelligence Markets, industries, and structures Goods, commodities, and services Cost Structures/value drivers Supplier alternatives Trends, indices, general information PESTLE analysis Contract benchmarking Financial/risk assessment Examples of Business Intelligence HSE requirements Sustainability considerations Spend/demand outlook Regulatory requirements Performance/quality expectations Technology/specifications Market Intelligence as a Strategic Weapon 9

10 Leveraging Market Intelligence as a Competitive Advantage The use of Market Intelligence extends beyond PSCM to influence Business decisions and strategies External and internal data sources Market intelligence Business intelligence Best practices Supplier relationship 3 rd party research COE Triangulate information and using it to identify strategic advantage Market Intelligence analyst Market update Analytics Suggested strategies Financial impact Cost modeling Best practices Business reporting Indices Consultant view M&A Info Outputs Benchmarking Category Mgr. Strategic Sourcing Mgr. Multi-year strategies Multi-year strategies COE: Center of Expertise Market Intelligence as a Strategic Weapon 10

11 Case Study: Market Intelligence in Line Pipe Sourcing The MI function forecasted an increase in steel prices, which was the basis for accelerating the RFP process timeline MI for logistics, steel and pipe mills, along with cost models was the basis for negotiations Example of first pipe purchase using Market Intelligence and Category Management Budget based on recent purchase Benefits due to accelerating the timeline $ Initial Quote Round 1 Negotiated Cost Reduction Round 2 Negotiated Cost Reduction Additional Negotiated benefits Final Cost Market Intelligence as a Strategic Weapon 11

12 Case Study: Cost Modeling for Globally Performed Professional Services INPUTS DYNAMIC COST MODEL OUTPUTS Hundreds of benchmarks Normalized job classifications Current data Geography specific Service (scope) specific Man-hour histograms Proposal pricing, markups, etc. Algorithms Assumptions Should cost Sensitivity analyses Identified gaps between proposals and the market Market Intelligence as a Strategic Weapon 12

13 Case Study: Health Care Program Administration CONTEXT Company provides guidance on health care plan for active and retired employees OBJECTIVES - Convert incumbent contracts so that profit is tied to performance measures - Address past performance issues - Enter into a 3-year contract using Market Intelligence as the basis for single source negotiation OUTCOME 20% reduction in transaction cost Implemented Key Performance Indicators Market Intelligence as a Strategic Weapon 13

14 Conclusion Market Intelligence is a critical driver of world-class PSCM organizations Provides a powerful tool to influence Business stakeholders Required for cost modeling Catalyst for innovation Helps manage supplier risk more effectively Market Intelligence as a Strategic Weapon 14

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