eaton supply chain indirect materials & services …pub/@eaton/@corp/documents/...11 11 scm -...
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© 2011 Eaton Corporation. All rights reserved.
Eaton Supply ChainIndirect Materials & Services Update
Terry WahlgrenDirector SCM – Global Indirect Materials & Services
22
SCM Indirect Supplier’s
Welcome to Eaton’s SCM
(Extended) Indirect Staff
Meeting!
Thank You for Your Support &
Contribution to Eaton!
33
Agenda
TIMEAGENDA ITEMS
11:45 a.m. →• Lunch
11:00 a.m. – 11:45 a.m.• Networking
10:40 a.m. – 11:00 a.m.• Q&A
10:15 a.m. – 10:40 a.m.• Supplier Engagement Process
10:00 a.m. – 10:15 a.m.• Break
9:30 a.m. – 10:00 a.m.• Indirect Strategy
• Indirect Global Organization
• Indirect Goals
8:15 a.m. – 9:30 a.m.• Introduction
• SCM Indirect Team
• R & R
• 2010 Award Winners
• Past Award Winners
7:15 a.m. – 8:00 a.m.• Continental Breakfast
44
SCM Indirect Materials & Services Team
� Brendan O’Malley
� Kim Cazzetta
� Janet Horvath
• Rod Bayliss
� Scott Morton
� Fernando Garza
� Rich Gorzé
• Jason Frisbie
� Larry Caston
� Gaston Alvarado
� Michael Garred
� Jacek Skowronski
• Barna Kato
• Stephane Venhard
• Craig Bolton
• Ralf Borkowski
• Giuseppe Donati
• Peter Loheitt
• Claudia Mary
� Chiara Benetazzo
• Birgit Gelbe
• Gerald Apfelthaler
• Emanuela Boggio
• Sara Wright
GLOBAL / NA EMEA APAC
• OPEN
• Jack Hou
• Sallin Lu
• Andy Feng
LAM
• Marcelo Coletta
• 6 Commodity Mgrs
• 6 Buyers
55
2010 Indirect Premier Supplier Award Winners
• Advanced Technology Services, Inc. (ATS)
• at&t
• Bartech Group, Inc.
• Commercial Metals Company
• Concept Packaging
• Houghton Fluidcare
• JP Morgan Chase
• Kite Packaging Group Ltd.
• MJ Brunner
• Motion Industries
• PSMi
66
Past Indirect Supplier Award Winners
• ATS, Inc.
• American Express
• at&t
• Bartech Group, Inc.
• Bruckner Supply
• ComDoc
• Commercial Metals
• Crown Packaging
• Hewlett-Packard
• Houghton International
• Kite Packaging
• Motion Industries
• National Car Rental
• Oracle
• Pratt Industries
• Saint-Gobain Abrasives
• Summit Energy
• Tata Consultancy Services
77
Eaton Organization Aligned to Better Serve our Markets
Industrial Sector
$7.3 B Sales
Vehicle – Truck & Auto
Aerospace
Hydraulics
Electrical Sector
$6.4 B Sales
Electrical Americas
Electrical Rest of World
88
Key Business Drivers
• Increased Customer Expectations
• Value - Quality, Service, Cost, & Sustainability
• Global Competition - Globalization
• New Products – New Technology
• Amount and Speed of Information
99
Eaton’s SCM Response
• Center-Led Global/Regional Organization
• Global Spend Visibility
• Standardized Sourcing Process – Centralized agreements
• Clear Supplier Expectations / Performance Metrics
• Organized “Voice to the Supplier”
• Partner with the “Best” continue to “Test”
1010
Indirect Categories / Commodities
PC’sServersMainframeSoftwareTelecommunicationsValue Added Reseller (VAR)
Air TravelHotelsCar RentalTravel AgenciesFleet VehiclesT&E & P-Card
Integrated MROConsumable Tooling
AbrasivesChemicals/LubricantsPipe/Vales/Fittings (P,V,F)Electrical SuppliesPower TransmissionEquip Maint Parts & Services Maintenance Supplies
Temporary LaborOffice SuppliesPrint MaterialPhotocopiers/Fax/MFDPromotional MerchandiseSignageService AwardsCopy ServicesDocument ManagementOffice Furniture
FinanceHuman ResourcesLegalMarketing Communications
Office Services
Energy
IT/TelecomTravel / Fleet
Capital
Utilities• Electricity• Natural Gas• Propane
Staff Standards
SCM/OPX/EHS Standards
MROFacility
Services
Scrap Metal SalesCompressed GasesPersonal Protection EquipmentWaste Management ServicesSecurity Services & EquipmentJanitorial ServicesCafeteria/CateringUniforms
Machinery/EquipmentCNC, Grinders, Shapers
Shears, Punches, PressesGear CuttingCompressorsHVAC EquipmentForklifts, etc.Surplus Asset Mgmt.
CorrugatedPallets/Wood ProductsFoam ProductsLabelsSupplies
Packaging
ProfessionalServices
1111
SCM - Indirect Materials & Services Strategy and Goals
• Indirect Strategy:• Strategically support the management of indirect cost
to maximize business profitability
• Collaborate with internal stakeholders to identify requirements – materials & services
• Categorize & leverage spend to maximize value
• Partner with core-competent suppliers to satisfy business & stakeholder requirements – eliminate poor performers & low valued suppliers
• Optimize total value - service, quality, support, & cost
• Drive continuous improvement – clear expectations & performance management
• Goals:• Satisfy Quality / Delivery / Service requirements
• 60% spend under management
• 4% Y on Y cost savings - productivity,
• 20% supplier reduction
• 7% MBE spend, 4% WBE, 2.5% VO
• DPO - >60 days
• Program user satisfaction
1212
SCM Indirect Center Led Organization
Global IndirectMaterials & Services
AmericasAPAC
Sub-RegionProgram Mgrs
Regional IndirectLeaders
Global CategoryManagers
Global CategoryManagers
EMEA
# Plants# Offices$ Spend
Regional Comm. Mgrs.
Regional Comm. Mgrs.
Regional Comm. Mgrs.
Regional CommodityManagers
MX/PRElectrical
(Open)Vehicle Group
FPGBrazil
(5)
31 22 39 16 8
UK/(Open)
Bene/France
CE/Aust.
ItalyGermany IndiaAustraliaSE AsiaKoreaChina
12 9 9 7 12 12 5 6 5 4
1313
� Maintenance
� Engineering
� Operators
� IT
� Finance
� HR
� EHS
Site/Staff Stakeholders
Sub-Region Indirect
Managers
SCM Center Led Teams
Category/commodity
Managers
SCM Indirect – Organization Structure
SCM center led regional teams –
category/commodity managers leverage &
source indirect materials and services
regionally & globally.
SCM indirect program managers coordinate
stakeholder requirements for commodity
managers and deploy lowest total cost
solutions.
Site and staff stakeholders have a single SCM
indirect point of contact. Deployment of
supplier solutions are coordinated &
prioritized with the site/staff stakeholders.
1414
SCM Global Indirect Materials & ServicesTerry Wahlgren
Director – Global Indirect Materials & Services
Jamie Pandy
Administrative Assistant
Rod BaylissGlobal Manager – MRO
Scott MortonGlobal Manager – Capital
Fernando GarzaManager – Facilities Svcs
Rich GorzeManager - Energy
Brendan O’MalleyManager – IT/Telecom
Kim CazzettaManager–Cont Wkfc/
Office Svcs
Janet HorvathManager – Travel/Fleet/HR
Linda BrentarTravel/Fleet Analyst
Rose WorthingtonFleet Analyst
Jacek SkowronskiManager Indirect – EMEA
Jason FrisbieProgram Mgr. – Vehicle Group
Category ManagersChiara Benetazzo – Deploy. Mgr.Giuseppe Donati – MROBarna Kato – Professional Svcs
Commodity ManagersClaudia Mary – Energy Peter Loheitt – Packaging/Capital Stephane Venhard – Office SvcsCraig Bolton – IT Ralf Borkowski – Fleet
Program MangersLarry Caston – Electrical Mike Garred – FPG HydGaston Alvarado – MX
David MontaninoIndirect – FPG Aero
Indirect Buyers(7)
OPENManager Indirect – APAC
GLOBAL CATEGORY MANAGERS
PLANT OFFICE REGION AMERICA’S
Marcelo ColettaIndirect Manager – Brazil
Program ManagersBirgit Gelbe – GermanyGerald Apfelthaler–Austria/CEEEmanuela Boggio – Italy Sara Wright – UK
Jack Hou – MROSallin Lu – Office
Andy Feng – Capital Pramod Nair – India
1515
SCM Indirect Team Collaboration
Global Plant Commodity TeamCapital / MRO / Facilities / Energy
Indirect Leadership Team
Global Office Commodity TeamIT / HR / Travel / Fleet / Office Services, etc.
EMEATeam
America’sTeam
APACTeam
1616
Category/Commodity
StrategyDiagnostics
Supplier Selection &
Award
Deployment & Transition
SupplierPerformanceManagement
• Customer Requirements
• Organization Requirements
• Spend Analysis
• Commodity Profile
• Market Analysis
• Supply Base Analysis
• Supplier Qualification
• RFQ – Supplier Negotiation
• Supplier Selection
• Contract Authorization
• Communication
• Implementation
• Contract Management
• Supplier Performance/ Metrics
• Performance Improvement
Continuous Improvement
SCM Strategic Sourcing & SupplierManagement Process
1717
Business Requirements – Supplier Expectations
Regulatory Requirements
Assurance of Supply
Quality
Delivery
Service & Support
Cost
Sustainability
Innovation• Technology• Collaboration
• Social Responsibility• Energy/GHG Reduction
• Price• Cost – Specification/Usage
• Relationship - Account Management• Technical Support
• OTD• Lead Times/Inventory
• Consistency• Reliability
• Financial Stability• Capacity/Footprint
• Compliance
1818
Materials Supplier Value Chain
Value
Low
Responsibility
High
Low High
Product
Cost Per UnitProduction
TotalCost
Life Cycle Cost(Sustainability)
• Price• Freight
• Specification• Quality• Volume
• “Best Solution”
• Lowest total cost
• Inventory Management
• Related Costs
• Tooling, chemicals, energy, etc.
• Requisition to Check
• Recycled Materials• Packaging• Product Emissions –
air, water• End of Life Treatment
Supplier
Customer
Salesman
Buyer
Engineering
Manufacturing
Sales Mgmt
SCM Mgmt
Business Mgmt
Business Mgmt
Engagement Level
1919
Category/Commodity
StrategyDiagnostics
Supplier Selection &
Award
Deployment & Transition
SupplierPerformanceManagement
• Customer Requirements
• Organization Requirements
• Spend Analysis
• Commodity Profile
• Market Analysis
• Supply Base Analysis
• Supplier Qualification
• RFQ – Supplier Negotiation
• Supplier Selection
• Contract Authorization
• Communication
• Implementation
• Contract Management
• Supplier Performance/ Metrics
• Performance Improvement
Continuous Improvement
SCM Strategic Sourcing & SupplierManagement Process
2020
SegmentKey
Suppliers
IdentifySupplier
KPIs
Measure &Review KPIs
SupplierPerformance
Review
Action &Follow-Up
• Identify Tier 1 & Tier 2
• Contract/SOW
• KPIs
• Targets/Goals
• Supplier Dashboard
• KPIs
• Supplier Scorecard
• KPIs
• Action Steps
• Responsibilities & Timeframe
Continuous Improvement
SCM Supplier Performance Management
• Monthly/Quarterly
• Stakeholder Involvement
• Supplier
• Semi-Annual/Annual
• Management/Executive Involvement
• Supplier
2121
Supplier Engagement - Segmentation
StrategicSuppliers
KeySuppliers
UnleveragedSuppliers
Suppliers who add significant
long-term value – multi BU/region.
Close relationship and highly
engaged.
Suppliers positively selected and
provide high value – multi-BU.
Greatest number, least value –
rationalization opportunity.
~ 25
~ 400
~ 20,000
Tier 1 & 2
Tier 3
$300M
$600M
$700M
Tier 4
Preferred SuppliersSpend Under Management
2222
Category Area
North
Am
Region/
Function SCM
Eaton
Average Supplier Difference
Cost Out / Cost
Avoidance 3 2.5 4 3.17 4 -0.83
Quality & Support 4 4 3.8 3.93 4.5 -0.57
SLA & Reporting 4 3 4.1 3.70 3 0.70
Account Support 3 3.5 3.2 3.23 3 0.23
Administration (ex:
Billing) 3 4 3.7 3.57 4 -0.43
Prof/Tech Services 2 3 4.1 3.03 4 -0.97
Strategic Roadmap N/A N/A 3 3.00 5 -2.00
Sustainability N/A N/A 3 3.00 4 -1.00
Totals
KPIs
Acct Mgmt
Innovation
SCM Supplier Scorecard – Example
Dashboards
Stakeholder
Surveys
Supplier
Review
2323
SCM Indirect Internal Collaboration
ManufacturingEquipment &
MachineryMRO
Facility ServicesEnergy
Materials & Services
ManufacturingOperations
MaintenanceEngineering
EHS
SCM
Commercial Operational
Business Stakeholder
OfficeIT/TelecomTravel/Fleet
Human ResourcesMarketing
Professional StaffIT
Human ResourcesFinance
Marketing
Supplier
Contract -SOW
2424
Eaton - SCM Indirect Opportunity
• APAC – 100%
• EMEA – 40%
• America’s – 20%
Regional Increase
$100–200M/yrIndirect Spend Increase
12–14% growth/yrEaton Revenue
2010 - 2014
2525
Carbon Disclosure Project
The Carbon Disclosure Project is an independent not-for-profit
organization holding the largest database of primary corporate climate change information in the world.
Some 3,000 organizations in some 60 countries around the world now
measure and disclose their greenhouse gas emissions and climate
change strategies through CDP
• The Carbon Disclosure Project was launched in 2000 to accelerate
solutions to climate change by putting relevant information at the heart of
business, policy and investment decisions.
2626
Eaton / CDP
Goal of CDP
• Extends awareness of an organization’s carbon footprint beyond the
internal greenhouse gas emissions to include carbon footprint across the
supply chain.
• CDP provides a global process for supply chain disclosure.
• Goal to drive action for companies and their suppliers.
Eaton’s Relationship
• Eaton started with CDP 2006
• In 2010, CDP ranked Eaton third in the Industrials Sector behind CSX
and Boeing.
• Eaton has a strategic focus and commitment to understanding business
issues related to climate change, and an ability to measure and manage the
company’s carbon footprint
2727
Eaton GHG Footprint Categories
Suppliers Footprint
Logistics
Air Travel
Fleet Vehicles
Electric/
Natural Gas
Current
Next
Future
2828
Thank you for listening!
Questions ?
2929
Thank You …for Your
Support to Eaton!