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Profitability Improvement, Game Changing Capability
Executive OverviewSteve SparoughPartner
eps Summary:
on demand, leveraged buying for items & servicese-sourcing managed service supplier paid fee modelup to 50% shorter cycle times & level of effort WW reach to NA, SA, AP, India, Europe
eps drives EPS higher
eps improves EPSe-procurement services (eps)
eps game changing business model overview Client business transformation proof points Getting started Back Up: Software screen shots
Today’s Agenda
By the end of the meeting we will have discussed:
2 eps improves EPSe-procurement services (eps)
eBid (reverse auction) level-set
Auction(buyers bid price up)
$100
Time
$102.5
Event Opening
Event Closing
$105
$107.5
$110
$98.5
SellersCost
Reverse Auction(sellers bid price down)
$94.5
Time
$96
Event Opening
Event Closing
$98.5
$100
$102.5Buyer’sHave Paid Price
Reverse Auction Dynamic(Sellers are bidding price down for
commitment of larger, future revenue albeit at less margin)
$100
$0$20
$250
$0
$40
2.5x
$0
16%
20%
1x
1 yr Revenue
3 yrs Revenue
Cost
Op Profit Op Profit
Cost
3 eps improves EPSe-procurement services (eps)
eps’ Game Changing ValueReducing OpEx 10% has exponential impact on margin and shareholder value
4 $3Bn in Revenue would be required to replicate $200Mn in operating profit
1A. Impact on Operating Profit & Margin
Operating Profit
COGS
A 10% Reduction in OpEx Results in…..
38% Margin Improvement
100%
$7.866Bn
28%($2.2Bn)Op Ex
FY09 Revenue
100%
Incremental impact of $200Mn of reduced OpEx10%7.3%
64%($5.1Bn)
64%($5.1Bn)
25%($2Bn)
1B. Impact on Shareholder Value
10%
FDO Share Price; NYSEMarket Capitalization
A 10% reduction to OpEx Results in
10%$62$7.9Bn
41% Impact on Shareholder Value
Assumptions:
• P/E (TTM): 16• Corp Tax: 35%• Source: Yahoo Finance
$44$5.5Bn
Incremental impact of $145Mn of After Tax Earnings
eps improves EPSe-procurement services (eps)
ILLUSTRATIVE
eps unique value add
eps’ value add:Level 0 Objective 3rd partyCollaborative continuous improvementLevel 1Market research to optimize bid structure and determine savings opportunity WW supplier identification not bound by networksSupplier pre-qualificationCustom RFQ developmentLevel 2: Configurable s/w to create varying event s (language, currency, rank, price, weight)Supplier communication/trainingLevel 3: Time to identify /negotiate additional value add of suppliers
eps’ managed service creates four levels of value to maximize savings
Illustrative Project
5
$100
$90
Client’s Current Cost
$95 1st threshold of value
Time
Cost
$N
Project Beginning
Event Closing
Level of Value Created
[captured thru eps reverse auction]
Initial Value Created
[captured thru eps primary research]
2
1
2nd threshold of value
$94
$92$91
$93
3rd threshold of value
Level of Value Created
[captured thru client’s final negotiation w/supplier
3
eps improves EPSe-procurement services (eps)
For The Supplier:•No fee unless they win
•Additional sales channel at lower cost
•eBid managed service & tool
– 3rd party facilitation
– A transparent & fair bid process
– ID of market pricing for benchmarking
– Web based, no S/W to install
– Instant notice of RFQ’s
– All eBids are awarded
•Other
– Catalyst to reduce costs & restore margin
eps benefitseps is win-win for buyers and suppliers
Lower costs @ less time New Revenue @ Lower Cost
For The Buyer:
• No client paid fee (supplier paid fee structure)
• eBid managed service & tool– Enables quicker time-to-value
– Up to 80% less client time expended per sourcing project
– Each bid is customized to client’s requirements
– Market data to support eBid strategy
– Open, competitive bidding leading to 5%-24%++ cost savings
– Benefit of 10 years experience & best practices on every eBid
Time spent on sourcing or sales activityActivity completed by eps
6 eps improves EPSe-procurement services (eps)
eps enables & optimizes leveraged buying
7
Lighting Requirement Store A
B. B
id R
equi
rem
ents Lighting Requirement Store B
Lighting Requirement Store C
Lighting Requirement Store D
Re-lamping Requirement Store A, B
Lamp Servicing Requirement Store A, D
StoreA
Store C
Lamp Servicing Requirement Store C, B
Store D
Re-lamping Requirement Store C, D
Store B
ILLUSTRATVE
eps improves EPSe-procurement services (eps)
eps game changing business model overview Client business transformation proof points Getting started Back Up: Software screen shots
Today’s Agenda
By the end of the meeting we will have discussed:
8 eps improves EPSe-procurement services (eps)
$200K
$165K
Vehicles
Savings of 10% + have been achieved across most categories
Size of Bubble : (Relative Value Generated from ebids)
$1.5M
$1.75M
$2M
$2.25M
5% 10% 15% 20% 25% 30% 35% 40% 45%
$250K
$500K
$750K
$1M
$1.25M
% Savings
Bid
Val
ue
$62KEnergy
9
$780K
Store Shelving/Fixtures
$240K
StoreRe-model
$27K
StoreConst’n
$119KDSL Service
$550K
StoreLighting Services
$120K
PoS H/W, S/W*
$48KRoofing$52K
HVAC
50%
$90K
PkgSupplies
$140K
Temp Labor
$150K
Wireless
$212.5K
Office SuppliesPrintServices
$266K
Media Services
$150K
DMARC Extensions&
Service
eps improves EPSe-procurement services (eps)
eps game changing business model overview Client business transformation proof points Getting started Back Up: Software screen shots
Today’s Agenda
By the end of the meeting we will have discussed:
11 eps improves EPSe-procurement services (eps)
in
2. Administer ebid 1. Design project 3. Due Diligence & Award
Capture Value
Draft SpecsDraft Specs
QA & Format RFQ QA & Format RFQ
Prepare Suppliers
(Conduct Pre-Event Site Tours;
Distribute Samples)
Prepare Suppliers
(Conduct Pre-Event Site Tours;
Distribute Samples)
Contact Low BiddersContact Low Bidders
1
5
Answer RFQ QuestionsAnswer RFQ Questions
Distribute RFQ to Suppliers
Distribute RFQ to Suppliers
Perform Due DiligencePerform Due Diligence
Award ContractAward Contract
Negotiate Contract
Negotiate Contract
3
4
1
2
3
4
eps’ process
Authorization is needed to begin supporting you
eBid Managed Service step
Client responsibility
0. Plan projects
3
Review and sign eps engagement authorization
Review and sign eps engagement authorization
Analyze Spend Opportunity Analyze Spend Opportunity
Conduct eBid
Event
Conduct eBid
Event
8
Distribute Event Access Code to pre-Qualified Suppliers
Distribute Event Access Code to pre-Qualified Suppliers
1
2
Engage Buyers; Confirm eBid Readiness
Engage Buyers; Confirm eBid Readiness
3
Confirm RFQ Confirm RFQ 2
Prepare Suppliers for eBid Event
Prepare Suppliers for eBid Event
6
Research suppliersResearch suppliers
Confirm SpecsConfirm Specs
5
4
Conduct Market Check
Conduct Market Check
6
Cut Blanket Purchase Order
Cut Blanket Purchase Order
5
7
Sequence eBid events Sequence eBid events
4
Purchase Review Purchase Review
2
Define eBid scope (objective, volume, current price, switching costs, incumbent suppliers, service level, T&Cs, event & award timeline)
Define eBid scope (objective, volume, current price, switching costs, incumbent suppliers, service level, T&Cs, event & award timeline)
4.
Lessons LearnedLessons Learned
6
12
* If the award threshold price and specs are not met, a client need not award
Go/ No-Go
1
eps improves EPSe-procurement services (eps)
Store ServicesCleaning & MaintenanceGeneral ContractingElectrical Work and MaintenanceFixtures and InstallationFlooring and InstallationPaintingPavingSnow RemovalSecurity ServiceSignage and InstallationWaste Management
Office ItemsFurnitureOffice Supplies
Professional Services Advertising/Media Services Audit/Accounting ServiceCall Center ServiceCredit ServiceEngineering ServiceFood ServicesHealth AssessmentHuman ResourceIT ConsultingLeasing ServiceLegal ServicesLimo/Van ServicesMail ServiceMarketing ServicesMedical ServicesOutsourcing ServicePayroll ServicePrinting (Marketing, HR)Real Estate ServicesTemporary LaborTraining
IT Equip./Services Cell PhonesComputer RentalsComputing StorageCopiersData StreamingDatabase Mining / WarehousingDSLHard DrivesKey BoardsLaptops, Cell Phones etc.Midrange ComputersModemsMonitorPoS Equipment, Istallation and Maintenance PrintersSoftwareTelecommunicationsVideo Cards
Travel/Transport/Freight Air TravelHotels RoomsInternational Air FreightLogisticsRoadside Assistance
Store & DC SuppliesAbrasives BagsCleanersCorrugateDunnageLabelsLight Bulbs & BallastsMaterial Handling PackagingPaperPlastic TotesReceipt Tape Safety SuppliesToolsUniforms
Potential indirect spend events
13 eps improves EPSe-procurement services (eps)
eps game changing business model overview Client business transformation proof points Getting started Back Up: Software screen shots
Today’s Agenda
By the end of the meeting we will have discussed:
14 eps improves EPSe-procurement services (eps)
RFX TEMPLATESRFX TEMPLATES
eps supports different sourcing strategies
15 eps improves EPSe-procurement services (eps)
Bid administration screen
16 eps improves EPSe-procurement services (eps)
Bidder enters bids
Bidder enters bids
Feedback on ranks and bid prices
Feedback on ranks and bid prices
Supplier bidding screen
17 eps improves EPSe-procurement services (eps)
Buyer detailed view
Bid price after applying handicap
Download result to
Excel
18 eps improves EPSe-procurement services (eps)
Thank You
Steve SparoughPartner,
Account Executive1-303-521-8136 (mobile)[email protected]
19
eps d
rives
EPS
hig
her
eps improves EPSe-procurement services (eps)