Confidential and Proprietary©2009 Ed Kerbs KERBS

Best Practices Procurement And Sourcing:

Ed KerbsFebruary 2010

How Vendor Management Offices (VMO) helps by adding governance & structure around global spend, savings and reporting.

Bring the right management skills process & tools around contracts, vendor performance, finance and administration to maximize profit.

Confidential and Proprietary©2009 Ed Kerbs KERBS

Vendor Management Office:“Introduction”

• Vendor Management Office (VMO) - Why bother? • Purchasing & Sourcing departments may be unjustified source of discontent.

• They have “good / best ” people, connected, hold high ground • Can be perceived as competent but inflexible and time consuming bureaucrats• May be managed as a cost center (no “spend to save” mentality)• Can be the results of years of decentralization - best effort delivers suboptimal results• Be effected by weak management (internal, external, upper & cross divisional) • Not always viewed as strategic in times of change or duress - no bandwidth, fire fighting

• Purchasing & Sourcing departments may not be staffed & chartered to focus on • Global portfolio reporting & management of

• Strategic vendors, Spend, Savings• Policy, Tools, Process, Archives

• Interface to upper management for• Contracts, Vendors, Performance, Finance

VMO – Why?

Successful VMOs proactively manages global spend as a visible portfolio. VMO governance is a cornerstone of fact based management around spend & savings.

Confidential and Proprietary©2009 Ed Kerbs KERBS

Vendor Management Office:“Introduction”

• Vendor Management Office VMO – Why bother?• VMO can help when:

• Too many fire drills, “band aids”, out of control perception• Poverty of specific experience or category management• Beginning of a new strategy like outsourcing, vendor consolidation, volume/enterprise• Beginning of a new strategy like business process re-engineering (challenging)• Desired evolution to metrics based management across the spend• Need to put laser focus around global cost savings • Lack of existing governance bandwidth to implement policy and reporting• Lack of accurate measurement systems or financial data confounding reporting• Lack of proactive governance to rationalize productively and profitably• Political issues between users, finance, purchasing• Lack of mentor to “train the trainer”• Over reliance on management consulting in multiple procurement contexts

VMO – Why?

VMO provides guidance, evaluates suppliers, helps in negotiations, consolidates for leverage VMO supports objectives without bias or emotion, provides legal and contractual best practices

Confidential and Proprietary©2009 Ed Kerbs KERBS

Vendor Management Office:“Goals and objectives”

• Vendor Management Office (VMO) - Why bother? • VMO can complement and create synergy with Purchasing & Sourcing

• Goal: Global alignment of spend to an increasing shareholder / owner wealth

• Strategic Objectives: • Deliver global financial synergies around contracts (save money)• Deliver global operational innovation synergies around contracts (increase quality and agility) • Optimize specific contract deliverables & SLAs to meet requirements at lowest TCO• Bring common governance, visibility, tools, process and order around the global spend portfolio• Deliver i) global spend reporting and ii) rationalized strategic vendor reporting • Give management the opportunity to rationalize & prioritize for profit• Proactively maximize satisfaction around the global spend

VMO - Goal

Successful VMOs proactively manages global spend as a visible portfolio. VMO governance is a cornerstone of fact based management around the spend.

Confidential and Proprietary©2009 Ed Kerbs KERBS

Vendor Management Office:You have seen a 4 page excerpt of a 15 page presentation

• I give four presentations covering cost savings• Delivering Precise Reporting In Cost Savings – 8 pages - accurate/precise savings financials

• How To Set Up a Cost Savings Office – 10 pages, day 1-100, pipeline structure & governance

• 3 Ways To Mine For Cost Savings – 23 pages, 3 effective & proven methods to mine for savings

• Vendor Management Office (VMO) -15 pages, maps VMO goals, function & KPIs

• Contact me any time• Ed Kerbs

• 847-323-9986

• ekerbs@aol.com

• LinkedIn Profile http://www.linkedin.com/in/edkerbs

Contact Ed Kerbs I am a procurement executive with a background in IT and the financial industry. I am different in that I build and

manage teams that save money via Cost Savings Offices (CSOs). I am expert and highly experienced in mining for savings by looking at contracts, invoices, inventory & business process (6 Sigma Black Belt) to determine ways to reduce expense.