Upload
others
View
33
Download
0
Embed Size (px)
Citation preview
Omid Ghamami, MBA, CPSCM™
President, Purchasing Advantagewww.PurchasingAdvantage.com
CEO & Chairman, Center for
Purchasing & Supply Chain
Management (PSCM) Excellencewww.CenterForPSCMExcellence.org
“THE Godfather
of Negotiation
Planning”
~ Intel Corp
The CPO AgendaTransforming Procurement
into a Value Added Center Of
Profit
1
Omid Ghamami, MBA, CPSCM™❖ MBA, University Of California System
❖ President, Purchasing Advantage; CEO Center for PSCM Excellence
❖ Globally Recognized Author, Speaker, Trainer, Consultant
❖ 18 Years At Intel: Ran Global Corporate Purchasing Operations with $16B USD scope –“THE Godfather of Negotiation Planning”
❖ Thousands Of Hours Consulting/Speaking/Training In 26 Countries
❖ 2 Best Selling Procurement Books; Multitude of Industry Articles
❖ 50+ Hours TV Appearances As Procurement/Negotiations Expert
❖ Twice Hired to Train the 50 CPOs of U.S. ($3.2 Trillion USD)
❖ Regularly Speak to Harvard University Supply Chain Management Master’s Program
❖ Founder & Adj. Professor Of Purchasing, Los Rios Comm. College
❖ Interviews Published by SAPAriba & Fortune Magazine
❖ Named one of the “Top 5 Procurement Influencers in the World” by CPO Strategy Magazine in 2019 2
Artificial IntelligenceRobotics
Procure to Pay
Block Chain
Supply ChainEnterprise Spends
Centralization
Sustainability
Automation
Globalization Business Continuity
Social
Responsibility
Supplier Has
Your $$
CPSCM™ Procurement Transformation Model
Supplier Has
Your $$
4
Transforming the Organization:
Negotiating for Performance
Results
5
“The procurement of goods and
services instead of performance
results is the #1 problem facing our
profession today”
- Omid G.
Supplier Relationship Management
(SRM)7
Smart City Lighting Fiasco
- 1,100+ light polls changed from sodium to LED in 64 sqr km city
- End user specified 125 watt light bulbs
- Result: 1 lane roads too bright, 2 lane roads have dark spots
- What went wrong?
Using Supplier Innovation for City Camera
Procurement Project
9
Failure to Focus On This In Advance of Negotiations Will Result in Endless Heartache
After They Are Done.
1010
End Result
How it will be used
What they want to
buy
4 Legs of the Stool for Buying
Performance Results
Procurement
Mission Pay For
Performance
Pre-Defined
Remedies
ROSM - Results
Oriented
Success Metrics
Warning! The Standard Contract Will NOT Give You
Adequate Coverage in These Areas 11
Benefits of Making the Shift to
SPM
• End users and procurement have common goal
• Organizational productivity swings up
• SPM becomes preventative
• Performance metrics can be used to drive Design for
TCO
12
The cpo agenda: transforming the Organization
Driving Design for TCO
13
Pushing suppliers
for a lower price
year after year is
not a sustainable
purchasing
strategy
CostsProfit
14
Source: McKinsey Consulting
Cost Reduction
Opportunities
Average Amount Of Purchases By Industry as a Percentage Of Revenue
CPOs: Where Are You Finding Your Cost Savings?
The SOW/Spec
Handoff Results in
an Average LOSS
of 18% Cost
Savings!
16
4 Pronged Approach
Reuse Simplification
Standardization Supplier Innovation
17
Why Did Costco Change Milk Jug Sizes?
18
Oxygen Tubes for Turbine Systems
.9995 vs .995 Pure
19
Beautiful Master Packaging for Retail Product Shipments
What the Master Packaging Designer Imagines will happen
What Actually Happens 20
21
Airport Terminal Case Study, cont
22
Airport Terminal Case Study, cont.
23Source: http://www.turnerconstruction.com
How Did the Mercedes CLS Get Introduced at
$30K Below the S Class With The Same Core
Features?
S Class CLS Class
25
"I'm not sure anyone should have made this car.
We probably should have just [modified the Model S]. There are so many more features and difficult to build parts on [the Model X] than it is necessary for us to sell the cars.“
- Elon Musk
USS Virginia – Dept of
Defense
• Historically, nuclear submarines had custom designs
• Result: proliferation of functionally similar or nearly identical parts
and specifications, but all custom.
• A $27 million investment in parts standardization lead to:
– $789 million in cost avoidance
– 60% reduction in number of procured parts
– The USS Virginia lead ship was launched ahead of schedule
– Marked improvement in crew readiness and parts costs26
BOOM – The Supersonic Airplane That is Economical
• The Concorde was fast, but expensive ($20K R/T), used a lot of fuel,
had a big boom, & was expensive to maintain
• Boom uses many existing technologies/parts (such as F15 landing
gear)
• This Standardization & Reuse allows it to be priced the same as
existing business class tickets!
27
28
Unproven Solution
Shifts Risk of
Performance from
Supplier to You
Increases Costs & Time to Market
Rarely solves
problem better than
existing solution
Innovation in End User Demand….
……is
Rarely
Beneficial
The Grand Illusion
Benefits of Making the Design
for TCO Shift
• Cost savings strategies stop exclusive focus on supplier
profit compression
• Costs savings are achieved *before* negotiations
• Suppliers can play vital role in achieving Design For TCO
• Costs are surgically removed from the supply chain
29
The Executives in this Conference Need to Make a Difference
Overhead Service Providers Value Added Revenue and Profit Generators
Procurement
Human Resources
Finance/Accounting
Payroll
Legal
Thank You Very Much!
•Procurement Transformation
•Procurement Consulting
•Negotiation Advisory
•In House Training
•CPSCM™ Certification
32
www.CenterforPSCMExcellence.org
www.PurchasingAdvantage.com
1-888-TCO-4889