Dawn of A New Era:
Radical Procurement Innovations
Moderators:
Mary Holcomb, PhD, Associate Professor of Supply Chain Management,
University of Tennessee
Panelists:
Tommy Barnes, President, Con-way Multimodal
Theresa Dirker, VP Integrated Supply Chain Transformation, IBM
Sheila Roethke, Associate Director Logistics Procurement,
Mondelēz International
John Urban, EVP & General Manager Logistics Services, GT Nexus, Inc.
Transforming the arena of direct procurement—to improve responsiveness,
performance and profitability
“GT Nexus allows for a balcony view of the status of shipments and
payments. Suppliers are clear, we’re clear. And payment is executed on
time.”—Doug Freeman, CIO
 Unlike procurement practices and technology for indirect (MRO) purchases,
the direct supply chain impacts strategic market elements
Customer experience and brand
Revenue and growth
Competitive differentiation
 Direct procurement takes a holistic and integrated approach to managing
direct vendor relationships
 Service and operational excellence with vendors is paramount, and mission
critical—not just about getting the best “first cost”
In Direct Supply Chain, merging the financial and physical supply
chains on a single network-wide process platform is a MUST:
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Shared data sets
Linked objects
Dependent triggers
Internal departments overlap
External third parties
Total cost picture
Financial
Physical
Combining these worlds onto the same platform enhances corporate
performance in inventory management, COGS/margin and SG&A
administrative efficiencies...
Cloud Supply Chain
Information
Physical & Financial Supply Chains
Enterprise
Manufacturing
[Supply]
Customers
[Demand]
Distribution
Markets & Retail
North America
Factories
WIP
AP
System
POs
Bank
Payment
Status
Comm.
Invoice
Europe
Funds
FCR
DCs
Broker
APAC
Inventory
FF
Pack & Ship
PROFILE
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Direct
Ship
$500 million apparel brand
10 Million shipping units annually
Operational in 13 countries
42 Patagonia retail Stores
PLATFORM CAPABILITIES
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Purchase to Pay
Open account financing
PO & WIP Collaboration
Pack & Ship
Customs Process Automation
App Xpress Doc Library
RESULTS & VALUE
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Moved transactions onto an open
account platform to eliminate LCs
Automated AP processes to eliminate
manual processes, errors and delays
Saved $100k in first year
Integrated with Customs Broker
Single View into Work in Progress for
Customer Reps
Dawn of A New Era:
Radical Procurement Innovations
Moderators:
Skip Frisz, Director Logistics Operations, Darden Restaurants
Mary Holcomb, PhD, Associate Professor of Supply Chain Management,
University of Tennessee
Panelists:
Tommy Barnes, President, Con-way Multimodal
Sheila Roethke, Associate Director Logistics Procurement,
Mondelēz International
John Urban, EVP & General Manager Logistics Services, GT Nexus, Inc.
Joanne Wright, VP Global Hardware Execution,
IBM Integrated Supply Chain
Integrated Supply Chain (ISC)
ISC supports all IBM lines of business providing the following:
About IBM
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Conducts business in 200+ countries
~400,000 employees globally (~25,000 in ISC)
Works with ~100,000+ business partners
Comprised of 5 business units:
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2013 Revenue
Supply Chain Execution: Manufacturing, New Products
Introduction, Cross-platform Solutions Integration,
Engineering, Supply/Demand & Inventory planning,
Customized Solutions
Procurement: Production, General & Services
Procurement, Procurement Process Outsourcing
Quote to Cash / Sales Support
• Pre-Sales support (New 2013 Mission): Client proposals
and quotes, Solution Design, Order processing
• Post-Sales support: Order Fulfillment, Contract
Administration, Accounts Receivable
Asset Management
Risk and Compliance Management
Supply Chain Transformation and Analytics
ISC Global Transformation
Multi- National Towers
Globally Integrated Enterprise
Smarter Value Chain
Journey
Strategic Sourcing Roles and Responsibilities
Extend from Client Influence through Supplier Selection and Relationship Management:
Influence / Support
Sourcing
Relationship Mgmt
Client,
Client Influencers
Spend Analysis
Contract
Management
Strategic Sourcing
Strategy
Performance
Reporting
Engineers
Supplier Selection
Relationship
Governance
Driving Value in Cost, Quality, Supply Assurance
Moving to an Effective Category Management Model
Traditional
New Model
Category
Management
Strategic
Sourcing
Operational
Buying
Operational
Sourcing and
Buying
Transactional
Transactional
Contribution comes from delivering value, not
processing transactions.
Global Procurement Centers and Satellite Locations
We have consolidated our transaction processing into three low-cost, efficient centers to
support our global requirements
Procurement Center activities
Operations
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Purchase Order (PO) Processing
“Hands-Free” Transaction administration
Vendor Master File updates
Operational reporting
Systems administration
Bypass tracking
Blocked Invoice administration
Sourcing Activity
Also co-located Accounts Payable administration
Bangalore, India
Budapest, Hungary
Shanghai, China
(English Speaking)
(European Languages)
(Asia Pacific Region)
Ghana, Africa
Sofia, Bulgaria
Chengdu, China
Satellite locations
Dawn of A New Era:
Radical Procurement Innovations
Moderators:
Skip Frisz, Director Logistics Operations, Darden Restaurants
Mary Holcomb, PhD, Associate Professor of Supply Chain Management,
University of Tennessee
Panelists:
Tommy Barnes, President, Con-way Multimodal
Sheila Roethke, Associate Director Logistics Procurement,
Mondelēz International
John Urban, EVP & General Manager Logistics Services, GT Nexus, Inc.
Joanne Wright, VP Global Hardware Execution,
IBM Integrated Supply Chain
Within Mondēlez International’s Sourcing Framework, Technology
brings value in Supplier Selection & Supplier Relationship Management
• Simplifies & enables Procurement to
collaborate with Integrated Supply Chain
partners & suppliers more efficiently &
effectively
• Optimizes service & costs in Mondelez
North America’s Supply Chain
The Transportation Category has seen benefits related to eSourcing…
Segmented
Approach
2010 & Prior
•Full Truckload Modes were sourced separately
•Cumbersome process with Operations to build specifications for bid events
•Multiple systems to manage the analysis & supplier selection process
•Significant implementation and compliance challenges
Leveraged
Scale
(2011-2012)
•Partnered with single eSourcing supplier to manage sourcing events
•Leveraged Full Truckload volume across all modes
•Efficient Supplier Selection…time reduction of 50%
•All Rates documented in one place for compliance
Collaborative
(2013-Now)
•Improved use of the tool to optimize full suite of options
•Operations & Procurement creates value together
•Balanced decision-making between Service & Cost
•Greater transparency and collaboration with suppliers
Time-consuming &
Inefficient partnerships
Consolidated,
Semi-Automated
& Improved
Partnerships
Integrated decisions &
simplified processes
“Costs compared to the Market” are
closely aligned to F&B industry…
Requested Delivery Date (RDD)
improvement in 12 month period of 45%
Segmented
Approach
Leveraged
Scale
Collaborative
Improved partnership between
Procurement & Logistics Operations
Compliance effectiveness…ensures a
“Pass” Scorecard
Transportation
Market…
All Sectors
Kraft/MDLZ
Food & Beverage
Enables Procurement & Operations to
incorporate Carrier Scorecard
performance in the selection process
Integrate Full Truckload category management into eSourcing tool by
incorporating TMS & Benchmark data to further automate the process to
optimize cost & improve Requested Delivery Date to our customers
1. Prior to 2010 how did Kraft/Mondelez International approach their bid events for
Transportation?
a. Segmented Approach
b. Leveraged Scale
c. Collaborative
2. How did Kraft/Mondelez International’s Costs compare to the Transportation market in 2012
when they implemented a Collaborative approach?
a. Better than the market
b. In line with the market
c. Worse than the market
Dawn of A New Era:
Radical Procurement Innovations
Moderators:
Skip Frisz, Director Logistics Operations, Darden Restaurants
Mary Holcomb, PhD, Associate Professor of Supply Chain Management,
University of Tennessee
Panelists:
Tommy Barnes, President, Con-way Multimodal
Sheila Roethke, Associate Director Logistics Procurement,
Mondelēz International
John Urban, EVP & General Manager Logistics Services, GT Nexus, Inc.
Joanne Wright, VP Global Hardware Execution,
IBM Integrated Supply Chain
Suggested Questions:
• How long does it take to implement a network and functionality as
you described for Patagonia?
• What’s the value for suppliers to participate? Is it hard to get them
to comply?
• What’s the value of a Public Cloud Network that is multi
customer/multi enterprise vs. a Private Cloud Network?
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