Eaton Supply Chain
Indirect Materials & Services Update
Terry Wahlgren
Director SCM – Global Indirect Materials & Services
© 2011 Eaton Corporation. All rights reserved.
SCM Indirect Supplier’s
Welcome to Eaton’s SCM
(Extended) Indirect Staff
Meeting!
Thank You for Your Support &
Contribution to Eaton!
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Agenda
AGENDA ITEMS
TIME
• Continental Breakfast
7:15 a.m. – 8:00 a.m.
• Introduction
8:15 a.m. – 9:30 a.m.
• SCM Indirect Team
• R&R
• 2010 Award Winners
• Past Award Winners
• Indirect Strategy
9:30 a.m. – 10:00 a.m.
• Indirect Global Organization
• Indirect Goals
• Break
10:00 a.m. – 10:15 a.m.
• Supplier Engagement Process
10:15 a.m. – 10:40 a.m.
• Q&A
10:40 a.m. – 11:00 a.m.
• Networking
11:00 a.m. – 11:45 a.m.
• Lunch
11:45 a.m. →
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SCM Indirect Materials & Services Team
GLOBAL / NA
Brendan O’Malley
Kim Cazzetta
Janet Horvath
•
Rod Bayliss
Scott Morton
Fernando Garza
EMEA
Jacek Skowronski
• Barna Kato
• Stephane Venhard
• Craig Bolton
• Ralf Borkowski
APAC
• OPEN
• Jack Hou
• Sallin Lu
• Andy Feng
• Giuseppe Donati
Rich Gorzé
• Jason Frisbie
• Peter Loheitt
• Claudia Mary
Larry Caston
Gaston Alvarado
Michael Garred
Chiara Benetazzo
•
•
•
•
Birgit Gelbe
Gerald Apfelthaler
Emanuela Boggio
Sara Wright
LAM
• Marcelo Coletta
• 6 Commodity Mgrs
• 6 Buyers
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2010 Indirect Premier Supplier Award Winners
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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
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Past Indirect Supplier Award Winners
• ATS, Inc.
• Houghton International
• American Express
• Kite Packaging
• at&t
• Motion Industries
• Bartech Group, Inc.
• National Car Rental
• Bruckner Supply
• Oracle
• ComDoc
• Pratt Industries
• Commercial Metals
• Saint-Gobain Abrasives
• Crown Packaging
• Summit Energy
• Hewlett-Packard
• Tata Consultancy Services
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Eaton Organization Aligned to Better Serve
our Markets
Electrical Sector
Industrial Sector
$6.4 B Sales
$7.3 B Sales
Electrical Americas
Aerospace
Hydraulics
Electrical Rest of World
Vehicle – Truck & Auto
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Key Business Drivers
• Increased Customer Expectations
• Value - Quality, Service, Cost, & Sustainability
• Global Competition - Globalization
• New Products – New Technology
• Amount and Speed of Information
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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”
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Indirect Categories / Commodities
MRO
Integrated MRO
Consumable Tooling
Abrasives
Chemicals/Lubricants
Pipe/Vales/Fittings (P,V,F)
Electrical Supplies
Power Transmission
Equip Maint Parts & Services
Maintenance Supplies
Machinery/Equipment
CNC, Grinders, Shapers
Shears, Punches, Presses
Gear Cutting
Compressors
HVAC Equipment
Forklifts, etc.
Surplus Asset Mgmt.
Travel / Fleet
Air Travel
Hotels
Car Rental
Travel Agencies
Fleet Vehicles
T&E & P-Card
SCM/OPX/EHS Standards
Facility
Services
Energy
Capital
Utilities
• Electricity
• Natural Gas
• Propane
IT/Telecom
PC’s
Servers
Mainframe
Software
Telecommunications
Value Added Reseller (VAR)
Packaging
Scrap Metal Sales
Compressed Gases
Personal Protection Equipment
Waste Management Services
Security Services & Equipment
Janitorial Services
Cafeteria/Catering
Uniforms
Office Services
Temporary Labor
Office Supplies
Print Material
Photocopiers/Fax/MFD
Promotional Merchandise
Signage
Service Awards
Copy Services
Document Management
Office Furniture
Corrugated
Pallets/Wood Products
Foam Products
Labels
Supplies
Professional
Services
Finance
Human Resources
Legal
Marketing
Communications
Staff Standards
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SCM - Indirect Materials & Services
Strategy and Goals
• Indirect Strategy:
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•
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•
•
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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:
•
•
•
•
•
•
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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
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SCM Indirect Center Led Organization
Global Indirect
Materials & Services
Global Category
Managers
Global Category
Managers
Americas
Regional Indirect
Leaders
EMEA
Regional
Comm. Mgrs.
Regional Commodity
Managers
APAC
Regional
Comm. Mgrs.
Regional
Comm. Mgrs.
Sub-Region
Program Mgrs
Electrical
(Open)
# Plants
# Offices
$ Spend
31
Vehicle
Group
22
FPG
39
MX/PR
16
Brazil
(5)
8
Germany
12
Italy
CE/
Aust.
Bene/
France
UK/
(Open)
China
9
9
7
12
12
Korea
5
12
SE Asia
6
Australia
5
India
4
12
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.
SCM Center Led Teams
Category/commodity
Managers
Sub-Region Indirect
Managers
Site/Staff Stakeholders
IT
Maintenance
Finance
Engineering
HR
Operators
EHS
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SCM Global Indirect Materials & Services
Terry Wahlgren
Director – Global Indirect Materials & Services
GLOBAL CATEGORY MANAGERS
PLANT
Rod Bayliss
Global Manager – MRO
Scott Morton
Global Manager – Capital
Fernando Garza
Manager – Facilities Svcs
Rich Gorze
Manager - Energy
OFFICE
Brendan O’Malley
Manager – IT/Telecom
Kim Cazzetta
Manager–Cont Wkfc/
Office Svcs
Janet Horvath
Manager – Travel/Fleet/HR
Linda Brentar
Travel/Fleet Analyst
Rose Worthington
Fleet Analyst
Jamie Pandy
Administrative Assistant
REGION
AMERICA’S
Jacek Skowronski
Manager Indirect – EMEA
Jason Frisbie
Program Mgr. – Vehicle Group
Category Managers
Chiara Benetazzo – Deploy. Mgr.
Giuseppe Donati – MRO
Barna Kato – Professional Svcs
Program Mangers
Larry Caston – Electrical
Mike Garred – FPG Hyd
Gaston Alvarado – MX
Commodity Managers
Claudia Mary – Energy
Peter Loheitt – Packaging/Capital
Stephane Venhard – Office Svcs
Craig Bolton – IT
Ralf Borkowski – Fleet
David Montanino
Indirect – FPG Aero
Marcelo Coletta
Indirect Manager – Brazil
Program Managers
Birgit Gelbe – Germany
Gerald Apfelthaler–Austria/CEE
Emanuela Boggio – Italy
Sara Wright – UK
Indirect Buyers
(7)
OPEN
Manager Indirect – APAC
Jack Hou – MRO
Sallin Lu – Office
Andy Feng – Capital
Pramod Nair – India
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SCM Indirect Team Collaboration
Indirect Leadership Team
EMEA
Team
America’s
Team
APAC
Team
Global Plant Commodity Team
Capital / MRO / Facilities / Energy
Global Office Commodity Team
IT / HR / Travel / Fleet / Office Services, etc.
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SCM Strategic Sourcing & Supplier
Management Process
Category/
Commodity
Strategy
Diagnostics
Supplier
Selection &
Award
Deployment
& Transition
Supplier
Performance
Management
Continuous Improvement
• Customer
Requirements
• Organization
Requirements
• Spend Analysis
• Commodity
Profile
• Market Analysis
• Supply Base
Analysis
• Supplier
Qualification
• Communication
• Implementation
• RFQ – Supplier
Negotiation
• Contract
Management
• Supplier
Performance/
Metrics
• Supplier
Selection
• Performance
Improvement
• Contract
Authorization
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Business Requirements – Supplier Expectations
Innovation
Sustainability
Cost
Service & Support
Delivery
Quality
Assurance of Supply
Regulatory Requirements
• 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
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Materials Supplier Value Chain
High
Life Cycle Cost
(Sustainability)
• Recycled Materials
• Packaging
• Product Emissions –
air, water
• End of Life Treatment
Total
Cost
Cost Per Unit
Production
Value
Product
• Specification
• Quality
• Volume
• “Best Solution”
• Lowest total cost
• Inventory Management
• Related Costs
• Tooling, chemicals,
energy, etc.
• Requisition to Check
• Price
• Freight
Low
Responsibility
Low
High
Engagement Level
Supplier
Salesman
Engineering
Sales Mgmt
Business Mgmt
Customer
Buyer
Manufacturing
SCM Mgmt
Business Mgmt
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SCM Strategic Sourcing & Supplier
Management Process
Category/
Commodity
Strategy
Diagnostics
Supplier
Selection &
Award
Deployment
& Transition
Supplier
Performance
Management
Continuous Improvement
• Customer
Requirements
• Organization
Requirements
• Spend Analysis
• Commodity
Profile
• Market Analysis
• Supply Base
Analysis
• Supplier
Qualification
• Communication
• Implementation
• RFQ – Supplier
Negotiation
• Contract
Management
• Supplier
Performance/
Metrics
• Supplier
Selection
• Performance
Improvement
• Contract
Authorization
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SCM Supplier Performance Management
Segment
Key
Suppliers
Identify
Supplier
KPIs
Measure &
Review KPIs
Supplier
Performance
Review
Action &
Follow-Up
Continuous Improvement
• Identify Tier 1 &
Tier 2
• Contract/SOW
• KPIs
• Targets/Goals
• Supplier Dashboard
• KPIs
• Supplier Scorecard
• KPIs
• Monthly/Quarterly
• Semi-Annual/Annual
• Stakeholder
Involvement
• Supplier
• Management/Executive
Involvement
• Supplier
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• Action Steps
• Responsibilities &
Timeframe
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Supplier Engagement - Segmentation
Preferred Suppliers
Spend Under Management
Suppliers who add significant
~ 25
Tier 1 & 2
Tier 3
Strategic
Suppliers
Key
Suppliers
long-term value – multi BU/region.
Close relationship and highly
$300M
~ 400
engaged.
Suppliers positively selected and
provide high value – multi-BU.
$600M
Tier 4
Unleveraged
Suppliers
~ 20,000
Greatest number, least value –
rationalization opportunity.
$700M
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SCM Supplier Scorecard – Example
North
Am
Region/
Function
SCM
Eaton
Average
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
Acct Mgmt 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
Category
Dashboards
Stakeholder
Surveys
Supplier
Review
Area
Supplier Difference
KPIs
Innovation
Totals
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SCM Indirect Internal Collaboration
SCM
Business Stakeholder
Manufacturing
Manufacturing
Operations
Maintenance
Engineering
EHS
Equipment &
Machinery
MRO
Facility Services
Energy
Professional Staff
Office
IT/Telecom
Travel/Fleet
Human Resources
Marketing
IT
Human Resources
Finance
Marketing
Contract SOW
Commercial
Operational
Materials & Services
Supplier
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Eaton - SCM Indirect Opportunity
2010 - 2014
Eaton Revenue
12–14% growth/yr
Indirect Spend Increase
$100–200M/yr
• APAC – 100%
Regional Increase
• EMEA – 40%
• America’s – 20%
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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.
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Eaton / CDP
Goal of CDP
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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
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Eaton GHG Footprint Categories
Suppliers Footprint
Current
Next
Logistics
Future
Air Travel
Fleet Vehicles
Electric/
Natural Gas
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Thank you for listening!
Questions ?
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Thank You …for Your
Support to Eaton!
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