How You can Recover Hidden Cash Flow from

How You can Recover Hidden Cash Flow from Your Supplier Base (Modify your title as appropriate for your audience) First Name Last Name Bold Month XX, 2015

Expense Reduction Analysts A Global Company Finding extra cash flow within your supplier base and putting it back to work in your business.

Agenda What’s the Real Opportunity for You? What are the Obstacles? What Can You Do about it? Q&A

Is this Relevant to You? You’re probably doing a good job of managing expenses Thinking it’s still possible that you’re leaving significant money on the table? Curious if you are, how much it might be, where it is, and how to get it? Some important initiatives may be underfunded? You could put Additional Cash Flow to good use

The Opportunity ERA’s Experience with over 17, 000 client projects tells us: Most companies are still leaving 10%-30% on the table across large expense categories 10% 15% 20% 30% What could Your Company do with an additional 20% added back into your budgets?

How is this Possible? 1 The Goal of any Supplier is to win as much business as they can, at the highest margin that they can. 2 Most companies don’t realize that the greatest leverage comes from understanding their Suppliers’ industries as well as their own. 3 It can be impractical to dedicate equal resources to less strategic cost categories. 4 Most companies lack real time market pricing data that creates the benchmark to know what pricing is really possible. 5 There are many Misconceptions about Procurement Best Practices.

Top 10 Common Misconceptions 01 ONE 03 THREE Suppliers give similar pricing to similar clients and customers National pricing agreements are always better than local or regional agreements with the same Supplier 02 TWO 04 FOUR Your strategy and expertise in purchasing in one cost category will produce similar results in another Supplier loyalty translates to best pricing and service

Top 10 Most Common Misconceptions 05 FIVE 07 SEVEN More volume always gets you a better deal You’re asking the right questions in your RFPs 06 SIX 08 EIGHT Getting three bids will get you to the best price Group purchasing will always get you the lowest costs

Top 10 Common Misconceptions 09 NINE Lower price means lower quality and service IS YOUR ORGANIZATION LIMITED BY SOME OF 10 TEN Lowest price is the same as lowest cost THESE BELIEFS?

You Can Find Additional Cash Flow Top 10 Best Practices in the Path to Exceptional EXCEPTIONAL GREAT BETTER GOOD

The Path to Exceptional: Getting Started 02 01 COMMIT Develop a strategy and a plan ANALYZE Analyze your actual purchasing history---It’s NOT what you think

The Path to Exceptional: Understand Yourself 03 DEFINE QUALITATIVE NEEDS Understand the qualitative requirements for each cost category – It’s NOT all about price 04 UNDERSTAND YOUR BUYING ASSUMPTIONS Many of the Assumptions & processes that drive supplier requirements are no longer valid, appropriate, or necessary.

The Path to Exceptional: Understand Suppliers • Market Trends, Pressures, Cycles 05 • New Developments & Alternatives • Terminology & Jargon SUPPLIERS & THEIR INDUSTRIES • Business Practices & Unique ways to Contract Understand each of your suppliers’ businesses and their industries like you understand your own • Cost/Price Drivers • Pricing & Terms Behavior for Similar Companies, with Similar Spends, in Other Geographies • Their True Differentiation Among Their Competitors

The Path to Exceptional: Re-evaluate 06 RE-EVALUATE Re-evaluate your current supplier relationships with these new insights 07 GO TO MARKET Go to market with written bids, proper frequency and ask the right questions

The Path to Exceptional: Execute 09 08 DECIDE, IMPLEMENT, MONITOR Implement quickly • This is equivalent to a cash leak! Fight Price Creep NEGOTIATE Negotiate More Effectively • • • Leverage all your new insights Separate negotiator & relationship owner Use pricing behavior benchmarks Help the supplier save money Know all the contracting options • Many mistakes—many line items and human error on both sides • Processes---e. g. , Off-contract purchasing • Publish pricing & SKU changes • Rebates, incentives, credits, etc. • Suppliers have many methods to recover margin Continue to Optimize over time

The Path to Exceptional: Sustain it 10 CHANGE THE CULTURE Embed a real expense control mindset into the company culture • Mindset first – techniques, policies and procedures second. • No cost is sacred • Do they spend money like it’s their own? • Do they understand the real Impact on the company, e. g. , $1, 000 Saved = $5 -10, 000 in Sales? • Are cost-saving suggestions encouraged and pursued? • Integrated into your reward systems?

How You Can Recover More Cash Flow Understand your qualitative requirements for each cost category 2 Develop a strategy and a plan Analyze and validate your actual purchasing history 1 Negotiate Better 3 8 Understand Your Assumptions & Processes Re-evaluate supplier relationships Go to market better 4 7 5 6 9 Decide, implement and monitor Embed the expense control mindset into the company culture 1100 Understand your suppliers and their industries like your own

Question & Answers

Next Steps As Promised: High-Level Analysis No Fee for Attendees Could You be Leaving Money on the Table? If so, Want to Know How Much? Where it might Be? How You Can Get It?

Expense Reduction Analysts Topic: Date: Location: Speaker: How to Recover Significant Cash Flow from Your Supplier Base Monday, Month XX, 2015 ABC Association Annual Meeting, Dallas, TX Will Finemore, Director, Expense Reduction Analysts Attendee Name ______________ Company _____________ Email Address _______________ Phone ______________ Check if You are Interested in: q Following up on ERA’s Special Offer q Learning more about ERA Services q Invitations to other ERA presentations q ERA Blog & Case Studies Y TIO N

Question & Answers