SAVING THROUGH PROCUREMENT MODERNIZATION BDO CANADA LLP SAVING

SAVING THROUGH PROCUREMENT MODERNIZATION BDO CANADA LLP

SAVING THROUGH PROCUREMENT MODERNIZATION Procurement Modernization generates positive bottom-line impact through cost savings, productivity gains, and process efficiencies. Plus, businesses that undergo Procurement Modernization experience competitive advantages by generating closer, more strategic relationships with suppliers and fostering higher employee satisfaction. 2

PROCUREMENT MODERNIZATION BDO’s Approach STEP 1: Do you have a Spend Management Strategy? STEP 2: What does your Spend Management Strategy look like? STEP 3: What elements does your Spend Management Strategy address? STEP 4: How do you apply your Spend Management Strategy? STEP 5: How are you buying – using 20 th or 21 st century tools?

STEP 1: DO YOU HAVE A SPEND MANAGEMENT STRATEGY? A Spend Management Strategy addresses all indirect, non-payroll spend. Studies show that organizations without a Spend Management Strategy are typically paying as much as 10% more on indirect, non-payroll spend than they should. Even organizations that have a Spend Management Strategy in place can benefit from reviewing regularly and updating. 4

STEP 2: WHAT DOES YOUR SPEND MANAGEMENT STRATEGY LOOK LIKE? 5 What are you buying? When are you buying? From whom are you buying? How much are you spending?

STEP 3: WHAT ELEMENTS DOES YOUR SPEND MANAGEMENT STRATEGY ADDRESS? 6 What goods, services, equipment and capital projects make up your spend profile? Is there a cyclicality to your business that should be considered? Who are your Top 10 suppliers? Do you tend to buy from the same suppliers? Do you keep up-to-date with market developments? Do you shop around to get the best deals? Is your indirect spend increasing or decreasing? Are there mechanisms in place to ensure that you are paying a competitive price and optimizing the value of your supplier relationships?

STEP 4: HOW DO YOU APPLY YOUR SPEND MANAGEMENT STRATEGY? Take action: ü Negotiate better prices ü Get more spend under contract ü Improve your supplier relationships ü Synchronize your spend with your business cycles 7

STEP 5: HOW ARE YOU BUYING – USING 20 TH OR 21 ST CENTURY TOOLS? Organizations that use labour and paper intensive processes find that, on average, each purchase transaction costs between $80 and $150 end-to-end. Implementing end-to-end procurement technologies has the potential to realize significant productivity gains with substantial savings. Procurement technologies reduce transaction costs and time in the procure-topay cycle. This is illustrated in the following metrics from a recent Materials Management Magazine study. 8

MATERIALS MANAGEMENT MAGAZINE METRICS Process Step Manual (minutes) e. Procurement (minutes) Product Selection 20 3 Availability/Price Check 10 1 Requisition Creation 11 2 Requisition Approval 21 3 PO Generation 11 0 PO Approval 3 0 Send PO to Vendor 14 0 PO Confirmation 4 0 Status Check 11 1 Receive Shipment 12 2 Match Invoice, Receipt, etc. 8 5 Process Exceptions 8 3 Payment Approval 4 3 Payment Generation 8 5 Process Returns 5 3 150 31 Average Staff Cost per minute (at $65, 000 + benefits) $0. 60 Cost per purchasing cycle $89. 66 $18. 53 Total Minutes/Purchasing Cycle 9

APPLICATION OF METRICS TO CLIENT CASE STUDY Recent BDO Client Data Manual e. Procurement Total Minutes/Purchase 150 31 $89. 66 $18. 53 Annual Minutes (7000 purchases X minutes/purchase) 1, 050, 000 217, 000 Annual Cost (7000 purchases X cost/purchase) $627, 620 $129, 710 Total Annual Minute Savings 833, 000 79% Total Annual Cost Savings $497, 910 79% Total Cost/Purchase 10

HOW WERE THE CASE STUDY SAVINGS ACHIEVED? ü Replacing manual, paper-based Purchase Orders and supplier Invoices with electronic documents ü Automating administrative tasks, such as PO / Invoice / Receipt reconciliations (2 - and 3 -way match) ü Eliminating redundant tasks ü Creating user profiles to ensure control and visibility ü Automating workflow for approvals 11

ADDITIONAL BENEFITS ü Early payment discounts (include in contract negotiations) • Also likely to receive discounts for ordering and paying electronically ü Better supplier relationships • Higher quality of services – you get their best staff / team • Increased flexibility when things are tough • Priority over other clients • Reduces your suppliers’ order processing costs • You become your suppliers’ best customer • Benefits related to e. Procurement technologies are experienced on both the buy and sell sides

ADDITIONAL BENEFITS ü Reliable and efficient procurement tracking • See trends and flag issues quickly (all the information is in one place) • Adjust your spend with speed and precision • Include compliance measures to enforce procurement policies effectively and to reduce the potential for rogue buying and inappropriate or fraudulent activity

PROCUREMENT TECHNOLOGIES More Accessible and Affordable Than Ever! Optional features allow small and medium-sized organizations to adapt the technologies to their needs and budgets. Lots of price points exist in today’s marketplace. Cloud-based applications and Software-as-a-Service eliminates much of the burden associated with installing, maintaining and supporting on-site, internally-hosted solutions. Sophisticated middleware solutions enable integration with existing ERP & Financial Systems. Amazon-like user interfaces make training and implementation simpler and more user-friendly. 14

BDO CANADA BDO is the world's fifth largest full-service assurance, accounting, tax, and advisory network. For over 90 years, BDO has provided 50, 000 clients with business, accounting, and tax advisory services, building a reputation for being one of the leading professional service providers in Canada. 15

BDO CANADA BDO’s Advisory Services Practice has a national business line dedicated to Procurement Advisory Services, which we began providing in 1989. Our Procurement Centre of Excellence, located in Toronto, is the forefront of Procurement Modernization with a demonstrated track record for positive contributions to strategic sourcing and procurement. Our Procurement Advisory Services team is among the most mature in Canada with: • over 100 years of experience in planning, orchestrating, and provisioning procurement initiatives; and • over 1, 400 successfully completed procurement assignments, representing a consolidated contract value in excess of $35 billion. 16

BDO PROCUREMENT ADVISORY SERVICES Ian Brennan, CSCMP Vice President Ian Brennan is the Vice President of Procurement Advisory Services and the National Procurement Practice Lead for BDO. Ian, along with his team of professional procurement practitioners, strives to deliver procurement projects within a proven process that delivers the business outcomes the organization is seeking. Ian has over 24 years of procurement and supply chain experience. Ian has worked in the retail, services, manufacturing sectors and has been providing procurement consulting services for over 10 years. 17 Diane Horvath, J. D. Manager Diane provides expert advice and services to the public, broader public, provincially funded, not-forprofit and private sectors. As a versatile lawyer and senior procurement professional, she brings 30 years of experience in Canada and the U. S. to her consulting practice. Prior to launching her consulting career, Diane worked in the legislative, executive, and judicial branches of government at the local, provincial/state, and federal levels, as well as in higher education. Diane’s broad commercial expertise includes policy and strategy development, drafting procurement documents and contracts, vendor management, negotiation and compliance.

BDO PROCUREMENT ADVISORY SERVICES Stephen Whittaker, P. Log. Manager Stephen Whittaker focuses on Procurement Modernization, P 2 P/S 2 P (e. Procurement) system evaluation, selection, and project management in addition to leading client RFx initiatives. Prior to joining BDO Stephen spent over 10 -years as Director of Procurement Services with the University of Toronto where he was responsible for leading procurement transformational initiatives including the implementation of SAP supply chain modules; P 2 P; p. Card; project management for complex RFPs; policy development & compliance monitoring. 18 Sean Owen, CSCMP Manager Sean Owen is responsible for managing and delivering the procurement, fairness and management consulting engagements with the federal, provincial, municipal and broader public sector within the province and private sector clients. Sean has over 22 years of progressive experience in strategic sourcing, procurement, contract management and supply chain management in the public sector.

THANK YOU 647 285 2038 Contact Us www. bdo. ca Services → Advisory → Procurement ibrennan@bdo. ca