deutsche post dhl sourcing project 2010 - geo · deutsche post dhl sourcing project 2010 agenda •...
TRANSCRIPT
SESSION 7.2
Deutsche Post DHL Sourcing Project 2010
Christopher JerebConstantin von Schönfels
Andreas Schmalhofer
Christopher Jereb Constantin von Schönfels
Andreas Schmalhofer
SESSION 7.2 Deutsche Post DHL Sourcing Project 2010
Agenda
• Introduction Deutsche Post DHL • Setup and Organization of Share Matching Scheme Project • Description of Sourcing Process and -Tools • Getting Clear and Define our own Minimum Requirements • Negotiation Strategy and Outcome • Market Feedback and Lessons Learned
Introduction Deutsche Post DHL
• Delivers 72 million mail items to 40 million households in Germany
• DHL Global Mail largest network for mail distribution worldwide
Revenue: 14.4 bn€ FTE: 146,184
• Cross-border express service
• Presence in 220 countries and territories
• 6,500 branches • 4.2 million customers
• Air & Ocean freight • One of Europe's leading
road freight forwarders • Rail activities • 3,000 locations • Strong customer base
(>50% of Forbes 500)
• Contract logistics • 3.5 million m2 managed
warehouse space • Leading provider of
Corporate Information Solutions worldwide
GLOBAL FORWARDING,
FREIGHT EXPRESS SUPPLY CHAIN
Revenue: 13.6 bn€ FTE: 112,420
Revenue: 14.2 bn€ FTE: 41,602
Revenue: 13.8 bn€ FTE: 141,060
Revenue: 54.4 bn€ Underlying EBIT: 2.4 bn€
Note: Reported Financial Figures as per 2008 (Source: Annual Report 2008)
In 2009 DPDHL introduced a new Share Matching Scheme (SMS)
Following the plan design the following challenges were identified:
• How to manage and administer the plan?
• What aspects and functions need to be invloved?
• Are there service providers for our global reach?
• Which services should be performed in-house?
• What are the total costs associated with the administration ?
It was decided to carry-out a thorough sourcing process to select an appropriate service provider
Setup and Organization of the Share Matching Scheme Project
Sponsors/ Steering Committee
SMS Administration
Local SMS Coordinator
Communication
IT / Organization /Intranet
Data Protection
Corporate Finance/Treasury
Payroll
Legal
Corporate Executives Financial Accounting
Tax
Project Management
Corporate Procurement
Stakeholderteam/ Workstreams
Description of Sourcing Process and Tools (1/2)
DP DHL Sourcing Process
A five-step sourcing process is used to include all dimensions for a strategic decision making
Demand Analysis
Supply Analysis
Sourcing Strategy
Development
Supplier Selection
Implemen-tation
1 2 3 4 5
Timeline
No. of suppliers
May 09 Jul 09 Jul 09 Oct 09 ongoing
11 5 3 1
Review Gate 2
Review Gate 3
Review Gate 1
Description of Sourcing Process and Tools (2/2)
Two dimension, capability (quality) and competitiveness (cost), define the preferred supplier
Joint Decision
Processes
IT
Security
Expertise and Experiences
Companies Info
Supplier Capability Evaluation
Request for Information Request for Proposal
Contract feedback & critical questions
Rebates
Additional expenses
Service Charges
Supplier Pricing
Evaluation
Qua
lity/
C
apab
ility
Cost/
Competitiveness
Provider Scoring
Best Supplier H
H LL
1 2 3 4 5
Getting Clear and Define our own Minimum Requirements (1/3)
Evaluation Dimensions Weight
Global presence 10%
Expertise & Experience 20%
IT 20%
Project Set-up 5%
Share Administration 20%
Support Processes 10%
References 5%
Solutions 10%
Manual Calibration
The intensive, weighted Request for Information (RFI) assured a preference based capability (quality) scoring
1 2 3 4 5
Rating for each element of categories from 1-10 based on significance Bottom-Up
Definition of investigation areas
Top-Down based on experience of subject matter expert
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Getting Clear and Define our own Minimum Requirements (2/3)
1 2 3 4 5
Please describe the implementation approach and size of the team.
What are the key success factors of your approach?
1 Very general description of the team, e.g. “8 – 10 employees not always fulltime”
Sales phrases, like “quick and professional implementation, high qualitative service, etc”
2 + Support functions mentioned + Unique Selling Points (USP) are generally specified
3 + general content of tasks of the team + 2 - 3 clear described USPs
4 + detailed description of tasks of each team member
+ 2 – 3 clear described USPs supported by testimonials
5 + detailed KPIs, rules & responsibility description of each team member
+ USPs also documented in e.g. analytical results, process
Examples for achieving the scores
Getting Clear and Define our own Minimum Requirements (3/3) The RFI led to a first ranking of the long listed suppliers and was the base for the RFP supplier short list
ILLUSTRATIVE
Supplier Score RFI Live Presentation
Score Live Presentation
Total score (50/50) RFP invitation
Supplier A 3,2970 yes 3,8364 3,5667 yes
Supplier B 2,9704 yes 2,9778 2,9741 yes
Supplier C 2,9530 yes 3,1200 3,0365 yes
Supplier D 2,9344 yes 3,8000 3,3672 yes
Supplier E 2,8734 yes 2,5600 2,7167 yes
Supplier F 2,7270 yes 1,5800 2,1535 no
Supplier G 2,7134 no
Supplier H 2,6145 no
Supplier I 2,5513 no
Supplier J 2,2537 no
Does not meet
Partially meet
Fully meet Exceeds Far
exceeds 1 2 3 4 5
0 - 1,4 1,5 - 2,4 2,5 - 3,4 3,5 - 4,4 4,5 - 5
1 2 3 4 5
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Negotiation Strategy and Outcome (1/3)
The Product Positioning Matrix defines the negotiation strategy
Leverage • Use competitive
advantage • Volume used as
negotiation lever
Strategic • Ensure long-time
supply • Relationship-building
and process integration
Non-critical • Standard sourcing
process (efficiency) • Reduce number of
suppliers and simplify order process
Bottleneck • Reduce risk to price
increases/ supply disruption
• Secure sources and search for substitutes
Supply Market Complexity
Bus
ines
s Im
pact
Low High
Low
H
igh
• Spend base impact • Customer value impact • Product differentiation impact • Leading technology impact • Failure impact
Business Impact
• Industry Rivalry • Buying Power • Sourcing Constraints and
Restrictions
Supply Market Complexity
1 2 3 4 5
Negotiation Strategy and Outcome (2/3)
1) One off implementation and set up costs
3) Annual administration & services
5) Corporate banking and transaction prices for DPDHL
7) Banking and transaction prices for plan participants
Difference 1st offer against market average
Difference 2nd offer against market average
Difference 3rd offer against market average
The detailed cost brake down allowed a detailed negotiation approach on the different cost drivers
Cost Brake down Cost effects against market avg. of 1st offer
1 2 3 4 5
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Negotiation Strategy and Outcome (3/3)
The final competitiveness (cost) score compared to the capability (quality) score let to the selection of the supplier
Supplier Positioning Matrix R
eque
st fo
r Inf
orm
atio
n - R
FI
Request for Proposal – RFP
Supplier B
Supplier A
Supplier D
Supplier E
Supplier C
deselect
select
Supplier B
Supplier A
Supplier D
Supplier E
Supplier C
1 2 3 4 5
Market Feedback
‘The RFI was perceived as to extensive with partly ambiguous questions on plan design.’ DO ask all your questions!
‘The precisely timed and closely coordinated live presentation and Q&A session with the full DP-DHL Team was well appreciated.’ Plan your Beauty Contest well ahead
and act concerted
‘The fee schedule template was perceived much to detailed, but the feedback round was highly appreciated.’ Outlined drivers for effort and costs
will boost your negation power
‘Intensity of tender high above market average. Very transparent, but with a lot of uncertainties about the requirements.’ This intense tender allowed us to learn
and build our knowledge
Average [Std.Dev]
1 = very poor 2 = poor 3 = neither 4 = good 5 = excellent
1,00 2,00 3,00 4,00 5,00 0,00
3.28 [1.01]
3.90 [0.58]
3.57 [0.85]
3.71 [0.63]
Request for information (RFI)
Live presentation
Request for proposal (RFP)
Overall process
Finally we asked providers on…
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Lessons Learned
• Identification and early involvement of a relatively high number of stakeholders was crucial
• The precise scoping and definition of the requirements in advance supported the negotiation position and helped to prevent misunderstandings and change requests
• The breakdown of cost components and the assigned volume and demand grid provided DPDHL with the opportunity to understand the cost drivers and negotiate appropriately
• To get clarity of the requirements from the beginning can be considered as relatively time-consuming and resource intensive
• The structured approach enabled a transparent process to be carried out, which was well-perceived by the participating service providers
• This was confirmed in a final feedback survey which was carried out after the finalization of the sourcing process. However, the RFI was criticized as being too expensive and rather unusual at this stage compared to other projects
Questions?
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Contact Details
Christopher Jereb
Deutsche Post DHL Charles-De-Gaulle-Str. 20 53113 Bonn
Germany
Constantin von Schönfels
Deutsche Post DHL Charles-De-Gaulle-Str. 20 53113 Bonn
Germany
Andreas Schmalhofer
Allianz SE Königinstrasse 28 80802 Munich
Germany