CPS Workshop 2006 Existing Market Hotel Groups Independent hotels Restaurant Groups Potential Groups Healthcare Government Tenders o Prisons o Hospitals o Schools o Universities o Food Parcels Old Age Homes Mines School Groups Contract Food Groups Restaurant Buying Group Clubs B & B Buying Group Large companies with in sourced catering Airline Caterers Suppliers Categories Current Food Beverage Cleaning materials Potential Liquor Laundry Soft Furnishings Linen Kitchen Smalls Kitchen Equipment Amenities Stationery IT Hardware Printed Stationery Computer Consumables TV Sets Uniforms Business cards Travel Services Security Cleaning Laundry Landscaping Office Plants Courier Repairs and Maintenance Current Offering Price Stability o Managed, monitored o Inflation guarantee Buying Manual o Listed suppliers o Product and price details o Contact details o Customised to Buyer Account Facility o Manage accounts o Reconciliation and payment of all creditors o Single invoice to client o 30 day accounts Manage Quality and Service o Products o Suppliers Suppliers o Minimal Risk o On time payment o Volumes / potential business o Query Resolution o Sell products on behalf of suppler o Customer lock in / partial Procurement Service o Organisation and structure around the procurement process o Fraud / bribe control o Reporting o Line item price control o Price benchmarking and monitoring Cost o Rebate o Administration saving o Time and resource – productivity gains VALUE PROPOSITION Clients Professional procurement services Lowest sustainable prices Single monthly invoice o Enhanced cash flow Enhanced category of products offered Electronic procurement system o Self service admin tools to reduce fixed monthly costs o Integration services Detailed real time reporting systems Tendering service for large clients Suppliers Enhanced sales force Centralised guaranteed payment Enhanced average order size (no cherry picking) Single drop vs multiple deliveries – disciplined ordering Electronic order receipt – correct product, price RFC and POD management Centralised negotiation Proposed Increased Offering Best Nett Price Product Range / categories o Liquor? o Other service suppliers Easy to use system MMC o E mail order o On line reporting o Budget checks o Approval of orders BEE Suppliers and Tracking Payment Terms Lowest Cost provider Weaknesses Name / Brand Easy to target and undercut o Nett price / invoice price / perception of being expensive Manual costly processes o Unprocessed Pod’s Over reliance on key accounts Client churn – no contracts o Regular client visits to maintain volumes Offering a partial service – not 100% of spend o Duplicate processes for client o No control of compliancy Sales strat and pipeline o Value proposition not clear o Flexible deals Administration o Staffing incomplete o Decentralised Supplier Adoption o Take on and listing slow No Point of purchase systems o Undisciplined client ordering High client staff turnover o Training and selling Supplier support try to deal directly Staff and focus Strengths Buying Dept Buying Power / Volumes Price controls o Administration price checks Compass System Flexibility pricing policy with rebates Relationship managers National infrastructure and presence Experience in Industry o Procurement o Hospitality o Client Relationships Suppliers o Support (categorizing suppliers) Buying Manual Single invoice value proposition Part of Bidvest Group Empowerdex rating Opportunities Nett Pricing model Growth incentives with suppliers Liquor mymarket,com mymarket.com clients Increased Range Increased Markets Bidvest Procurement Exports Risks Cash flow management Bad Debt Buying Manuals Arabella Three Cities o Tender out for procurement Staff Suppliers o Losing Compass perception System migration Client loss due to change Buying Power Client contracts External procurement consultants Proposed Cost Model Different rate chart per market segment o Different base rates o Sliding scale on the admin fee 5% fixed admin fee per client Minimum fixed fee of RXXX – base on 70% of current purchases 2,5% settlement discount from suppliers Growth incentives negotiated with suppliers Supplier Adoption Fee o Penalty for not using approved Vendors mymarket.com transaction fee mymarket.com set up rates Arabella Offering (Wednesday) Currently – Earning 12.5% returning 3% - Therefore earning 9.5% of Average R400K Offer – Best Nett Prices Charge Fee of Either 5% If CPS to do all administration as current OR 3% If Arabella utilize mymarket to order and receive Minimum base price of R 15 000 ex VAT Ebrahim to negotiate a 2.5% Settlement Discount, where possible. ACTION PLAN Action Who When Sales Define target market PE Value Proposition o ROI model to be implemented (blue sheet) CR Identify list of customers per target market per PE region PE Goals in place per target market PK/CR Commission structure to be finalized TP Sales material (brochures and leave behinds) CR Rate Chart per target market Identify Sales team per region CR/PE Client Contract (2 page) CR/PK Marketing Rebranding TP Sales Brochure TP/PE Supplier Brochure TP/EH Corporate ID TP Uniforms TP Website TP Communication to clients TP/EH TP/PK Communication to suppliers TP Re brand mymarket.com system ALL Road show to clients and suppliers Financial Budget 2007 CR Done Staff salaries / increases CR/PK Staff and structure PK/CR Possible restructure – location PK/CR o Iook within Bidvest PK Company registration PK Directors PK Reporting structures CR Capex Operations Internal Conference / workshop PE Location of offices PK/CR Procurement PK/EH o Identify additional categories o Negotiate 2,5% settlement discount Migrate customers to mymarket.com system PE/TP Purchasing of equipment and office space layout TP Investigate integrated payment solution with IT IS PK Centralised creditors System Migration and Development of back office PK/BP/EH Front end Client Purchasing BP/PK/PE Supplier management PK/BP/EH Suppliers Supplier value proposition EH o Cant undercut us EH Trading agreements EH Settlement discount EH/PK Identify additional categories EH/MM Migration from Compass to mymarket.com EH/TP Communication Supplier Matrix definition EH/CR Training mymarket.com system training TIMING 19th May Feedback Conference 24, 24, 26 May ???