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AberdeenGroup 2009
The Journey fromCPO to CEO
Andrew BartoliniVice President,
Global Supply Mgmt. Research
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We intend to operate with strict financialdiscipline, maintaining a maniacal focuson cash. We're also closely managing all
of our costs, renegotiating contractsaround the world, localizing oursourcing
~ Indra Nooyi, CEO, Pepsi
CPO CEO Alignment
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The CFOs View Cash is King
When asked what his top priority was for 2009,one CFO replied, Survival.
CFOs Survival Guide (Top Priorities):
Cost Reductions 73%
Working Capital Optimization 70%
The CPO is also aligned with the CFO
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We have been driving a payment terms initiative that
has extended our usual terms from 20 days to 60days, resulting in an estimated annual cash benefit ofbetween $50 and $60 million.
~ CPO, Fortune 500 Company
We're very focused on the working capital impact ofthe contracts we negotiate, how inventory is
managed, and our payment terms.~ CPO, Manufacturing
Smart Strategies
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Aberdeen recommendations:
Engage the CFO to optimize workingcapital
Demand management
Asset utilization improvement programs
Smart Strategies Cash Management
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AberdeenGroup 2009
The Journey from
CPO to CEODavid Parsley
President/CEOCentralized Supply Chain Services, LLC
November 18, 2009
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Session Agenda
Steps to ensure success
Leadership was critical
CSCS is formed
Opportunity
IHOP Corp. acquires Applebees
What is Centralized Supply Chain Services?
David R. Parsley
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Centralized Supply Chain Services (CSCS)
Purchasing cooperative owned by the Member restaurantoperators of the Applebees and IHOP systems
CSCS is an independent company from DineEquity or itsBrands
Exclusive buying agent for the Applebees and IHOPsystems
$1.8B in spend under management 44 team members
Offices in Lenexa, Kansas (HQ) and Glendale, California
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Where the Journey Began
IHOP Acquires Applebees
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The Opportunity
Leveraging the combined purchasing power of the systems
could save MILLIONS
$1.8B combined annual spend
3,300 restaurants
77% of suppliers shared across brands
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The Challenge The Supply Chains Were Different
Transparency and system wide leverageNumerous side-deals and sheltered
income
Leveraged scaleDilution of buying power
Data visibility and system supportLimited technology support and/oraccess to data
Approved products and suppliersProliferation of unapprovedproducts/suppliers
Staffed appropriately for the systemMinimal staff
Category ExpertiseGeneralists
ContractsPrice focused: verbal & priceagreements
Process focusedActivity focusedStrategically focusedTactically focused
FacilitationFacilitation ManagementManagement
Today Today
Transparency and system wide leverageNumerous side-deals and sheltered
income
Leveraged scaleDilution of buying power
Data visibility and system supportLimited technology support and/oraccess to data
Approved products and suppliersProliferation of unapprovedproducts/suppliers
Staffed appropriately for the systemMinimal staff
Generalists
ContractsPrice focused: verbal & priceagreements
Process focusedActivity focusedStrategically focusedTactically focused
Facilitation (IHOP) Management (Applebees)
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The ChallengeThe business model was changing
IHOP Corp. (now DineEquity) began applying the IHOPbusiness model to Applebees
Re-franchise a majority of company-owned Applebeesrestaurants
Less company-owned restaurants requires less corporatesupport
Downsize administrative functions including Supply Chain
How could we still capture the combined systemspurchasing power when Supply Chain was being
downsized?
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Successful Co-op Models
This was not a new idea in foodservice
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Sizing the Prize
IHOP Corp. commissioned the Size the Prize study
Project team established to develop a business case
Third-party consultants
Applebees franchisee leadership
IHOP franchisee leadership
Brand representatives
Supply chain leadership Business case confirmed MILLIONS in savings
opportunities over time
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Road Show to sell the value of a Co-op
US Map with road show cities
Newport Beach
Houston
Philadelphia
Boca Raton
Glendale
Kansas City
Various Franchisee Meetings
San Francisco
Hawaii
Las Vegas
Chicago
Dallas
TampaJacksonville
AtlantaGreenville
LouisvilleWashington DC
New York City
Buffalo
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The Result
CSCS was formed
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The Supply Chain Team was critical in this transition
Formation of the Co-op was not guaranteed
Risk of staff job loss
Only one resignation
Majority of staff from Applebees SCM team
Demonstrated results
Confidence of the franchisees
Leadership was critical
Had to sell the idea
Continued to deliver results
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My Foundational Components of Leadership
Philosophical Foundation
PEOPLE ARE PARAMOUNT
Continuous improvement
Change management
Education, resources & tools
Create a Safe environment
Accountability, Responsibility, Authority
The Renaissance Manager
David R. Parsley
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The Renaissance Man
MichelangeloMichelangeloLeonardoLeonardo
da Vincida Vinci
Pa in t e r Scu lp t o r A rch i t ect Poe t Eng ineer
Mat hem at i ci an Eng ineer I nv en t o r Pa in t e r Scu lp t o r
Bo tan i s t Mus i c i an Wr i t e r
.Ver sa t i le in Mu l t ip le D iscip l in es.
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The New Supply Chain Professional
Supply-chain managers used to have one mainjob: purchasing stuff cheaply. They need a whole
new skill set now.
- The Wall Street Journal, March 10, 2008
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The New Supply Chain Professional
Knowledge discipline
Relationship discipline
Process discipline
Technology discipline
Other skills and attributes
David R. Parsley
The "Renaissance Manager"
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The Result is this Ideology
Every position is critical or it shouldnt exist
Therefore, every person adds value
Therefore, every person has the right and responsibilityto
Speak up, challenge the status quo
Advocate their ideas
Contribute
Continuously improve
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The Result is this Ideology
Consistently good performance can lead to greatness
Find something you like and become good at it
We are all here to serve
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Three Golden Rules for SCM Executives
Surround yourself with great people
Make sure those people are given all the support,resources and training that you can possibly provide
Make your goals and objectives absolutely clear, sotheres no confusion and everyone is aligned andfunctioning as a team
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Steps Were Taking to Ensure Success
Continuing to develop "Renaissance Manager"
professionals Implementing technology, process & tools
Applying key leadership principles and change
management / continuous improvement
Prioritizing opportunities and EXECUTING
David R. Parsley
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Thank you
David Parsley
President / CEOCentralized Supply Chain Services, LLC
913.890.0111
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Stacked Column Chart
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28 AberdeenGroup 2009 Proprietary and Confidential Information of Genesis Management, LLC
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