RESULTS

D.

T KEARNEY (PTY)

© _ATI(EARNEY 2001 k~3!&'?~~~;:;t;~d:t{;' '0A'v,';;hBit"<;P~1&!k&;iiliUlli*,?44,;.-~1';Te:',",}e;'f',-t~'4 ... ;(:~W*·;:'f¥,'t1f~~'''?H$~%t\';:(;;;'tt(,,%if.f'''~\,32:,{{J0r;"Sf>"h0\e0&~{~\1,t':i''?fkf;'/~'.t;'f.·~{:;c't'~?'::-h,.::""$:>;-i,.,,yL>t~ {~iy;:)<l!<~'<: ,;,,,<; to'· '.'j'\'fi9;;:d;t~&'\~:i\\:"·,,~ ,., '~':1-{;~''':. '% ;W'\l"J\ 's::;~

This document is exclusively intended for the selected recipients.

Distribution, quotations and duplications

- even in the form of extracts - for third parties is only permitted

upon prior written consent of A. T. Kearney.

A. T. Kearney used the text and graphs compiled in this report in a pmsentation; they do not represent

a compil9te documentation of the presentation.

~'~'17(EARNEY

A.T. Keamey 83/SAIMMfMal'ch 2001 2

©.ATKEARNEY 2001

SA comnanies ave recognised are expecting significant usiness enefits

ofe-p these" ..

-Anglo American

--McCarthy Motor Holdings

-Barloworld -Engen - Iscor -Old Mutual @Nedcor • Didata -Multichoice -Naspers @M-Web

@Sasol

@Bidvest

- Standard Bank

Source: Press, websites

Quadrem

Procure Trade

Miraculum

CommerceZone

Marketsite Africa "

MyMarket.com

The Trade standard

"Gartner Group estimates that by automating

purchasing transactions and processing with

Web-Based electronic procurement solution,

companies can reduce purchasing costs by

up to 30%" - Intelysis

A.T. Kearney 83/SAIMMI March 2001 3

©A'f](EARNEY 2001

e ossible en,efits are hasis is eing placed on the "e"

"procurement"

"e" El) Allow on-line access to

company wide supply contracts El) Speed the procurement process

by automating purchasing functions

El) Move towards paperless transactions

El) Capture spend data for use in future contract negotiations

e-procurement scale

materialise, ecause enough

.. Aggregate company spend El) Standardise what is bought El) Negotiate better deals with

suppliers .. Demand management .. Procurement organisation and

policies El) Reengineer existing

A.T. Kearney 83/SAIMMlMarch 2001 4

© .?J7(EARNEY 2001

Procurement practices ar1e the focus seek leverage e-procurement

leading global co

• They adopt a rigorous approach to align their business and supplier requirements

• Consequently they achieve substantive savings

" anles

III e-Procurement provides added cOlIlpliance to ensure the benefits and additional procurement . process savIngs

Leveraging e-procurement in a net market provides further benefit

Jointly this provides a solid business case

Case study - A leading clothing and consumable retailer

A.T. Keamcy 83/SAIMM! March 200} 5

© Af'I(EARNEY 2001

They adopt a rigorous requirements

Value Chain

Vallle Added

External Pllrchases

o

o

Procurement Portfolio Positioning

QOffice Supptieso

00

o circuits

o 0

Supply Market Complexity

I

Position the Sourcing Group

+

ach to align their

Strategic Sourcing Approaches Selection

Select "Best Fit" Sourcing

Approaches and Techniques

G LOW

1 Sourcing Group: Groups of external spend with similar characteristics and suppliers

lIi

• USlneSS

Wave prioritization and implementation

HIGH

III

Define, prioritize and implement opportunities

A.T. Kearney 83/SAIMMI March 2001 6

©AJ7(EARNEY 2001

Consequently ey achieve substantive savings

Fred Smith, CEO, Federal Express: "A.T. Kearney has helped enormously to address our key issues '" We have planned and implemented cost reduction programs that will return over a $ 112 billion. If

Art M2lrtinez, CEO, Sears (excerpt, Dangerous Company, 1997): HIn sharpest contrast '" A.T. Kearney consultants helped engineer one of the most stunning corporate turnarounds in recent memory."

Micha~:1 F. Mee, CFO, Bristol-Myers Squibb: "We have monumental goals of productivity improvement, purchasing is delivering now."

R. Tobiias, CEO, EH LiUy: "With A.T. Kearney's help, we have achieved nearly double our cost reduction targets."

Jack Smith,CEO, GM: "A.T. Kearney are our achievement consultants." "A.T. Keamey is really the father of our Global Purchasing Systems. It is not Ignacio Lopez; it is A.T. Kearney."

A.T. Kearney 83/SAIMMI March 2001 7

© AJ'I(EARNEY 2001

e-Procurement provides added compliance to ensure the enefits additional procurement process savings

Costs per Transaction

Source: A.T. Kearney client engagements

Price

Twenty Days

Time

Five Days

.. 0001'

Compliance ! ............................................................................................. :

A.T. Keamey 83/SAIMMI March 2001 8

@ .. AJ7(EARNEY2001

Leveraging e-procuremeIlt 4! a et market provides

5% -15%

Sourcing Group General, Facility & MRO

5% - 15% I Products Facility Services Rock Support and Timber Maintenance Spare parts

5% - 15% I Explosives Chemicals

Source: AT Keamey experience

Safety equipment IT Hardware and Software Travel Services

Co. A I Co. B I Co. C Spelld Spend Spend

A.T. Kearney 83/SAIMMI March 2001 9

©.<4.T/(EARNEY 2001

this provides a solid business case

., Interview schedules

.. Spend data collection and analysis " IT requirement assessment .. Process assessment .. Develop and select options .. Communication roll-out

r----------------------------------------------, I

It Leading practices in procurement e Significant savings potential .. Soureed spend for e-procurement

" E-enable procurement practices " Transaction cost, compliance, speed and

ease of use benefits

sourcing and e-procurement benefits generation opportunities

service opportunities

1 ______ ---------------------------------------_.

It Strategic Sourcing and e-procurement business case

It Net marketplace business case

• Revenue enhancing and shared services opportunities

A.T. Kearney 83/SAIMMI March 2001 10

©.AfI(EARNEY 2001

Case - A leading clothing and con sum retailer

III AT Keamey was engaged by the client to develop

and implement an e-procurement strategy

III With a sourceable spend base of ruo billion,

they recognised the importance of e-procurement,

and how it could assist them in achieving

significant cost savings and business benefits

III Conducted an opportunity assessment to identify sourceable spend, sourcing groups and compare their procurement practices with industry best practices

III Developed an e-procurement strategy and business case focusing on "Strategic Sourcing, then e-enabling and [mally leveraging volume in a Net Marketplace" value proposition

III Implemented the strategy through a joint project team of e-procurement, strategy and technology experts to ensure success

A.T. Kearney 83/SAIMMJ March 2001 11