Procurement Excellence in the Retail Industry

#AribaLIVE
Retail Industry Track
– Ariba LIVE 2014
Tuesday, March 18
YALETOWN 2
© 2014 Ariba – an SAP company. All rights reserved.

Retail Industry Track
Tuesday, March 18, Ariba LIVE 2014
© 2014 Ariba – an SAP company. All rights reserved.2
3:00 PM – 3:15 PM Welcome – Ariba LIVE Retail Track Overview
Chris Ball, SVP Retail, SAP
3:15 PM – 4:15 PM Panel Discussion - Procurement Excellence in Retail Industry
Moderated by Todd Hallett, Manager, Solution Consulting – Strategic Industries, SAP Cloud
David Strauss, VP Procurement, 7-Eleven
Frank Corris, Global Director, Non-Merchandise Procurement, American Eagle Outfitters
Carl Hernas, Senior Director, Procurement, Coach
Nancy Rustia, Manager, Strategic Sourcing, Delhaize
4:15 PM – 4:45 PM Networking Break
4:45 PM – 5:00 PM Innovation Showcase - Retail
5:00 PM – 6:00 PM Retail Industry Roundtable
6:00 PM – 7:15PM Retail Networking Reception

#AribaLIVE
Procurement Excellence in Retail Industry
A Customer Panel Discussion
David Strauss, VP Procurement, 7-Eleven
Frank Corris, Global Director, Non-Merchandise
Procurement, American Eagle Outfitters
Carl Hernas, Senior Director, Procurement, Coach
@ariba

Introducing Customer Panelists
David
Strauss
VP Procurement
Frank
Corris
Global Director
Non-
Merchandise
Procurement
Carl
Hernas
Senior Director
Procurement
Nancy
Rustia
Manager
Strategic
Sourcing

#AribaLIVE
7-Eleven, Inc.
David Strauss, VP Procurement, 7-Eleven, Inc.
@ariba

About 7-Eleven, Inc.
Based in Dallas, Texas, 7-Eleven, Inc. is the world's largest operator,
franchisor and licensor of small-format neighborhood food stores. At
the close of 2013, 7-Eleven® operated, franchised and licensed more
than 10,300 stores in North America (including Mexico), and close to
52,200 7-Eleven stores worldwide. 7-Eleven is also one of the nation's
largest independent gasoline retailers.
7-Eleven was founded in 1927 in Dallas, Texas. The company
pioneered the convenience store concept during its first years of
operation as an ice company when its retail outlets began selling milk,
bread and eggs as a convenience to customers. The name 7-Eleven
originated in 1946 when the stores were open from 7 a.m. to 11 p.m.
Today, offering customers 24-hour convenience, seven days a week is
the cornerstone of 7-Eleven’s business.

Procurement Department
• Procurement is the
support group for
Direct and Indirect
spend amounting to
billions annually
• The department is
centralized, reporting
to the CFO, and
organized around
specific categories
CFO
Procurement
Department
Proc.
Support
for Asset
Mgmt.
Proc. Support
for
Merchandising
Proc. Support
for
Construction
Proc.
Support
for Legal
Proc.
Support
for
Facilities
Proc.
Support
for IT

Procurement Strategy for 2014 and Beyond
Through a collaborative effort with our executive team, corporate procurement strategy goals
and significant year-over-year savings objectives are established that support and further the key
initiatives for 7-Eleven’s retail food and beverage business.
• Support corporate strategic initiatives
• Continue to improve quality while decreasing costs
• Constantly improve service and cost of goods to be more competitive, offer more variety, and increase
top and bottom line savings
• Increase Global Leveraging Initiatives
Continue to leverage our talent, resources and volumes to gain efficiencies globally. We have
several projects scheduled for 2014 that will include our operations in Canada, Mexico, and the
Pacific Rim (Hong Kong, Malaysia, Singapore, Philippines, China, Taiwan).
Examples of Procurement Objectives

Sourcing with Ariba at 7-Eleven
The Retail Industry requires a procurement department to test the market, change vendors and validate pricing at
a fast pace. Our use of the Ariba Sourcing, Online Auction and Contract Management platforms greatly enhances
our ability to conduct constant, rapid sourcing events.
Opportunity
Identification &
Analysis
Strategy
Development
Souring Exercise Negotiation
Implement &
Monitor
Procurement Actions
Analyze categories
and prioritize
opportunities based
on savings potential
vs. ease of
implementation and
cultural impact to
determine plan for
strategic sourcing
program
Combine knowledge
of cost-drivers, such
as inventory, quality,
delivery, internal
business
requirements and the
external marketplace,
to develop a category
strategy
Conduct competitive
exercise
Summarize contractual
savings
Create negotiation
documents to prepare
the negotiation team
with the facts
necessary to reach
the desired outcomes
Utilize the Ariba
platform to locate
suppliers and
quickly test-market
pricing
Utilize the Ariba
Online Auction and
Sourcing platform to
rapidly drive down
pricing among
vetted suppliers
Utilize the Ariba
Contract
Management
platform to drive
contract compliance
and contract
management

Ariba Auction Successes
Procurement Category Event / Commodity Name Savings
Development Worktop Fridge / Freezers 10%
Development Electricity 12%
Development Utility Bill-Payment Service 47%
Development Refrigeration 31%
IT Pin Pad Auction 39%
 First Ariba online auction performed on December 1, 2011
 Proven record of additional savings when events go to a live-auction scenario
 Increased interest and involvement in auction process from 7-Eleven department stakeholders
and global licensees

Keys for Procurement
Excellence in Retail
Next Steps for 7-Eleven
 Always have the guest in mind. Ask yourself
“How will this impact the guest experience?”
 Keep it simple. Stores do not have time to
respond to complicated implementations
and processes
 Keep initiatives narrow and focused
 Understand the limitations of
vendor partnerships
 Implement Ariba’s Contract Management Platform
 Increase Frequency of Reverse Auction Activity
 Decrease Logistics costs associated with
decreased Cost of Goods
 Continue to source commodities (such as baked
goods components)
 Continue to expand Procurement’s influence in
traditionally untouched areas of the organization
such as Private Brands
Next Steps & Lessons Learned

#AribaLIVE
Procurement Transformation Plan
March 2014
12

13
 American Eagle Outfitters, Inc. (NYSE: AEO) is a
leading global specialty retailer offering high-quality,
on-trend clothing, accessories and personal care
products at affordable prices under its American
Eagle Outfitters® and Aerie® brands.
 The company operates more than 1,000 stores in
the United States, Canada, Mexico, China, and
Hong Kong, and ships to 81 countries worldwide
through its websites.
 American Eagle Outfitters and Aerie merchandise
also is available at 62 licensed international
franchise stores in 12 countries. For more
information, please visit www.ae.com
American Eagle Outfitters

14
Primary Goals & Deliverables
 Centralize and standardize procurement operations globally
 Implement a strong but flexible technological backbone
 Staff with professional procurement talent
 Promote speed and efficiency with no-touch catalog purchasing of goods
 Develop a transactional “Buying Center” to rapidly process low level bidding with
standard T&Cs and approval limits up to $100,000
 Develop a Strategic Sourcing “Center of Excellence” to develop and qualify new
suppliers in international markets where negotiations are complex and high touch
is required
The Mission of the Non-Merchandise Procurement (NMP) team is to develop
guardrails required to build a global procurement network to support American
Eagle Outfitters’ corporate strategy and fortify global growth.
Procurement Strategy

Current State
 Decentralized
Organization
 Customized
Technologies
 Disparate Systems
 Non-scalable
Manual Process
 Untrained
Personnel
 Unpredictable
Outcomes
 Domestically
Focused
 Reactive
 Slow
 Unmanaged
Suppliers
Future State
 Centralized Shared
Services
Organization
 Standardized
Policies and
Business Processes
 Trained
Procurement Staff
 Globally Focused
 Efficient and
Scalable
 Proactive
 Strategic
 Fast
 Managed Suppliers
 Nearly 90 FTEs have
been identified as
performing purchasing
functions outside of NMP
 There is no enterprise
Procure-to-Pay (P2P)
technology at AEO.
Technologies that do exist
are piecemeal
approaches which are not
integrated to work
together, making global
integration impossible
 Therefore, visibility and
categorization of the
spend is severely limited
 Standardize the
technology platforms,
policies and
procedures to create a
process which is
consistent and scalable
 Centralize strategic
sourcing and
contracting activities to
NMP
 Requisitioning stays
within the business
units
 Develop long-term
business strategies by
category
 Gain the ability to
Source and Transact
globally
Non-Merchandise Procurement Roadmap

All figures are estimates and in $ millions
$1.3B in non-merchandise spend annually
$557M is considered “addressable” spend
$0
$100
$200
$300
$400
$500
$600
Addressable Spend Corporate Services Store Operations Construction &
Facilities
IT/IS Marketing
Addressable spend varies year to year and is dependent on individual
contract length and expirations dates
Non-Merchandise Procurement Spend Categories

Achieving Procurement Excellence at Coach
with Ariba
Carl Hernas
Senior Director, Procurement
AribaLIVE 2014

About Coach
Global leader in premium handbags and accessories
Over 1,000 direct owned and operated stores
Over 15,000 employees in over 20 countries
21 © 2014 Ariba – an SAP company. All rights reserved.

How Procurement works at Coach
 Procurement Organizational setup at coach  center-led reporting to finance
 Sourcing and Procurement Operations Teams focused on Indirect
 >7,000 suppliers in 20 countries
Undergoing significant changes to improve
 Improved compliance to policies
 Ability to pay suppliers on-time
 Contracts/agreements are honored
 Source to Settle process improvements
Procurement Challenges & Operations at Coach

 Sourcing has yielded savings in excess of $40MM on an annual basis
 Wave 1 has launched and completed with significant improvements
– Improved compliance
– Pre-purchase approval
– Significant usage/acceptance of the Ariba Network
– Great engagement from users
 Wave 2 and 3 in process now
 International Business Units next fiscal year
Success Highlights at Coach with Ariba

Ariba Procurement Solutions @ Coach
Ariba Sourcing
Deployed in 2009 as an On Demand cloud solution
Strategic sourcing and project management
Leveraged globally for centralized spend categories
Heavy use in North America, China, Japan ~100 users
Ariba Procure to Pay
Operational procurement system for end user requisitioning, catalogs, contract
compliance, approvals and purchase orders
Global deployment currently in progress as an On Demand cloud solution
FY14 North America, leveraging Ariba Consulting Services
FY15 China, Asia, Japan, Europe

Key Accomplishments/Lessons Learned
Don’t underestimate change management
Leverage any relevant HR, Training or Change teams
Capture their experience in deploying other large systems
Be as clear as possible with users regarding the rationale
Utilize a phased approach
Decide what dimensions of deployment are important to you, spend
category, region, process type, etc.
Deploy in chunks that are strategic for success, not necessarily immediate impact

• Look at the big picture: policy, technology and process
• Continually revalidate your base procurement data
• Make it easy for staff to do the right thing with standard processes
• Identify and use all available communication and governance channels
• Get buy-in from the top and get your execs to deliver communications
• Implement in phases; apply learnings to each go-live
• Include SMEs and Ariba in your project; work as one team
• Hire a change manager to help reduce resistance and inertia
• Engage suppliers early, often and consistently
• Don’t underestimate how much effort is involved
Quick Thoughts on Developing Your Program

#AribaLIVE
Delhaize
@ariba

5/31/2012
March 10, 2014
Strategic Sourcing
Ariba LIVE Presentation

5/31/2012
Who is Delhaize America?
Delhaize America, one of the nation’s largest supermarket
operators, has more than 1,500 stores along the East Coast.
Delhaize America companies include Bottom Dollar Food, Food
Lion, Harvey's, Hannaford Supermarkets, Reid’s and Sweetbay. Each
banner has a distinct identity and well-established brand image within
its respective markets across 18 states, offering market-specific
products and services to meet the unique needs of its customers.
Delhaize America employs more than 100,000 full-time and part-time
associates. The company is part of Delhaize Group (NYSE: DEG), an
international grocery retailer based in Brussels, Belgium.
29

5/31/2012
Direct and Indirect:
Strategic Sourcing leads the price negotiation for both Direct Non-Branded
(for resale) and Indirect (not for resale) Categories of spend for Delhaize
America.
Annually we support the following volumes of sourceable spend;
• Indirect> $2b
• Direct> $3.1b Cost of Goods
We execute 400 RFx events annually; approximately 30% of these events are
in new categories or previously unsourced.
Our “run rate” of average savings delivered annually is:
• Indirect = 9%
• Direct = 3%
30

5/31/2012
Value proposition:
Strategic Sourcing reports through Supply Chain at Delhaize America.
The Team was created with Indirect in 2005, and grew to include
Direct in 2009.
Our core value proposition is to provide a systemic, transparent and
repeatable process to our internal Business partners that consistently
delivers value.
The foundation of our process is “Six Step” sourcing methodology. We
offer fact based analytics to our Stakeholders who make all award
decisions. We ensure that Suppliers invited to our events are treated
fairly and provided as much information as possible regarding our
award intentions and business strategies.
31

10/03/2014
632
Strategic Sourcing Process
Six Step Sourcing Process / COGS, Expense & Capital
• Review Statement
of
Work, Specificatio
n for
product/service
• Review current
Supplier(s)
performance
• Review current
contract
• Determine award
strategy / goals
for event
• Develop scoring
metrics for event;
price and non-
price factors
• Set timelines and
next steps
E V E N T
P R O F I L E
M A R K E T
A N A L Y S I S
E V E N T
S T R A T E G Y
E N G A G E
M A R K E T
A W A R D /
C O N T R A C T
• Identify additional
/ new Suppliers in
Category
• Research market
conditions, and
industry trends
• Evaluate SOW /
specification to
marketplace norms
• Create RFx
Questionnaire to
assess suppliers
ability to provide
non-price factors
determined at Kick
off
• Start QA/Test
process
• Finalize Suppliers
to participate in
event
• Sourcing
coordinates
potential site
visits, reference
checks, capacity
confirmation
• Sourcing executes
price collection;
selected Suppliers
invited to
participate in
event ; using
eSourcing
tool, model, or
negotiation
M A R K E T
N E G O T I A T I O
N
• Sourcing provides
event
reporting, includi
ng Supplier
results and award
scenarios for
Stakeholder
review /decision
• Stakeholder Team
determines next
steps; ( additional
negotiations, adv
anced auction)
• Contract terms
are considered
and included as
part of final
negotiations
• Stakeholder review
of market, Supplier
discovery, and
QA/Test results
• Consider change of
SOW /
specification, (if
warranted)
• Review award
strategy ; confirm
or update
• Sourcing
recommends price
collection method
based on Business
Owner event goals
and market
findings
• Stakeholders finalize
award decision
• Sourcing issues award
/ denial letters to all
event participants;
letters approved by
Business Owners
• Sourcing initiates DA
contract process and
manages red-line
process through
contract execution /
upload
• Event Summary is
finalized and
submitted; Indirect -
(FP&A, Direct –
Category)Direct Sourcing
• Center Store
• Produce/Meat/Seafood
• Deli/Bakery/HMS
• Pharmacy
Indirect Sourcing
• DC Supplies and Equipment,
• Corporate Services
• Store Supplies, Equipment, Retail Services

5/31/2012
Delhaize and Ariba:
Delhaize Group has used several sourcing tools in our
sourcing evolution prior to Ariba; WWRE, Procuri and AGX.
We began our relationship with Ariba in 2010 and purchased
the Sourcing and Contract Management modules.
We continually evaluate additional modules and their potential
value to Delhaize. We are currently considering opportunities in
our Contract Management processes and are considering an
additional Ariba module to assist as we deploy a new
organizational contract management vision.
33

5/31/2012
Strategic Sourcing Success Stories:
Telecommunications;
• Partnered with a new Business Team to execute an RFx event in one of the
largest areas of spend for this Team
• Long term (20+ year Incumbent), significant disruption and risk if we moved
to new Supplier for these services
• Utilized Total Cost of Ownership (TCO) early in process where Business
Team quantified non-price factors and their associated values as well as
hurdle amount to make transition
• Event achieved a 58% savings over previous costs, delivered over $6m in
first year savings and we negotiated with new Supplier to cover all our
transition costs
34

5/31/2012
Strategic Sourcing Success Stories:
Our Brands Snack Nuts Sourcing Project:
• Conducted extensive supplier discovery. Worked closely with all of the
suppliers and coach new ones to increase participation and competition
• Partnered with our economic insight team and leveraged their input to
identify potential opportunities and future projections based on the crop
• Worked with our R&D team to establish clear product specifications for the
suppliers to match during the sourcing project
• Utilized Total Cost of Ownership (TCO) early in process where Business
Team quantified non-price factors and their associated values as well as
hurdle amount to make transition
• Event achieved a 26% cost of goods savings($3.5M) versus historical costs
35

5/31/2012
Categories with Best Traction:
Initially, the Indirect Team focused on commodity categories to drive results;
e.g. front end bags, deli oil, product packaging, small wares, and office
supplies.
As we ran these categories multiple times, we have sought not only new
approaches to the repeating categories but also looked for new areas of
addressable spend. We applied our same processes and methodology
providing a quantifiable result to our Business Owners in Services.
Our most recent successes have been in more highly complex services
categories; e.g. Corporate and Store Bank Fees, Insurance Brokers, Waste
Services.
36

5/31/2012
Strategic Sourcing Challenges:
Sustainability of Sourcing:
• How do we grow our influence, consistently deliver great results and
continue our momentum year over year?
• Drive the evolution from transactional sourcing to strategic relationships
Suppliers:
• As commodity markets and Supplier bases shift, how do we drive
successful events and strategies in categories with highly volatile
commodities and limited Suppliers? We currently tie pricing to commodity
and index and adjust at mutually agreed intervals. Crop based event are
typically annual awards due to the volatility of the markets.
37

Questions for Our Panelists

Procurement Excellence in the Retail Industry

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