Creative ways business data can be used to measure, manage & drive compliance to enterprise contracts & preferred procurement processes for creating and implementing strategies which uncover savings opportunities and drive compliance.

2. KEY STRATEGIES TO DRIVE
COMPLIANCE
Monica Graham,
Director, Technology Sourcing
October 23, 2012

3. Agenda
 Company Overview
 SCM Organization
 Challenges and Goals
 Situation and Process Analysis
 Case Study
 Lessons Learned

4. Company Overview
Vertis Communications is one of the top producers of advertising
inserts and direct marketing/direct mail solutions in North America
 Key Facts
– Industry: Marketing Communications
– Size: Top 10 commercial printer in U.S.
– Revenue: $1.1B, Private equity
– Facilities: 25 production sites
– Employees: 5,000

5. Vertis Communications Facilities
Portland
Shakopee
Stevensville Springfield
Greenville
Sacramento
Chalfont
Medina Bristol
Marengo York N. Brunswick
Salt Lake
Westampton
Boulder Columbus Manassas Monroe
Lenexa St.
Louis
Irvine So. Cal
Charlotte
Dallas
Lufkin
Legend Houston
Advertising Inserts Tampa
Direct Marketing
Specialty Print

6. Vertis Supply Chain Organization

7. Challenges
Vertis Spends Millions

8. Goals
Spend
under SCM
Standard control
procurement
procedure Contract
Compliance
Item level
spend
information

9. The Situation
 Over $1 billion annual spend
– Indirect spend categories account for 30% of total spend
– SCM controlled less than 10% of total indirect spend
 SCM only controlled direct materials spend
 Cost saving tactics were non-collaborative
– Heavy reliance on corporate rebates that did not benefit plant P&L
 Inherited D&B “Supply Optimizer”

10. The Process
Categorization
Opportunity Assessment
Implemented UNSPSC
with Local Management
Improved SCM Involvement
Long lead-time to get Joined Group Site visits to plants in
spend analysis results Purchasing conjunction with other
Organization (GPO) business in the area
Spend analysis is
unreliable because of Increased staff Created three Regional
poor quality data Supply Chain Manager
positions
Synergy Savings

11. The Tools
Discovery
Spend Analysis e-Procurement E-Sourcing
Services
• Quarterly spend • Integrated with • Targeted reverse • Supplier
data categorization business unit auctions identification and
ERP’s qualification
• Implemented (“Go
Live”) September
2011

12. Path To Success
ROI
Cost –
Benefits
Ease of
Use
Timely
Turnaround
Data of Spend
Currency Analysis
Capture
ALL
Accurate Spend
Categoriza Data
Right tion
Taxonomy

13. Identify Savings
Opportunities by reducing
the number of suppliers Click Next to set Filters

14. This category has the highest number of
suppliers under the category of Information
Technology.
This further drill down enables the procurement specialist to find the category where the
suppliers is the highest and there is a possibility to rationalize their supplier base.

15. Opportunity is
added to list of my
opportunity
The identified opportunity then gets added to the entire list of opportunities.

16. Bubble Matrix Graph to prioritize identified
opportunities
Armed with all the information the head of procurement team can review the pool of all these
opportunities in the opportunity prioritization module in the form of a bubble chart, where the X-axis
represents the efforts in months and the Y-axis represents the maximum saving potential.

17. CASE STUDY

18. Safety Supplies
 Vertis annual spend is ~$400K
 Decentralized purchases
 No minimum safety standards
 Multiple suppliers
 No volume discounts for aggregated spend

19. Implementation Process
Emailed
Shared Vertis Emailed announcement
announcement to
locations & contacts to requisitioners &
requisitioners &
with Choctaw - Kaul management
management
Released Choctaw- Developed monthly
Contacted sites with
Kaul to initiate local spend and cost savings
slow adoption
site visits report template
Solicited feedback &
Visited Vertis sites to Requested management
engaged supplier in
emphasize partnership assistance as last resort
response to local
concerns

20. Supplier Collaboration Savings
• Lean & Continuous Improvement Project
Product
• Team of SCM, Supplier, Safety Coordinators,
standardization Inventory Clerks
• Minimum safety standards
Best value • Quality appropriate to the application
• Reduce number of SKU’s to manage
Lower inventory • Ability to share inventory between sites
• Lower prices
Reduced costs • Lower inventory levels; more inventory turns

21. Results
 Improved product quality and consistency
– ANSI approved anti-fog safety glasses with UV protection
– Minimum NRR 29 on earplugs
– More durable nitrile gloves
– Top rated cut resistance gloves
 Eliminated 80% of SKU’s (from 69 to 14) for hand/eye/ear PPE
 Additional 12% cost savings
– Renegotiated prices with manufacturer
– Spend concentrated on best value items
 Current compliance is 90+%

22. Conclusion: Lessons Learned
 Detailed and accurate spend data essential
 Compliance requires collaboration
– Control increased from 10% to 50%
– Compliance increased from 0% to 40%
 There is no substitute for face-to-face
interactions
 Comparative benchmarking drives friendly
competition