Value Managed Relationship

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Value Managed Relationship

• We strive to achieve Value Managed Relationships
  (VMRs) with our clients, especially on complex,
  integrated material handling solutions.
• Our VMR process is a unique approach that focuses
  on creating a partnership environment.
• Goals
• Optimal design
• Lowest investment cost
• Lowest possible implementation risk
• Shortest possible project schedules

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Value Managed Relationship
What is a VMR?

• Long-term, value based relationships that create
  significant advantages to traditional arms-length
  procurements.
• Top management involvement
• Pre-identified business goals
• Shortest possible project schedules
• Optimal design
• Reduced total investment
• Open book pricing to build confidence
• Reduced project risks
• Access to enhanced service support programs

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Value Managed Relationship
Top management involvement allows for

• Communications from a position of knowledge
• Shared visibility to strategic/future plans
• Assurances that a business solution is delivered

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Value Managed Relationship
Pre-identified business goals

• Macro-level goals
• Detailed operational goals
• Budgetary targets
• ROI targets
• Timeline constraints

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Value Managed Relationship
Typical VMR Schedule
Traditional Schedule

• Analysis 3 wks
• Design 2 wks
• Engineering 4 wks
• Procurement 6 wks
• Manufacturing 4 wks
• Installation 4 wks
• Commissioning 2 wks
• Turnover 1 wk
• TOTAL 26 WKS

• Vendor selection 4 wks
• Analysis 3 wks
• Specification 4 wks
• Bidding 4 wks
• Design 6 wks
• Engineering 4 wks
• Procurement 6 wks
• Manufacturing 4 wks
• Installation 4 wks
• Commissioning 2 wks
• Turnover 1 wk
• TOTAL 42 WKS

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Value Managed Relationship
Why its more likely to develop
the optimal design

• Much better atmosphere for a 2-way communication
  of project goals focus on true objectives
• VMR partners are focused on the best solution
  rather than responding to a specification
• Competitive positioning no longer affects
  solution development process
• Client business strategy is generally more
  openly communicated, allowing the VMR partner to
  contribute better design solutions

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Value Managed Relationship
Why is the total investment less?

• Reduced cost to develop specifications
• Optimal systems solutions generally reduce
  up-front capital costs
• Total system operating costs will be less with
  optimal system design
• VMR supplier partner bears more of the cost of
  solution development
• Access to enhanced post-installation services
  reduces life-cycle costs

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Value Managed Relationship
Open book pricing increased confidence

• Exposure to actual costs to implement a project
• Access to Diamond Phoenix pricing systems for
  review and audit
• Negotiated and agreed to profit levels
• Firm fixed pricing performance risk remains
  with Diamond Phoenix

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Value Managed Relationship
Reduced project risks

• Optimal design achieved which limits technical
  risks
• Change orders limited by removal of inefficient
  specification / response model
• Significantly increased levels of design
  acceptance due to partnering process
• Supplier partner is implementing own design
• Better continuity from design to engineering
  project phases

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Value Managed Relationship
Enhanced service programs

• 24 hour / 7 day a week software support standard
• Standard access to Diamond Phoenix on-line CRM
  system
• Discounted spare parts pricing
• Free system audit in first year of implementation
• Extended warranties offered, due to increased
  confidence of overall system design

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Value Managed Relationship
Developing a VMR requires significant effort from
both parties forming the partnership

• Senior management support and sponsorship
• Open sharing of information
• Commitment to the project / program
• Mutual confidence building to allow trust to
  replace traditional procurement activities. Past
  successes are a great way to build mutual
  confidence

VMR Trust
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Value Managed Relationship
Benefits to Diamond Phoenix

• More predictable future revenues
• Better long term client relationships
• Improved company reputation due to better designs
  developed in a VMR relationship
• Easier to implement designs
• Reduced project conflicts caused by specification
  mis-understandings