Jim Butler

1
Jim Butler Director, Procurement Services LS CO.
Improving the Process for Contingent Workforce
Procurement Management
2
Agenda

• Background
• Previous state of our business
• What initiated the program?
• Program process plan
• Benefits achieved
• Recommendations
• QA

3
Company Background

• Founded in 1853
• Headquartered in San Francisco, CA
• Sales in more than 110 countries
• 8,850 people worldwide
• Annual net sales of 4.1 billion

4
3 key functions for Procurement at LSCO.
Cost
Quality
Enhances the LSCO. customer experience
minimizes financial risk optimizes control
Frees-up budget to fund growth initiatives
Service
Optimizes speed timeliness supports
go-to-market process
Roles are performed across all business segments
5
Competitive Sourcing Example eAuction

• Conducted Auctions
• Received 340 bids across 8 participants
• Conducted strategic online messaging with
  suppliers during event
• Auction Results
• Completed project in 6-weeks
• Savings of 31 incremental 14 achieved during
  auction
• Significant price compression
• Supplier with highest total value was selected

LSCO Situation
Auction Delivered Results

• Category Sundries - Labels
• Labels Distributed across 11 manufacturing
  locations
• Objectives
• Conduct RFQ and negotiations within 6-week
  timeframe
• Achieve target savings of 10
• Challenges
• Aggressive execution timeline
• Simplifying the quote process collect
  information on product cost, freight, duties for
  13 SKUs and 11 intl ship-to locations

Label Auction Bid Activity Graph (actual results)
Event Details

• 8 Suppliers participated
• 1 hour 45 minute auction
• 340 bids received

6
Supplier Management
Office supplies
Forms
Hangers
Software
7
BPI Example eProcurement
8
BPI Example Online travel tool by TA.com
9
The Article

• Software fits Levi Strauss Co.New tool helps
  track spendingand manage suppliersBy Susan
  Avery Purchasing July 14, 2005
• The procurement services operation at Levi
  Strauss Co. (LSCO.) in San Francisco has
  consolidated the company's temporary labor buy
  and now uses software to streamline the
  requisition process for workers and to gain
  visibility to the multimillion dollar annual
  spend. Perhaps more important,

10
Pre-VMS State

• 10-11M temp staffing spend
• Decentralized process, no control, no visibility
• Various temp labor vendors
• Various bill rates for same/similar positions
• Individual requisition invoices
• No length of stay compliance
• Systems used included Kronos and legacy A/P and
  G/L (GEAC)
• Four Distribution Centers Light Industrial
• Workers frequently shift lines
• Different lines have potentially different rates
• Locations may have shift differential pay and/or
  overtime rates

11
What initiated the initial VMS program?

• Need for electronic time card approvals
• Need for centralized and consolidated invoices
• Need for temp labor spend and rate visibility
• Need for Reporting
• Mark-up variance, Length of stay, Time to fill,
  etc.

12
Initial VMS State

• Selected 1st VMS tool
• 2 preferred flex workforce suppliers
• Venturi (professional, accounting/finance,
  clerical/admin, models)
• Manpower (20 U.S. locations four distribution
  centers, union and non-union, and nationwide
  merchandise coordinators)
• Requisitioning Process
• Started with decentralized model
• Transitioned to 6 centralized requisitioners for
  US
• Currently have 1 full time centralized
  requisitioner
• Reporting Excel Access database

13
VMS Take 2 Why switch tools?

• Intensive data maintenance for Levi and Suppliers
  due to lack of LI/just-in-time staffing
  functionality
• Initial tool lacked functionality for easily
  managing increments and decrements to open job
  requisitions
• No time clock (Kronos) interface to VMS
• Inflexible reporting/no Ad Hoc
• No robust reporting to retrieve different data
  combinations as needed
• Cumbresome time card approval process wanted
  email only approvals

14
VMS Take 2 Why switch tools?
15
Program Process Plan
1. Identify Processes per Department
2. Vendor Evaluation Selection
3. Roll-out/Change Mgmt Plan
4. On-going Activities
16
1. Identify Processes per Department

• Goals
• Identify stakeholders
• Identify process gaps among departments
• Determine best practices

• Findings
• Reluctance to change
• Different cultures
• Different business objectives
• Very decentralized
• Stakeholders varied

17
2. Vendor Evaluation Selection

• Goals
• Identify thought leader in market
• Identify a provider with strong domain expertise
  and best practices around light industrial
• Provider with full service or self service option
• Find a solution with a strong technology that can
  support multiple service categories

• Findings
• Few providers with light industrial functionality
  and experience
• Only IQNavigator provided Ad-hoc reporting
• Vendor neutrality is important
• Selected IQNavigator

18
3. Roll-out/Change Mgmt Plan

• Goals
• Phased roll-out (no big bang)
• Contingent workforce service category initially
• Seamless transition to achieve strong user
  adoption

• Approach
• Obtained buy-in from stakeholders
• Communicated value (benefit over replaced
  technology and process)
• Conducted several training sessions

19
4. On-going Activities

• Goals
• Measure program success
• Look for opportunities for further program
  optimization
• Expand to additional service categories by
  leveraging existing technology platform

• Approach
• Immediate
• Successful vendor switch with process
  technology improvement
• Easier to use, better reporting resulting
  analysis
• Quarterly Reviews
• Review program to measure savings and process
  efficiencies
• Discuss industry best practices and new
  functionality to further optimize current program
• Currently investigating opportunities for
  expanded use and success

20
What benefits have been achieved to-date?

• Visibility to all data in one data source
• Light Industrial requisitioning process has been
  streamlined
• Timecard entry, approval, and invoicing process
  has been streamlined
• Helps us enforce length of stay compliance
• Better relationship with our Suppliers
• Shared system-of-record for invoices eliminates
  gottcha invoices 6 or more months after the
  fact

21
What do the results say?
User comments
Time Saving! No improvements that I could
make. I am very satisfied with all aspects of the
service. It would be nice to see a streamlined
step-by-step process so we know exactly what to
submit and when.
22
Recommendations

• Integration is important
• Time clock feed to VMS
• Time card feed from VMS to temp labor supplier
• Invoice feed to A/P
• Labor supplier neutrality
• Implementation operations team
• Enterprise scalability
• Option to leverage existing technology for
  additional uses

23
Questions