并购整合咨询框架

March2002MergerIntegrationIntellectualCapitalCollectionGenericProposalTableofcontentsExecutiveSummaryOurUnderstandingofYourSituationA.T.Kearney’sPerspectiveonMergerIntegrationProposedOverallApproachRealizingIntegrationSynergiesIntegrationManagementA.T.KearneyQualificationsExecutiveSummary

ThissectionistailoredtotheclientsituationandsummarizestheapproachproposedinthedocumentOurUnderstandingyourSituation

Thissectionistailoredtotheclientsituationandsummarizesthekeydriversofthemerger.Itshouldhighlightrelevantquantitativeandqualitativeanalysisthatdemonstrateourinsightintotheclient’sparticularchallengesanddriversofsuccessfortheintegrationA.T.Kearney’sPerspectiveonMergerIntegrationThebestvalue-builderscombineorganicgrowthwithmergersandacquisitionsSource: A.T.KearneyMonographonValue-BuildingGrowth2001RevenueGrowthValueGrowthUnderperformersProfitSeekersSimpleGrowersValueGrowersGrowthMatrix(CAGR1988-2000)ValueGrowersFollowConscious,ConstantProcessToGrowthMergersandacquisitionsarekeygrowthdriversWhatreallymattersin“acquisitionforgrowth”strategiesisexecutionSource: A.T.KearneyMonographonValue-BuildingGrowth2001SourcesofGrowth40%ofGrowthIsFromAcquisitionsValueGrowersManageBothWellFewmergersactuallycreateshareholdervalueSource: A.T.KearneyAnalysis2001,SDCdatabase,GlobalWorldscopeAcquirer'sValueGrowthFollowingaMergerTopperformingmergerscreatesignificantshareholdervalueValuegrowth3%8%12%27%21%16%3%Underperformancecompared

toindustryaverageOverperformancecompared

toindustryaverage-100%-60%-30%30%60%150%-15%15%0%Average:2.8%49.5%50.5%Top-PerformingMergers10%BusinessIntegrationissuesrequire“usual”managementdecisionswhilefourmainfactorsaddanotherlevelofconsiderablecomplexity…ScopeHighnumberofdecisionstobemadeinalloperationalandfunctionalareasDozensofprojects/initiativesandriskstobemanagedTimepressureAllstakeholdersexpectrapidexecution(shareholders,employees,management,regulationcommittees,government,…)DecisionsneedtobemadewithoutdelaySimultaneityCo-existenceofstrategic,tacticandoperationaldecisionsStronginter-dependenceofthedecisionsShorttermandstrategicdecisionsmayseemincompatibleHumancomponentHighnumberofpeoplepotentiallyinvolved(operational,functionalandexecutivepeople)RiskofculturalmismatchScarceresourcestobridgebetweenmergedcompanies"Usual"ManagementdecisionsStrategy&IPODefinethescopeofcombinedentityConfirmeachcountry’sscopeofactivityformobilesDesignstrategyleveragingonbroaderglobalpresenceDefinefinancialandoperationaltargetsaswellastimingofexpectedbenefitsPreparetheIPOOrganisationChoosethebestorganisationalmodelattheEuropeanmanagementlevelIdentifythecentral/localfunctionsevolutionscheduleDefineorganisationalchartsandmanagementnominationDefinekeydecisionprocesses(committees,procedures,…)

InfrastructureReducetotalcostofexternalpurchasesthroughbestpriceevaluationvolumeconcentration,competitivebiddingSharebestpractices…SupportfunctionsRationalisesharedsupports(AlignandselectInformationSystemsfortheintegrationAlignprocessesandsharebestpracticesCommunicationDefineexternalcommunicationstrategyDefineinternalcommunicationstrategySelectcommunicationrulesandproceduresChoosemedia(intranet,documents,speeches…)IntegrationmgntIntegrateoverallplanningandmilestonesDetailplanningbytopicandcountry…ManagetransitionphaseTrackandexecutefinancialsynergiesManagerisks…explainingwhyonlyfewmergersandacquisitionssucceedfullyNote:(1)Shareholderreturnsfrombuyerdividedbyshareholderreturns(industryaverage)afterthemergerSources:A.T.Kearneyanalysis,GlobalPMISurvey,1998;DatastreamHigherNo

changeLower100%=230companiesOnly29%ofCompaniesRealizeanIncreaseinAggregateProfitabilityPerformancerelativetoindustryaverage10%11%21%18%17%23%-15%-25%+15%+25%TopPerforming

MergersUnderperformanceOutperformanceNumberofcompaniesIndustryaverageOnly42%ofCompaniesOutperformTheirPeersinShareholderValue(1)42%58%TopperformersacrossmostindustriescancreatesignificantshareholdervalueCreationofShareholderReturnsErosionofShareholderReturnsNote:(1)Totalshareholderreturnspercentageover/underperformancerelativetoindustryindexinthetimeframebetween3monthsbeforeand24monthsaftermergerannouncement;totalshareholderreturnsdefinedasthetangiblereturnsinvestorsreceivethroughdividendsandstockpriceappreciationsSources:Datastream;A.T.KearneyAnalysis2001Retailers62.5%64.5%32.3%44.2%26.6%49.9%34.2%26.6%36.1%25.1%16.0%43.3%26.0%27.5%17.2%17.4%31.9%22.4%18.0%40.4%17.4%14.8%4.0%-6.5%-31.5%-38.9%-10.8%-25.9%-11.0%-35.0%-20.6%-17.6%-28.8%-18.0%-9.7%-39.6%-22.7%-24.9%-17.4%-20.3%-35.3%-26.7%-24.1%-46.8%-26.5%-27.2%-19.4%-24.1%RecreationChemicalsMetalProducersPaperTransportationDiversifiedDrugs,Cosmetics&HealthCareUtilitiesAutomotivePrintingandPublishingElectronicsFinancialBeveragesMetalProductsManufactureFoodTobaccoMachinery&EquipmentElectricalMiscellaneousOil,Gas,Coal&RelatedServicesConstructionTextilesAerospaceIndustrySpecificRangesofValueCreation(1)Oncethedealisclosed,theprincipalproblemsrelatealmostentirelytofailuresinmergermanagement,ratherthantotheunderlyingstrategicrationaleProblemsIdentifiedinMergerIntegrationUnder-communicationFinancial/synergyExpectationsUnrealistic/UnclearNewOrg.StructureWithTooManyCompromises“MasterPlan””MissingMissingMomentumMissingTopManagementCommitmentUnclearStrategicConceptMissingPaceofProjectITIssuesAddressedTooLateSource:A.T.Kearney’sGlobalMergerIntegrationSurvey1998PercentofRespondentsTomanageinherentrisks,““criticalsuccessfactors”canbedistilledfromsuccessfullarge-scalemergerstoguidevaluecreationCriticalSuccessFactorsfromLarge-ScaleMergersSource:A.T.KearneyMergerIntegrationCreateasenseofurgencyandreduceuncertaintythroughcleareventmilestones,andmovequicklySelecttop-levelleadershipquicklyandfairly;avoid“two-in-the-box”leadershipforintegrationplanningandexecutionunlessabsolutelynecessarySetoutsynergygoalsandobjectives,toprioritizeactivitiesandprovideabaselineforperformancetrackingManagemarketexpectationscarefully.SetconservativedollartargetswithatimeframethataccommodatesunforeseencircumstancesKeepstrong,explicitfocusonkeycustomerretentionandservicewithteeth(i.e.,measurementandtracking)MaintainopenandtimelycommunicationswithemployeestoensureunderstandingandretentionConductdecentralized

merger

IntegrationguidedforciblyviaClearguidingprinciplesOverallframeworkandtoolsforintegrationReportingstandardsEstablishastrongcentralIntegrationofficeanddecentralizedIntegrationteamswithcorporate-wideperspectivesonResultsProjectstatusRiskLeadroleoninternal/externalcommunicationsInstillrobust,well-definedprocessestoensureobjectiveandtimelyriskandinterdependencytrackingSenseofUrgencyTop-LevelLeadershipSelectedQuicklyClearSynergyGoalsManageMarketExpectationsExplicitFocusonCustomersOpen,TimelyandConsistentCommunicationsDecentralizedMergerIntegrationStrongCentralIntegrationOfficeWell-DefinedProcessesSource:A.T.Kearney'sglobalPMIsurvey'98ValueCaptureofTopPerformersOverTime15%Year1Year2CumulativeValueCaptureAfterTwoYears85%TimeClosingtheDeal12345678910-10-8-6-4-20246ValueCapture/Loss($MM)YearinWhichSynergiesAreRealizedTimingofSynergyRealizationIsAlsoCriticalSource:MarlLSirower:TheSynergyTrap.Calculatedbasedona$10MMacquisitionpremium,representing50%ofmarketvalueInourexperience,themostcriticalelementinachievingtargetedbenefitsisspeedProposedOverallApproachA.T.KearneyhasaflexiblemergerintegrationframeworkwithacomprehensivetoolkittosupportplanningandimplementationthroughoutthemergerprocesstoensurevaluecaptureA.T.Kearney’’sMergerIntegrationFrameworkDevelopStrategyEstablishStructureandPlanMerger/AcquisitionoptionsCreate/articulate/validateMarkets/customersCompetitionResourcesSourcesofvalueUnderstandtypeofmergerEstablishtheintegrationprogramBuildintegrationcapabilityAssesssourcesofvalueDeveloporganizationstrategy&designDevelopITintegrationstrategyDesign/harmonizeHRpoliciesCreatemasterplanandprioritizeValidatesourcesofvalueImplementquickhitsDevelopSOVITenablersImplementHRplanMonitorprogressandriskExecutetheplanRealigntheorganizationImplementITintegrationplanMergerManage-

mentSourcesofValueMergerEnablersChangeofControlShareholderApprovalMOUIntegratedPlanningandInitialRolloutFull-ScaleRolloutDayOnePhase0PhaseIPhaseIIPhaseIIIMultipleToolsExistforAllCellsThisallowsmergingentitiestorapidlycaptureavailablesourcesofvaluebyfocusingonoperationalsynergies,aswellasseamlesslymergingtheorganizationsMergetheOrganizationsas

SeamlesslyasPossibleDevelopandcommunicateasharedstrategicagendaDefineOrganizationstructures/leadershipKeybusinessprocessesTechnologyplatform/architectureChangeintegrationrequirementsDrivetoplinegrowthNewvaluepropositions/productsCrossselling/salespullthroughEnsurecustomerfocus/retentionIntegrateday-to-dayoperationsEnsuresustainablechangePositionforgrowthAchieve$XXmillion(annualrate)ofsynergysavingswithin12–18monthsSalesOperationsProcurementCorporateoverlapandduplicationCostofdistributionTechnology/R&DOtherstobeidentifiedEliminate/minimizesourcesofriskDrivetheshort-termvalueExceedthemarket’sexpectationsMISourcesofValueAchieveGrowthSynergyandCostSynergyTargetsasQuicklyasPossibleTheprogramstructuresupportsfocusedvaluecaptureteamsworkingacrossallSBU/GeographicteamsIllustrativeIntegrationOfficeOthersSteeringCommitteeBusinessDevelop-mentTeamCorporateCenterTeamGlobalOperationsTeamGlobalSourcingTeamTechnology/R&DTeamHumanResourcesTeamInformationTechnologyTeamSBUAorN.AmericaSBUBorLatinAmericaSBUCorEuropeSBUDorAsiaPacificBUdrivenintegrationtosetprioritiesFocusedonvaluecaptureacrossthebusinessesMarketFacingTeamsValueCaptureTeamsEnablerTeamsSetoveralldirectionMakecriticaldecisionsDevelopguidingprinciplesProvideintegrationmanagementleadershipandsupportImplementationFull-ScaleRolloutIntegratedPlanningandInitialRolloutEstablishStructureandPlanBylaunchingtheintegrationeffortpriortochangeofcontrol,significantprogressismadeinidentifyingsourcesofvalue,whilealsodevelopingthehigh-levelorganizationmodelstocapturethatvalueIntegrationManagementITRequirements/AlignmentHigh-LevelOrganizationDataRepositoryComm.PlanningOversight/VisibilityRmAnalysisOpportunitiesInitialPrioritizationInitialSequencingDataCollection/AnalysesOperations/AssetConsolidationDiagnosticPackPP1PP2PP3PP4HMLHMLInitQ1Q2Q3Q4PP1PP2PP3PP4DataCollection/AnalysesBusinessUnit(e.g.,Services)DiagnosticPackCS1CS2CS3CS4HMLHMLInitQ1Q2Q3Q4CS1CS2CS3CS4PhaseI(“CleanTeam””)Hypotheses1HypothesisN

Hypotheses1HypothesisN

MasterCalendarDay/Week/Month1PlansSourcesofValueIdentification…………BaselineDev./TrackingDuringthecriticalperiodpriortochangeofcontrol,theengagementteamassumestheroleofa“cleanteam”toenablecriticalpre-mergerintegrationRoleofCleanTeamQuantifysavingsgeneratedfromidentifiedopportunitiesfromteamsofmergedcompaniesActasathirdpartyconduitforproprietaryinformationofbothcompanies(protectionshouldmergerbeaborted)ValidateandchallengeinitialassumptionsofopportunitiesmadebymergingcompaniesHighlightbestpracticesinexistingcompaniesandexternalknowledgeandrecommendongoingmergedoperatingpracticesDetermineriskfactorsinmergerforongoingriskmanagementduringimplementationDataCollectionOrganizationassessmentHypothesesdevelopmentPreliminaryplanningCompanyACompanyBOpenJointClientTeamMeetingsA.T.Kearney

“CleanTeam”MergerSynergyHypothesesPre-ChangeofControlPost-ChangeofControlValidatedInitiativesAcceleratedecisionmakingbyprovidingaccesstocomprehensivedatabasesanddetailedanalysisShareandvalidatefindingswithjointclientteamsFinalizeinitiativesbasedonvalidatedhypothesesDevelopimplementationplansAssistinlaunchinginitiativesandprovidecontinuedimplementation,riskandfinancialtrackingsupportTheup-frontworkeffortsofthe““cleanteam”enablesacceleratedlaunchofimplementationactivitiesandvaluecapture“CleanTeam”ProcessLimitedJointClientTeamMeetingsAfterchangeofcontrol,theteamsquicklyfinalize—notidentify—synergyopportunitiesandgainconsensusResultsTracking/RiskAssessmentBeginImplementationInitialPrioritizationandSequenceMasterPlanSequencingFullTeamMeetingsDiscloseandValidateModifyandRefineFinalizeSavingsOpportunitiesandPrioritizationIdentifyInterdependenciesHMLHMLOverallPrioritization/ExecutiveCommitteeBuy-InInitQ1Q2Q3Q4MD1ST3SC6PP4SC6WorkplanST3WorkplanMD1WorkplanStep1234InvestmentRequirementsTimingofResultsMasterPlanDetailDay/Week/Month1ExecutionPhaseIIInitQ1Q2Q3Q4PP1HMLHMLInitQ1Q2Q3Q4PP1HMLHMLITRequirements/EnablersMasterPlanDetailCommunicationFull-ScaleRolloutIntegratedPlanningandInitialRolloutEstablishStructureandPlanMD1WorkplanActivityTask1Task1Task1Task1Q1Q2Q3Q4Thetransitiontofull-scalerolloutandimplementationofinitiativesissupportedbyacleartrackingprocess

ProgramRiskManagementTop10ProgramRisksasof06/24OrganizationannouncementtimingstillunclearITrequirementsnotfullyunderstoodNoplanstoaddressculturalmisalignmentSuccessofcommunicationnotcurrentlyplannedtobemeasuredIllustrativeInitiativeStatusManagementSize=$Saved61218GreenYellowRedRiskTimetoCompleteImplementationInitiativeCurrentQuarterCum.Qrtly.BreakdownJan.Feb.Mar.4Q971Q982Q98CostSavesandGrowthAchievementImplementationCommunicationPhaseIIIFull-ScaleRolloutIntegratedPlanningandInitialRolloutEstablishStructureandPlanSource:A.T.KearneyMergerIntegrationThroughouttheeffort,managingriskisaformalizedmethodology;adherencefacilitatesafairandrobustdecisionmakingprocessProjectRiskPrioritizationRiskIdentificationRiskCategorizationProjectPrioritization—BusinessCriticalityAndSizeBusinessCriticality—howmuchdoesitmatteriftheprojectdoesnotmeetitsobjective?A=Incrementalbenefitbutcurrent processeswillsufficeB=Supportsstrategybutmanageableimpactifprojectfails/delayedC=Importanttothestrategywithsignificantimpactifprojectfails/delayedD=Criticalimpact/mustkeepupwithcompetitors/cannotcontinuebusinessComplexityHighLowHighDCBAABCDBusinessCriticalityProject2Project3Project6Project1Project4Project5ManyissuesareclosedbymakingassumptionsRisksAssumptionsIssuesProjectPlansRiskPlansIssuesareopenquestionsUnstable/sensitiveassumptionscreaterisksSignificantrisksneedtobemanagedIssues,AssumptionsAndRisksAreInherentInTheProjectPlansRiskReductionRedAmberGreenMergerRiskProfileNowFutureGreenAmberRedTimeCriticalityIllustrativeChallengesDecisionMakingPlanning/ExecutionReportingBenefitsofProactiveRiskManagementCrossorganizationalinputanddedicatedfacilitationensuresobjectiveinputMilestonerisksassociatedwithdecisiontimingarederivedfromprocess-wideinitiativesRiskprocesshighlightsresourcevulnerabilities.SenseofurgencyassociatedwiththeprocessforcesdiscussionsandactionsProactivemanagementandfacilitationobjectivelyevaluatesallcommunicationrisks.ForumoffersparticipantsachancetoagreeordisagreeConciseupdatesfocusedoncross-organizationalrisksdirectattentionwhereitisneededClearassignmentofriskownershipandactionresponsibilitieseliminateconfusionRealizingIntegrationSynergiesToassessandachievetheirsynergies,allteamscanleverageanumberofA.T.Kearney’’sprovenmethodologiesandtoolsasappropriateStreamliningtheOrganizationReducingPurchasedCostsObjectives:FocusAreas:MethodologyandToolsDeterminemanagementandgovernancestructureIntegrateofficesAlignHRpoliciesandproceduresFinance/AccountingLegal/RegulatoryITHRCorporateCenterRationalizationLeveragecorporatespendLeveragepurchasingvolumesDirectmaterialsPurchasedservicesIndirectmaterialsCapitalexpendituresStrategicSourcingE-Sourcing(eBreviate)Marketexchangestrategy(LSN)SupportingMethodologiesandToolsIncreasingSalesForceEffectivenessIncreaserevenueproductivityofsalesforceIncreaseknowledgeandvalue-addedsellingcapabilitiesExplorechannelleverage(i.e.,Dealer/Resellernetwork)SalesforceeffectivenessCross-sellingSalesForceEffectivenessMethodologyCustomerRetentionMethodologyIllustrativeLeveragingAssetsMaximizeassetutilizationBottlingplantconsolidationWarehouseconsolidationRealizenetworksynergiesFixedassetsCapitalexpendituresInventoryProcurementSupplyChainTransformationOperatingAssetEffectivenessStreamliningProductPortfoliosandNetworksRationalizeproductofferingandcustomerbaseEvaluateandimplementoptimalnetworkstrategyProductOfferingCustomerrequirementsNetworkcostandcapacityProductPortfolioandNetworkRationalizationMethodologyOperatingNetworksIntegrationRapidbenefitdeliveryisfeasiblethroughintegratingtheoperatingnetworkManufacturing

CapabilitiesWhatcanbeproducedWhereHowdoesthroughputvarybylocationandplantcapabilityWhatarethecapacityconstraintsNetworkConfigurationWhicharethecostsoftransportation,handlingandinventoryWhichisthemostcostefficientnetworkconfigurationAretherecostsynergieswithotherDannonproductsManufacturingCapabilitiesNetworkConfigurationSeveralIterationsLocalMarketRequirementsWhatarethemarketrequirementsWhatisthecurrent/futurecompetitivepositioningWhatdistributionchannelsaregrowingfastestMarketRequirements1A.T.Kearney6/Document#/I.D.SamplePreliminaryScenarioSKUtree1SKU2SKU3ProliferationLevelABCDEEFGHI••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••1111111111111111111111111116121824612182461218246121824612182461218246121824ResealableClassicBlueGBHClassicResealableCompactBlueGBHCompactResealableClassicWhiteEBHClassicResealableClassicWhiteMechanicalResealableCompactWhiteEBHCompactResealableCompactWhiteMechanicalResealableClassicWhiteGBHClassicMenthol/Euca11128412232113NumberofVariantsPortfolioWhichSKUsareofferedWhichspecificproductcharacteristicsWhichemergingtechnologies/competitiveofferingsHowisproductbundledandpromotedSKUTree36CurrentSites:4FutureSites:3CurrentSites:8FutureSites:5CurrentSites:2FutureSites:1CurrentSites:1FutureSites:1CurrentSites:3FutureSites:2CurrentSites:2FutureSites:1CurrentSites:2FutureSites:1CurrentSites:1FutureSites:1SKU1KeyAssessmentsforIntegratingOperatingNetworksWhichentityinthesupplychainshoulddevelopacapabilityisdeterminedbythebusiness’’scaleandstrategicobjectivesStrategicAllianceDevelopstrongrelationshipswithkeysupplychainpartnersthathavetherequiredcapabilitiesMaintainveryhighlevelsofcross-functionalinvolvementIn-HouseInvestinresourcesandpeopletodevelopworld-classcapabilitiesOutsourceOutsourceactivitytocapableproviderOrganizerelatedactivitytominimizetransactioncostswithoutsourcedproviderRationalizeDependingontrueswitchingcostsandinvestmentrequirementseithercontinuetodevelopcapabilityin-houseoroutsourceHighHighLowLowActivityStrategicImportanceHowcoreistheactivity?How““entangled”isitwiththerestoftheorganization?Howcriticalisittomaintaincontrolandinvolvementintheactivity?Istheactivityanareaofcompetitiveadvantagetoday?Inthefuture?PotentialForInternalCapabilityDevelopmentIntheshort-tomedium-termcantherequiredcapabilitybedevelopedin-housetobehighlyefficientandeffectiveinanactivity?Differencesineachcompanyhavetobeunderstood,anddecisionsmadeonboththeoperatingmodelofthejointventuregoingforward–aformalprocesscanhelpinfacilitatingthisthinkingIdentifytheOperatingModelandDetailedOperatingStructureandCharacteristicsofEachFirmDetermineNewOperatingModel,andAppropriateBenchmarksMaketheHighLevelChoicesAstoHowtheCompanyOperatesGoingForwardStep1Step3Step2DefineandAlignSupportFunctionsStep4HoldingCompanyStrategicArchitectOperatorFunctionalStrategyFinancialControlCapitalAllocationResourceManagementAccountabilityCorporateStaffSizeAutonomyMarketingStaffPlacementDWNA/JVPartnerSupportFunctionAlignmentHoldingCompanyStrategicArchitectOperatorFunctionalFinance•AccountsPayable•P/Laccounting•Consolidation/corporatereporting•Tax•Treasury•Planning/budgetingHumanResources•Benefits/administration•Benefitsplanning•CompensationplanningBBCBBBB/OB/OBCC/BCC/BCBC/OC/OC/BCCCCCCC/OC/OCCCCCCC/BC/OC/OCC=CorporateB=BusinessUnitO=OutsourcedEffective,fastrationalizationandsavingsBestpractices““CorporateCenter”BG1BG2BG3OtherBusinessGroup???StandAloneModelDWNABG1BG2BG3BusinessGroup•?•?•?ModelCreateJointVentureOrganizationCorporateCenterRationalizationMethodologyJVPartnerBG1BG2BG3BusinessGroup•?•?•?Model7.ContinuouslyBenchmarkandMonitorSupplierImprovement6.OperationallyIntegrateSupplier(s)StrategicsourcingisapowerfulmethodologyforleveragingthecombinedspendingbaseandprocurementcapabilitiesofthemergedorganizationKeyElementsA.T.KearneyIntellectualCapitalEmployed5.SelectCompetitiveSupplier(s)4.SelectImplementationPath3.GenerateSupplierProfile2.DevelopSourcingStrategy1.DefineSourcingCategoriesEmbedsuppliermonitoringprocessesImplementmarketmonitoringtoolsPeriodically

re-evaluatesuppliercompetitivenessandperformancePerformancemeasurementtoolsTechnology-enableddatacaptureprocessCompleteimplementationtemplatesGainbuy-intosupplierchangesCoordinatenewsupplychainsImplementsystemstomonitorresultsImplementationtemplatesTailorandissueRFPsAnalyzeresponsesDeveloptargetednegotiationstrategyNegotiateadealElectronicprocurementtoolsInternetRFPsOn-lineauctiontoolsBenchmarksSelectsupplierdevelopmentornegotiationpathincludinguseofmarketexchangesDefineinitialnegotiationstrategyExperienceinthebeverageindustry,includingbottledwaterNegotiationtrainingReviewsupplierlistsandsuppliercapabilitiesPrescreenlisttodevelopshortlistofsuppliersExistingsupplierlistsavailablegloballyAssesssupplycategorybusinessimpactsConfirmsourcingstrategiesValidatetotalsupplychainperspectiveDetailedunderstandingofsupplymarketMarketcompetitionIndustryeconomicsProfilespendIdentifyspecificationsUnbundleasappropriateReviewsupplycategoryprofileAssessprocurementprocessesReviewtrendsEvaluatetotalcostandsavingstargetsProvendatabaseandmanagementtoolsExistingsupplycategoryprofilesSevenStepStrategicSourcingMethodologyStrategicSourcinghasagoalofdeliveringbottomlinesavingsthroughcoreelements:strategicpurchasing;demandmanagementandchangemanagementChangeManagementDemandManagementEmbedachievedsavingsbytransformingorganization,structure,processes,policies,andsystemsTangibleResultsApplicationMethodologyReducecostsbydecreasingoreliminatingthedemandforgoodsandservicesEliminateDemandReduceQuantityReduceQualityReduceFrequencySubstituteImposeOnerousApprovalsHeightenCostAwarenessConservativeAggressiveGreatestLowestOpportunityDemandReductionHierarchyReevaluateexternalpurchasesandrestructuresupplierrelationshipstogetbestvalueforthecompany(price,qualityandservice)GlobalSourcingReachedInfo.TransparencyBuyerLeverageProductSpecificationImprovementJointProcessImprovementRelationshipRestructuringStrategicPurchasingStrategicSourcingOrganizationandSkillsProcessSystemsStrategicProcurementVisionProcurementPoliciesRedesignedProcessesOrganizationalStructureandInfrastructureTechnologyTools(InformationSystems)ImplementationofProcessLinkagesPerformanceMetricsTransitionManagement,Communications,TrainingStrategicSourcingApproachOverviewIntegration-RelatedStrategicSourcingStrategicSourcingiseffectiveinintegrationenvironmentssinceitcanbestartedimmediately,delivermajorsavingsandcontributetobuildingthenewcompanyIntegrationSavingsLeveragingscaleCapitalizeoncombinedbuyingpowerUseleveragetorestructuresupplierofferingsMitigatesupplyrisksbymanagingvendorconcentrationGeneratingefficienciesSpreadtechnologyinvestmentoverincreasedpurchasingbaseEvaluate/selectthebestexistingpurchasingsystemsforuseintheneworganizationRapidtransferofbestpracticeRFI/RFPharmonizationConvergenceofprocurementpracticesandguidelinesBuildtheNewCompanyTeamworkacrossthenewenterprise:AllcategoriesAllbusinessunitsAllgeographies(domesticand/orglobal)Bottom-upinitiativedrivenbythe“new”teamServicelevels/needsDemanddynamicsOrganizationalsimilaritiesanddifferencesRelativelyundisruptive(productsandservicesnotpeople)HelpsnewmanagementtounderstandtheiroperationindetailOpportunitytoredesignprocessestoreflecttheneworganization,andembedworldclassprocurementasacorecompetencyinthenewcompanyThesalesproductivityeffortshouldincludeCustomerRetentionMethodologytounderstandthekeyrisksforcustomerdefectionandactionplanstoaddressthemStep1Step2Defection/LoyaltySegmentationStep3CreateTargetedRetentionProgramsRetentionbonus/incentivesDifferentiatedservicelevelsEnhancedproductapplicationsCustomizedcommunicationCustomizedproductbenefitsEarlywarningHighValueCustomersContributionRetentionValueChannelManagementChannelmigrationpricingPricerisePassivecustomerserviceMedium-TermActionsOverallProcessCustomerRetentionMethodologyWorkstreamsImmediateFront-LineActionsCustomerAnalysisandRetentionPlanRetentionSalesProgramsProductManagementIssuesObjectivesSalesforcefocusDetectandreacttodefectionbehaviorIncentivesforretentionperformanceEmpowermentofstaff-pricing,feewaivers,etc.AnalyzecustomersatisfactionlevelbyproductQuantifyretentionperformanceandvaluecontributionofkeytechnologysegmentsUnderstandcustomerdefectionPursueadditionalresearchonhighvaluesegmentsInitiateearlycommunicatio