Bill Dempsey, Director of Procurement and Strategic Sourcing at MillerCoors (“MC”) kicked off the 18th Annual NAPP Conference in Marina Del Rey this past Monday with a Keynote Address entitled “Unlocking Hidden Value Levers in the P2P Process” that provided a great look into the P2P (but, primarily procurement) operations at the joint venture that was formed by the two global adult beverage powerhouses, SABMiller and MolsonCoors in 2008. After a quick overview of each brand and some background on the joint venture, Bill dove into the five key initiatives that his team has been focusing on in recent months, specifically:
- Shareholder value: It is Bill’s perspective that his team’s sourcing efforts have and will continue to deliver tremendous shareholder value. But it is his preference (and my strong recommendation) to let his finance organization negotiate with the line-of-business on how cost reductions are accounted for in budgets.
- Collaboration: A major focus for the two newly-merged procurement organizations is to engage the business decision-makers and budget-holders across all of the different brands and bring them together around standard requirements and suppliers. As Bill said, “It’s easy to make friends in the company; we’re looking to have adult conversations.”
- Strategic alliances: As you would expect, marketing is a huge category of spend and in the sports/entertainment/events arena there are numerous cross promotional opportunities. Bill discussed a few examples where relationships that he and his team have developed while negotiating marketing deals have been leveraged by the MC marketing executives to significant benefit of the company.
- Cash Conversion Cycle (“CCC”): At MC, cash is still king; and, although they have not been as successful as Coca Cola or major rival, Anheuser Busch in moving to a negative CCC (this would mean receiving payment from customers on goods before paying the supplier(s) of those goods), MC made a big move forward in this area simply by asking, and then getting many of its suppliers to extend current payment terms.
- NRBEs or non-recurring business expenses: For this area of spend, Bill’s team initially had dedicated resources involved in its management. But, after performing a spend analysis and understanding the size of this spend, they determined that the best procurement plan was to support the buying process, if needed, but ultimately delegate decision-making to the business and in some cases outsource it completely.
Underlying these initiatives, Bill’s team embraced the principles to manage proactively, execute with discipline, and actively manage the change process.
When I caught up with Bill later in the day to “tap this Rockie”-based procurement veteran for more details, he reiterated the importance of and benefits from applying discipline (i.e. behaving like a mature organization) to what he referred to as its people processes, its strategy processes, and its operational processes. He talked about how that discipline quickly cascaded across his team and later, into the larger organization. And while Bill did not provide any free samples, he made sure that the bartenders stocked the bar at the gala dinner with plenty of Coors Light (true story). Thanks Bill!