Lululemon Goes All-In On Transformation with Coupa - Lululemon Michael van Keulen
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Lululemon Goes All-In
On Transformation
with Coupa
Lululemon
Michael van Keulen
Global Procurement Director
#SIGfall19
Lululemon Goes All-In On Transformation With Coupa
FEATURING Michael van Keulen Procurement Director l Global Procurement
Procurement Transformation
Table of Contents 01 LULULEMON ATHLETICA 02 PROCUREMENT TRANSFORMATION 03 CATEGORY MANAGEMENT 04 STRATEGIC SOURCING 05 DIGITIZATION 06 NEXT STEPS
Then Founded by Chip Wilson in Vancouver, Canada in 1998, lululemon is a yoga-inspired, technical athletic apparel company for women and men. What started as a design studio by day and yoga studio by night soon became a standalone store in November of 2000 on West 4th Avenue in Vancouver’s Kitsilano neighborhood. Now Publicly traded company with market cap of $22B operating, $3B in sales, 400+ stores in over 20 countries and 14,000 employees.
Ecomm
comp
GAAP
Revenue
45%
EPS growth
$3.3B
90 %*
Total Adjusted EPS growth
revenue growth
48%*
24%
Significant growth in 2018
Supporting Rapid Growth in North America
$2.9B 349
Stores*
$1.9B 321
Stores*
2015 2018
*company-operated lululemon stores
Building Processes to Support Emerging Markets
+40% CAGR
$360M
ASIA
EMEA 4
34
Stores
7
21
Stores
$135M ANZ
31
36
Stores
2015 2018
lululemon in 2021
Procurement Transformation
Procurement at lululemon has Transformed
LEVEL I LEVEL II LEVEL III LEVEL IV
Transaction Mastery Sourcing Factory Proactive Category Innovators
Management
201 202
2016 2017
9 0
CHANGE STABALIZE SUSTAIN & GROW
introduce embed strategic introduce category strategy tools &
strategic sourcing to execute proactive category
sourcing become second management Category & demand management
foundations & nature and to
deliver delivery value. Category strategy development
significant deliver
financial savings companywide Supplier management
programs.
Contract management
Strategic
sourcing
Spend analytics
Basic sourcing practices
Ordering & invoice processesCore Principles ▪ Fact based decision making using real analytics ▪ True competitive process ▪ Provide options to leadership ▪ Close collaboration with all stakeholders ▪ Transparency and engagement ▪ Demand planning and risk mitigation ▪ Create value—savings as outcome NOT goal!
Category Management
Defining Category Management
Category Management is a methodical approach to extract sustainable value
from distinct categories of third party spend
.
It’s the methodology and mindset we apply to everything we do in Procurement!
1 2 3 4
Supplier Lifecycle Risk Business Partner
Strategy & Planning
Collaboration Management Collaboration
• Procurement Vision • Strategic Sourcing • Contract Creation & • Process
• Business Alignment • Buying Channel Negotiation Improvement
Optimization • Contract Lifecycle • Demand
• Category Roadmap
• Supplier Management Management
• Internal Resource
Performance • Ongoing Third Party • Specification
Planning
Management Risk Management Rationalization
• Market Analytics and
• Supplier • Category
Insights
Development Enablement
• Benefits Tracking
• Supplier
Collaboration
(e.g. joint
partnerships)Strategic Sourcing
Strategic Sourcing 1 of 10 Procurement
Capabilities
Procurement Capability
Procurement CapabilityModel
Model
1.0 procurement strategy and governance
target value transact manage and sustain
2.0 spend 6.0 supplier
analytics management
3.0 category 5.0 procure to 7.0 category
strategy pay process management
8.0 contract
4.0 strategic sourcing
management
9.0 procurement organization
10.0 procurement technology7 Step Strategic Sourcing Process to
Maximize Value
lululemon’s strategic sourcing process
0 project management and stakeholder communication/management
1
assess
4 6
opportunity &
collect data execute sourcing
award contract
event
2
develop baseline
& define 5 7
requirements
negotiate terms
implement &
& make
monitor
3 recommendation
develop sourcing
strategy
Approval review # 1 Approval gate review # 2Procurement Digitization
Achieving a Maturity Breakthrough
with Technology
Procurement organizations are continuing to grow through a series of transformational step
changes, each delivering more business value as capabilities are built and efficiency is released.
Value Created by Procurement Level IV
(% of Spend)
Level III
12% to 15%
8% to 12%
Level II
Taking Procurement past this
3% to 8%
Level I point requires business buy-in,
alignment, and technology
0% to 3%
Level I Level II Level III Level IV
Affiliated & Transactional Engaged & Co-ordinated Collaborative & High Performing Value Chain Excellence
• Focus on tactical purchasing on a re-active • Category management in key spend areas • Wide range of category management • Strong alignment and active supporter of
basis / top suppliers levers utilized to fully leverage spend BU strategy – from planning to execution
• Primary role as a buyer / contract admin • Streamlined basic transactional • Spend channels customized to unique • Efficiency and automation of transactional
procurement processes requirements process allows Procurement to become
• Some consolidation of vendors in focus strategic partner
areas • Focus on cost savings but limited tracking • eProcurement technologies are
streamlined and integrated • Procurement and Supply Chain seen as
• Highly manual process with limited • Some efficiency driven by eProcurement value driver for the organization
supporting technology technologies • Begin to leverage self-serve and
automation tools • Attention to risk management
• Procurement relationships with business
and supplier are collaborativeProcess 1. Select System Integrator (SI) first 2. With SI develop current—future state blueprint 3. Develop procurement strategy 4. Select solution that best meets business requirements 5. Create cross-functional Project Group and Executive Steering Committee 6. Alignment roles & responsibilities
Selection Criteria ▪ Total Cost of Ownership ▪ User Experience (especially P2P) ▪ IT Architecture ▪ Implementation approach ▪ Scalability (global) ▪ Touchless processing ▪ Compliance (SSAE-16)
Next Steps ▪ Replace legacy expense platform with Coupa Expense ▪ Go global… ▪ Implement P-Cards ▪ Explore Coupa Pay/V-Pay ▪ Dynamic discounting/SCF
Lessons Learned
Lessons Learned ▪ Create governance model ▪ Engage with stakeholders across multiple departments/levels ▪ Celebrate early wins! ▪ Define “what success looks like” ▪ Start with non-sensitive categories ▪ Ensure spend is contractually available ▪ Training & development ▪ Determine resource requirements
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