>> Announcer: From the Cosmopolitan Hotel
in Las Vegas, Nevada, it's theCUBE.
Covering Coupa Inspire 2019,
brought to you by Coupa.
>> Welcome to theCUBE, at Coupa Inspire '19.
I'm Lisa Martin on the ground,
at the Cosmopolitan in Las Vegas,
and we're pleased to welcome to theCUBE
Michael Van Keulen, Global Procurement Director
of Lululemon Athletica.
Michael, welcome to theCUBE.
>> Thank you.
>> I'm a big Lulu fan, have been for many, many years.
If anybody doesn't know Lululemon,
this is a three plus billion dollar designer, distributor,
and retailer of really cool technical athletic apparel.
You've been there for a few years now,
came from a finance background.
One of the things that I love about Lululemon
is the inspirational messages on the bags.
Anytime I'm in a grocery store
and you have to bring your own bags,
and I'm nearsighted and I can spot a Lululemon bag
from a mile away.
Talk to us about just one of the examples
of this procurement transformation that you helped initiate,
when you came in and found something really interesting
about this iconic bag.
>> Sure, yeah, so when I joined the company
you start to do your basic spend cube analysis
and trying to figure out where the big spend items are.
And given that the bag is so visible for everybody,
I figured that's really a big volume,
lots of spend, very visible, and very important
to our business.
So I started to dig in to our shopping bag as a category.
And I uncovered that it was single-sourced
with one factory in Cambodia, with a nine month lead time.
But nobody in the company really knew that.
So when I was put in front of our senior executives
to talk about where do I feel there's opportunity,
there was some pushback on me digging into our shopper
and there was even perspective in the senior executive teams
that I didn't really understand
how important our shopper is.
And then when I asked the question,
where does the shopper come from?
Where is it made?
How is it made?
What's the lead time?
What's the cost?
There were lots of unknowns, and when I threw
that on the table and said, "Well, it's single-sourced,
"one factory, in Cambodia", you could immediately see
a lot of people going like, "Wow, that's very interesting."
And they started to realize that procurement is not
just about saving money, which we also did,
but it's also about de-risking our supply chain,
being more nimble and more agile.
>> Yes, I was going to say that what you discovered
was a massive risk to the brand.
I think the bag, is the number one brand asset?
>> Michael: Totally.
>> It's very visible.
But that was really the tip of the iceberg of some
of the things you came in saying, "You know, as procurement,
"there is a massive, massive, many massive,
"impact elements that it can have on the business."
>> Michael: Right.
>> So going from sort of a tactical to a strategic approach.
How was the bag, as an example, able to start
helping you transform the culture of Lulu
to be more strategic and start looking at all of the other
ways in which this business can derive value
from a number of the other elements besides the bag.
>> Yeah, so we started to identify, what are some
of our core principles when it comes to how we source,
and how we procure.
Those are things to me, like fact-based decision making,
analytics, knowing what you buy, how you buy,
where you buy, competitive pressure, making sure
the suppliers realize that we have
options in the marketplace.
I mean, those are some of the key components of running
a competitive department that drives
a competitive advantage.
And that's really what we focus on
at Lululemon in procurement.
>> Some of the disruptors that we see in procurement
and finance today are consumerization.
Rob Bernstein talked about it this morning
with some of the things that Coupa is now doing
with the Amazon Marketplace.
But as consumers, whether we're consuming Lululemon
products or software, we have choice.
We also have this expectation that we can go
somewhere and find anybody that's selling this
particular product, I can see the prices,
I can see, the pricing pressures put on,
I can see all the different suppliers.
So the consumerization sort of disruptor,
is really interesting to every industry.
How are you leveraging that to,
to really drive much more value.
Not just saving costs, but even things
like impacting shareholder value for Lulu?
>> Yeah, I think table stakes today is just
managing spend, right?
Knowing where your money goes, and trying to make
sure that we stretch the dollars as much as we can,
I think is what every procurement function does.
I think what distinguishes the world class
from the let's say, the middle of the pack,
is are you able to contribute to top-line growth?
How are you able to innovate?
Are you able to innovate through your suppliers?
And so one example, this is how we implemented
third-party gift cards at many grocers across North America.
That was an idea generating from procurement,
tying into gift cards that we already source
and that we now have third-party gift cards
at the Kroeger's and the likes.
That just drive more traffic to our stores.
And that's just through a really exciting, cool idea,
that wouldn't necessarily come from a procurement,
traditional procurement function,
but one that really wants to contribute to future growth.
>> One that wants to contribute to future growth,
that has a strategic vision.
When we look at the Coupa community,
there's now $1.2 trillion of transactions
going through that.
There's a tremendous amount of data,
and we go to so many conferences at theCUBE every year,
and we hear very commonly, data is the new oil.
>> Michael: Totally.
>> Data is gold.
It is those things if you have the right,
if you have visibility and the opportunity to extract
value from it and act on it immediately.
Talk to me a little bit more about the third-party
gift card approach, and was that something
that you said we have so much more visibility,
into our data, into our consumers, into our suppliers.
There's an obvious low-hanging fruit opportunity here.
How did that data help you make that decision?
>> Yeah, no this was more an idea where you start
to look at what value can procurement drive
other than just managing and reducing cost?
And every other big apparel retailer
is already in this third-party space and Lululemon is not.
And the power of our company
is we are vertically integrated.
You can only buy our product at Lululemon,
and some select strategic partners.
But opening up the doors for people to be
experiencing our brand in a different way,
through purchasing a gift card or being gifted
a gift card, I should say, and that audience
then now comes into our store.
It just could potentially be a completely new guest.
And that is what is super exciting.
>> So let's talk about some of the business
impact of that.
So, I would like to be on the receiving end
of the Lulu gift card,
for anybody who's watching my birthday's in March.
(Michael laughing)
But in terms of what are some of the things
that you've seen map back to top line impact from that.
Increase in new customers acquired,
increase in customer lifetime value,
what are some of those big impacts that procurement
has made with what seems like an, aha, this is
a simple idea, we should be doing this too.
>> I think what Lululemon does better than any retailer
on the planet is our educators.
Right, our educators in our stores.
And so, it's my job is
how do I set these guys up for success?
So I think one way we're now doing
and leveraging the Coupa platform,
is taking away administrative complexity.
So the lesser the administrative burden is on our
stores and our educators, the better they are
with engaging with our guests.
And educating them on our product, why we make it,
what it does, so that our consumers that we call guests,
ultimately, not just make the transaction,
but also buy the right product, they know what
the product is supposed to do for them.
And how it's supposed to fit and how it's supposed
to help them in their daily lives.
And so what procurement really does is just take away
that complexity that they have today,
so that they can focus on what they do best.
>> So walk me through who within,
so one of the things that Coupa does,
is more than I think any of their competitors,
is it's procurement, it's invoices, expenses, payments.
Tell me about all the different ways in which
Lululemon is leveraging Coupa and walk me through
kind of an average user experience.
This is somebody, like an individual contributor
in marketing or finance.
Give me a little bit of a taste of that.
>> Yeah, so we use Coupa for sourcing, contracting,
requisitioning, purchase orders, and then flip
that PO into pay, so we use the full suite of solution.
The biggest focus for us is on the downstream,
as we call, Procure to Pay.
So it's a lot of people placing requisitions,
and that can be in marketing, it could be in the store,
it could be in any part of our business, really.
And the downstream is the most important element,
because that's where the visibility comes.
And then from a procurement standpoint,
we use the Sourcing and the CLM platform.
But the downstream is where the magic happens.
>> So is every business unit within Lululemon
on the Coupa platform?
>> So we launched North America on February 4th,
we're live in 18 stores as a pilot,
and we're going to roll out all of North America,
the entire fleet, in August.
>> So just February of 2019, so just what,
five months or so ago.
And the impact to the business that you've seen
with just these first 18 stores?
>> Yeah, it's not just the 18 stores,
it's inclusive of our head office
and our distribution centers in North America.
We just now focus on supplier enablement,
more suppliers on the platform,
more spend through the portal,
and with the stores it's a pilot.
It's going really well and if the stores are going to get it
I'm pretty sure they will be very pleased.
>> So, we talked about kind of the consumer,
the guest experience, supplier centricity.
What have you achieved with respect to supplier centricity,
using Coupa, and how is that affecting everybody
up to the C-suite in your organization in terms of,
wow, procurement is really a business engine,
here we do invest in.
>> Yeah I think our, if you look at our journey
when we started three years ago where we literally
had no real procurement as it is described today,
we're still in that journey of maximizing
our supplier relationships.
And through our supplier relationships,
really drive innovation.
I think we're not entirely there yet,
I think that is one of the next iterations,
is how do we take procurement to the next level.
>> And if you look back at the last few years,
what surprises you about coming from a finance background,
now being in charge of procurement for a major global brand.
What are some of the things that surprise you
about this future of procurement and where Lululemon
is setup to be successful?
>> I think the biggest surprise is that people
never intentionally do business with a company
that we may or we should be doing business with.
People never intentionally do that, it's just because
they don't ask the right questions
around ownership structure and risk and sustainability,
and reputational risk and environmental risk,
and just cost aside.
And what I think what procurement helps to do
is to actually ask all those questions.
So that we end up with the right company,
with the right pricing, the right quality,
the right specs, the right everything.
I think that's what surprised me, is that missing link
that procurement brings to the table.
>> So if you had to give your peers,
in any industry, some advice would it be
first of all, help establish a culture
that is willing to ask questions.
'Cause there's that whole thing too, right?
We always think, well maybe it's a dumb question.
Have that culture that is, no question is a dumb question,
ask, ask, ask.
>> Yeah and Lulu is, fortunately enough, such a young company
so I had a lot of great stakeholders,
I still have them today,
that are highly supportive.
It's never just me or my team,
it is collaboration, it's cross-functional.
Everybody has to have something in it, right?
So Lulu's a very young company.
So if you're a very, maybe mature organization
where people are set in their ways
it just becomes a little.
So I used to work for VF Corps, which is a slightly
more mature, been around for 100 years.
There it required more convincing than maybe
at Lululemon where, again, people are just,
the population is much younger.
And we needed more structure and people recognized that.
>> The appetite was there.
>> The appetite was there, for sure.
>> Last question for you, Michael.
Some of the things that are being announced
this week at Inspire, we heard this morning about,
we mentioned a minute ago about the size
of the Coupa community.
The amount of data, the value that it's driving
for customers and for suppliers.
Also they talked about this Amazon Marketplace
that they're expanding this relationship
so that IT folks can have this full suite of visibility.
What excites you most about the direction
that Coupa is going in?
>> I mean, it's the data, it's the native integrations
with Amazon and the likes, absolutely.
What excites me the most in terms of the different
modules is Coupa Pay.
I've been wanting to go after dynamic discounting,
that's what Coupa Pay is going to enable us to do.
Virtual pay is another big opportunity where
we can start flowing a lot of our payments through
a virtual payment system, our payment cards,
that excites me.
But it's the data, and it's how do we as a community
start to leverage our spend,
I think will be absolutely awesome.
I look forward to that.
>> Yes and that collaborative spirit this morning
was really palpable.
Well, Michael it's been a pleasure
to have you
on theCUBE today. >> Thank you.
>> Congratulations on what you've done at Lulu,
and for Lulu being a Coupa Spendsetter.
>> Thank you.
>> For Michael Van Keulen, I'm Lisa Martin,
you're watching theCUBE from Coupa Inspire '19,
thanks for watching.
(upbeat techno music)