 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 Percument Director of Lululemon Athletica. Michael, welcome to theCUBE. Thank you. I'm a big Lulule 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. You know, anytime I'm in a grocery store and you have to bring your own bags, and I'm near-sighted 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've helped initiate when you came in and found something really interesting about this iconic brand, this iconic bag. Sure. Yeah, so when I joined the company, we, you know, you start to do your basic spent cube analysis and trying to figure out where the big spent items are. And given that the bag is so visible for everybody, I figured like that's really like a big volume, lots of spent, very visible, and very important to our business. So I started to dig into 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 executive to talk about like, you know, where do I feel there's opportunity, there was some pushback on me digging into our shopper and that 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 can immediately see a lot of people going like, wow, that's very interesting. And I 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 what is the number one brand asset. 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, many massive impact elements that it can have on the business. 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, and so we started to identify, like 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 Lulu Lemon 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 Koopa is now doing with the Amazon marketplace. But as consumers, whether we're consuming Lulu Lemon 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 really drive much more value, not just saving costs, but even things like impacting shareholder value for a little bit? 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 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 sourced and that we now have third party gift cards at the Kroger's and the likes that just drive more traffic to our stores. And that's just 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 Cooper 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, 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 the data help you make that decision? Now this was more an idea where you start to look at like what value can procurement drive other than just managing and reducing costs. And every other big apparel retailer is already in this third party space and Lululemon is not. And the power of our companies, 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 that 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 Lululemon gift card for anybody who's watching my birthdays in March. And, but in terms of like 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, and, 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 Koopa 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 by 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 Koopa does is more than I think any other competitors is it's procurement, it's invoices, expenses, payments. Tell me about all the different ways in which Lululemon is leveraging Koopa and walk me through kind of an average user experience. Is this somebody like an individual contributor in marketing or finance? Give me a little bit of a taste of that. Yeah, so we use Koopa for sourcing, contracting, requisitioning, purchase orders and then flip that P.O. 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 Koopa 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 spent 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 Koopa 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 relationship to 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 the last few years what surprises you about coming from a finance background now being in charge of procurement for a major global brand? Where are, what are some of the things that surprise you about this future of procurement and where Lululemon is set up to be successful? I think the biggest surprise is that people never intentionally do business with a company that we may or may not be, 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 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? Because there's that whole thing too, right? We always think, well, maybe it's a dumb question. Have that culture that is no question as a dumb question ask, ask, ask? Yeah, and Lulule is fortunate enough, it's 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 Lulule is a very young company. So if you're a very, maybe more mature organization where people are set in their ways, it just becomes a little, so I used to work for VF Corp, which is slightly more matured, been around for a hundred years. There it required more convincing. Then maybe at Lululemen where, again, like people were just, the population is much younger and we were just, 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-sweeted visibility. What excites you most about the direction that Coupa is going in? Yeah, 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 CoupaPay. I've been wanting to go after dynamic discounting. That's what CoupaPay is going to enable us to do. Virtual pay is not a 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. Yeah, that collaborative, yes, and that collaborative spirit this morning was really palpable. Well, Michael, it's been a pleasure to have you on theCUBE today. Congratulations on what you've done at Lulu and for Lulu being a CoupaPay spend setter. Thank you. For Michael Vankeel and I'm Lisa Martin. You're watching theCUBE from CoupaInspire19. Thanks for watching.