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Supplier Management - The Path to Supplier Management Excellence
 

Supplier Management - The Path to Supplier Management Excellence

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A Good supplier relation is one of the key parameters to achieve supply chain excellence as almost every company is dependent on their suppliers. Suppliers have a direct impact on an organization's ...

A Good supplier relation is one of the key parameters to achieve supply chain excellence as almost every company is dependent on their suppliers. Suppliers have a direct impact on an organization's product/service quality, competitiveness and also product innovation.

A good liaison between the buyer and supplier improves collaboration, thus increasing the efficiency and productivity for the organization.

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    Supplier Management - The Path to Supplier Management Excellence Supplier Management - The Path to Supplier Management Excellence Presentation Transcript

    • www.zycus.comTHEPATHTOSUPPLIERMANAGEMENTEXCELLENCE
    • A good supplier relation isone of the key parametersto achieve supply chainexcellence as almost everycompany is dependent ontheir suppliers. Suppliershave a direct impact on anorganization’s product/servicequality, competitiveness andalso product innovation. Formajority of the organizations,selecting a supplier is astrategic step which would notonly generate cost efficiencybut also help the companygrow.A good liaison between thebuyer and supplier improvescollaboration, thus increasingthe efficiency and productivityfor the organization when itcomes to managing the supplychain. It would also offerbenefits like:• Avoiding costly & potentially devastating supply disruption• Reducing risk towards scenarios like; defects / environmental problem/ safety issues etc.• Implementing corrective actions before the problem becomes a big headache or hits the bottom lineThis e-book will cover the3 stages for effective suppliermanagement.Introductionwww.zycus.comIntroduction01The path to supplier management excellence
    • www.zycus.comThe path to supplier management excellenceSTAGE 1: FOUNDATIONS OF ANEFFECTIVE SUPPLIER RELATIONSHIP
    • Value propositions differfor internal & externalstakeholders. For instance,internal stakeholders focus onprice savings through preferredsupplier contract compliancewhereas external stakeholdersfocus on building relationshipsthat create business value.Internal stakeholders preferrigid contracts as opposed toflexible contracts preferred byexternal stakeholders.Having understood the valueproposition, the next importantstep for the CPO/head of theprocurement is to address theconcerns of the stakeholdersurrounding the key valuepropositions.Stage 1: Foundations of an effective supplier relationshipwww.zycus.comUnderstand The Value PropositionOf Your Stakeholders02The path to supplier management excellence
    • This involves keeping a tabon how the changes in theecosystem will impact the keycommodities that you sourceincluding the competitors.This requires having a strongsystem for collecting marketintelligence to track commodityprices. For instance, if the priceof the commodity falls, theorganization can then demandthe commodity from thesupplier at new reduced price.Stage 1: Foundations of an effective supplier relationshipwww.zycus.comGauge The Ecosystem03The path to supplier management excellence
    • This is to gauge the impact ofmacro-economic scenarios onthe organization’s supply chain& sourcing strategies.Conducting scenario planningis simple for predictable eventsand market fluctuations.Establish theoretical scenarioplanning to combat risksemanating from events thatcannot be predicted viz.pandemic threat, cyber attack,natural disasters etc.Stage 1: Foundations of an effective supplier relationshipwww.zycus.comConduct Scenario Planning ForImpact Assessment04The path to supplier management excellence
    • Finding a suitable competitivesupplier is fundamental to thesuccess of a sourcing strategy.An effective supplier discoveryprocess helps to find a newsupplier which increases acompany’s sourcing leverageand gives an opportunity toevaluate different suppliersacross markets / geographiesbased on their capabilities.Companies can refer tosupplier registry or externalnetworks to scout for suppliers.However this can be verytedious and time consuming.Modern sourcing tools can beused to engage with suppliersearly through supplier portal.This helps in saving time andfinding relevant suppliersfaster.Stage 1: Foundations of an effective supplier relationshipwww.zycus.comLooking For Suppliers05The path to supplier management excellence
    • The sourcing team shouldbe cautious of unscrupuloussuppliers entering thesupply chain and providingsubstandard raw materials.Screening the suppliersensures supply quality andcost assurance.Sourcing teams should havea predetermined screeningprocess that every suppliershould go through.Companies can have aquestionnaire to judge thesuppliers. The questions canvary depending upon theproject requirements.Assign weightage and scoreranges to each questiondepending on the project needand complexity.Stage 1: Foundations of an effective supplier relationshipwww.zycus.comScreening The Suppliers06The path to supplier management excellence
    • It is imperative for companiesto select the right supplierswho not only provide items/services at a competitivecost but also possesses theability to reduce the impact ofeconomic uncertainties on thesupply chain.The shortlisted suppliersafter the qualifying roundcan be evaluated on differentparameters or scenarios likechoosing a supplier from aparticular geographic locationor working with minoritysuppliers.All stakeholders shouldbe involved in the supplierselection process to ensuretransparency and makeevaluation process moreobjective.Stage 1: Foundations of an effective supplier relationshipwww.zycus.comSelecting The Best Supplier07The path to supplier management excellence
    • Author contracts byaccommodating supplierviews - this gives suppliera sense of ownership. Thiscoupled with a transparentprocess helps build arelationship of trust betweenthe buyer and the supplier.Building relational contractscan help sourcing managersto plan for emergenciesand uncertainties. A goodrelationship with the supplierensures supplier support attimes of adversities.Explore options in thecontracting process keeping inmind the emerging risks.Stage 1: Foundations of an effective supplier relationshipwww.zycus.comBuild Relational Contracts08The path to supplier management excellence
    • Finalized suppliers should beequipped with the necessaryknowledge and behaviorto become a part of thecompany’s supply chain.Investing in a supplier portalmakes the onboardingprocess simple and less timeconsuming, wherein thesuppliers can upload requireddocuments and buyer can keepa track of the same.Stage 1: Foundations of an effective supplier relationshipwww.zycus.comBringing The Supplier Onboard09The path to supplier management excellenceFor detailed reading you can download the whitepapers:• Creating Agile Supply chains: The Role of Technology• 5 Steps for Effective Supply Chain Management
    • www.zycus.comThe path to supplier management excellenceSTAGE 2 : IMPLEMENT SUPPLIERINFORMATION MANAGEMENT
    • Define the parameters thatwould be considered forsupplier evaluation.Get insights into informationthat needs to be collected fromsuppliers by evaluating theindustry benchmarks or whatinformation the competitorsare collecting.Stage 2: Implement Supplier Information Managementwww.zycus.comOrganize10The path to supplier management excellence
    • Develop a portal wheresuppliers can feed theirinformation on regular basis.Key is to develop a userfriendly portal to ensuresupplier buy-in.Investing in supplier portalmakes it easy for the buyersto keep a track of informationsubmitted by the suppliers.www.zycus.comCollect11The path to supplier management excellenceStage 2: Implement Supplier Information Management
    • Assign commodity managers tomonitor critical categories.Group suppliers basedon priorities and type ofpurchases viz. strategicpartners, preferable suppliers,general suppliers etc.www.zycus.comCategorize12The path to supplier management excellenceStage 2: Implement Supplier Information Management
    • Alert suppliers to updateinformation on regular basis asdecided by the organization/department.Receive alerts for non-compliance by suppliers interms of information updatesto take appropriate action.www.zycus.comAlert13The path to supplier management excellenceStage 2: Implement Supplier Information Management
    • Integrate supplier informationwith other tools like SupplierPerformance Management,Accounts Payable, etc.Enable the organization inmanaging key performanceindicators & supplierscorecards.For detailed reading you can download the whitepaper:• Procurement Simplified with Supplier Information Managementwww.zycus.comIntegrate14The path to supplier management excellenceStage 2: Implement Supplier Information Management
    • www.zycus.comThe path to supplier management excellenceSTAGE 3 : SUPPLIER PERFORMANCE& EXPECTATION MANAGEMENT
    • Focus on the objectivesthat the organization aimsto achieve by answeringthe question “How do wecompete?”Reshape the routineperformance agendas likepurchase price variance, costsavings or avoidance, reliable/on-time delivery etc. to theones more aligned to theorganization’s competitivegoal.For instance, an enterprise thatintends to win in the market ona combination of technologyleadership, product featuresand style should generate verydifferent supplier performanceexpectations and metrics thanenterprises competing onthings like low cost producer,legendary customer support, orhigh market share.www.zycus.comDefine a Competitive Framework15The path to supplier management excellenceStage 3: Supplier Performance & Expectation Management
    • Establish performancebaselines - where are wetoday? And competitivebenchmarks - where are themarket leaders and how rapidlyare they improving?Achieve the competitivebenchmarks by giving supplierscreative incentives to offer anddeliver better performance vis-à-vis any competing customersthey may serve, investingin research and marketintelligence operations etc.www.zycus.comBaseline & Benchmark16The path to supplier management excellenceStage 3: Supplier Performance & Expectation Management
    • Set aggressive yet realisticperformance-improvementtargets and design/implementmetrics that systematicallyand consistently drive supplierperformance toward theimprovement targets.Use competitive benchmarksto set the targets. However, itis important to consider factorslike performance improvementtargets, that need to be highenough to inspire creativity,innovation but not so high asto be unattainable within areasonable time period.Design metrics that are (a)comprehensive enough todrive to desired results withoutcreating unintended behaviorsand (b) simple enough to beeasily and cost effectivelyexecuted and interpreted as abasis for action and decisionmaking.www.zycus.comTarget & Design17The path to supplier management excellenceStage 3: Supplier Performance & Expectation Management
    • Reporting and activelymanaging metrics to improvetargets.The organizations shouldcontinually refine targets,benchmarks, and metrics inresponse to what it learnsthrough Supplier PerformanceManagement and throughexternal changes.Performance targets need tobe realistic but at the sametime should trend upwardover time with the objective ofeither obtaining or maintainingmarket leadership.www.zycus.comRefine & Improve18The path to supplier management excellenceStage 3: Supplier Performance & Expectation Management
    • There is no one defined way forsupplier development. Thosesuppliers who do not meetthe targets should be givensupport in terms of knowledge,finance, and processimprovement capabilities tomake them more efficient.Supplier developmentprograms when executedcorrectly can help theorganization to improvesupplier performance, product/service quality, reduce costand attain higher valueaddition from the suppliers.www.zycus.comSupplier Development19The path to supplier management excellenceStage 3: Supplier Performance & Expectation Management
    • For detailed reading you can download the whitepaper:• Get Competitive with Supplier Metrics - Aligning PerformanceImprovement Drivers with Enterprise ObjectiveComplete reconfiguration ofmetrics if and when conditionswithin an enterprise or itsmarket change substantially.For example, a change incorporate leadership, adventof new competitors, economicboom/bust, technologyinnovation, change in customerpreference etc.It may not be necessary torewrite supplier performancemetrics right away.Organizations must always belooking ahead to understandwhat might need to change.Adopt flexible processes andtools that easily accommodatechanges and refinements.www.zycus.comStart Over20The path to supplier management excellenceStage 3: Supplier Performance & Expectation ManagementTo read more about Supplier Management, Click here
    • At Zycus we are 100% dedicated to positioning procurement at the heart of business performance. With our spirit of innovation and a passion tohelp procurement create even greater business advantages, we have evolved our portfolio to a full suite of Procurement Performance Solutions —Spend Analysis, e-Sourcing, Contract Management, Supplier Management, Procure-to-Pay (P2P) and Financial Savings Management. Behind everyZycus solution stands an organisation that possesses deep, detailed procurement expertise and a sharp focus on being responsive to customers. Weare a large — 600+ and growing — company with a physical presence in virtually every major region of the globe. We see each customer as a partnerin innovation and no client is too small to deserve our attention. With more than 200 solution deployments among Global 1000 clients, we searchthe world continually for procurement practices proven to drive competitive business performance. We incorporate these practices into easy-to-usesolutions that give procurement teams the power to get moving quickly — from any point of departure — and to continue innovating and pushingbusiness and procurement performance to new heights.About ZycusMumbai+91 22 66407676London+44 (0) 800 6226561Princeton+1 609 799 5664Atlanta+1 678 366 5000Chicago+1 847 993 3180© 2013 Zycus Inc. All rights reserved | Page 35