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Strategic sourcing change 2010

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2009 Strategic Sourcing & Procurement evaluation

2009 Strategic Sourcing & Procurement evaluation

Published in: Business

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  • 1. PROCUREMENT TRANSFORMATION• Background• Spend Analytics (The Linchpin)• Strategic Sourcing (The Result)• Tools (For Buyers, Partners, Suppliers)• Metrics (The Sustainable Measures)• Change Management (The Process)• Allies (The Vehicle)12/02/2009 1
  • 2. PROLOGUE Procurement at the Utility• Largely Transactional• Minimal Value Add• Reactionary• De-centralized (Approach & Process)• Like Driving With a Blindfold on• This Has To Change!12/02/2009 2
  • 3. SPEND ANALYTICS • Major Emphasis • Metrics – Score Card 80% Strategic – Market Intelligence – Commodities Indexing to Exception Analysis • Marquee Leveraging! 85% (Mission Critical) • Cross-functional Teams • Initial Emphasis • Minimize Base • Automate! 15% to Tactical • On-line Catalogs, VMI, 3PL • P2P! 20% • Co-source? • Cross-functional Teams12/02/2009 3
  • 4. STRATEGIC SOURCING BENEFITS• Improves Costs – Volume Discounts – Reduced Freight Costs – Increased Automation (fewer touches) – Reduction in Procurement Operational Costs• Improves Quality – Better Supplier Delivery Performance – Increased Supplier Assurance (lower risk) – Decreased Processing Errors – Better Contract Compliance• Improves Culture – Management by Exception – Strategic Partner to BUs – Visibility to Performance12/02/2009 4
  • 5. TOOLS FOR BUYERS• Spend Analytics – Dollar Volume (plus Mission Critical Sourcing) – Quantity of Goods vs. Value of Goods – Supplier Rationalization (Leverage AEP Marquee)• Standardized Operating Procedures• Supplier Score-carding• Market Intel Tools (organic or purchased?)• Commodities Intel Tools• Technology Tools (EDI!, P2P, Web-based Transactions)• Cross-functional Teambuilding with BUs12/02/2009 5
  • 6. SOURCING CAREER DEVELOPMENT• Buyer (III, II, I, Sr.)• Contract Analyst (III, II, I, Sr.)• Strategic Sourcing Analyst (III, II, I, Sr.)12/02/2009 6
  • 7. TOOLS FOR PARTNERS• Agnostic Sourcing Model• Total Cost of Ownership Acquisitions• Operational Assessments• Market Intel (organic or purchased?)• Cross-functional Teambuilding with Buyers12/02/2009 7
  • 8. TOOLS TO IMPROVE SUPPLIERS• Supplier Performance Management Program• Operational Assessments• Score-carding• Formal Standardized Corrective Action Plans12/02/2009 8
  • 9. INTERNAL METRIC MEASURES• Reduce Quantity of Suppliers• Reduce Number of Touches by Buyers• Reduce Aberrant (Rogue) Spend• Reduce Non-blanket Spend• Reduce Rework• Improve Savings & Cost-Avoidance Metrics12/02/2009 9
  • 10. STRATEGIC SOURCING • “Herding Cats” • “Boiling Frogs” (for next two years)12/02/2009 10
  • 11. CHANGE MANAGEMENT • People (Skillsets) • Processes (Standardization) • Technology (0 for 3)12/02/2009 11
  • 12. STRATEGIC PARTNERS FOR CHANGE• Accounts Payable• Treasury• Legal• Risk• Audit• CFO?• Wires?• Generation?12/02/2009 12