What is Strategic Sourcing?Definition A disciplined, integrated process designed to define the most appropriate relationships with suppliers in order to enhance the company’s strategic, competitive position.Sourcing Approach Understand the category spend profile. Establish category specific sourcing strategy/tactics. Identify potential suppliers. Create a competitive environment. Negotiate
What it does…….Strategic Sourcing engages in large spendcategories across the corporation.It provides a sourcing perspective, approach anddiscipline.Achieves common objectives and reduces costs.
Developing the TeamCollaborating with key business employees.Assessing processes, understanding thecompetitive landscape and proposing solutionsdesigned to maximize spending effectiveness.Maintaining day-to-day supplier relations.Impact: leverage corporate scale andcollaborative business negotiating to achieve moreeffective spending for the company.
Profile Select Sourcing Generate Supplier Select Implementation Negotiate and Integrate Benchmark Supply Sourcing Group Strategy Portfolio Path Select Suppliers Suppliers Market 1 2 3 4 5 6 7 Purpose Understand internal Create “go to Identify all viable Decide most Conduct aggressive Operationalize Monitor market and spend and external market” approach suppliers appropriate negotiations and supplier agreements supplier performance market execution strategy select suppliers Tasks Identify and understand Assess current Collect detailed Select RFP or Issue RFP Identify integration Benchmark supplier current usage sourcing practices supplier information supplier Analyze RFP responses issues performance Conduct industry Strategically Generate potential development path Develop negotiations Consider Develop processes to analysis segment the supplier master list Select method of strategy organizational monitor category Develop qualification negotiation Conduct negotiations implications and market/industry Analyze alternative criteria Develop RFP Recommend suppliers required changes conditions sourcing strategies Create new This is the Screen potential execution strategy Select appropriate supplier list against Develop RFP processes and sourcing approaches criteria procedures road map and techniques Create transition/ implementation plan Monitor results Tools Spend Management Supply Market Supplier Search Supply Market RFP Deal Management Spend Management Solutions (industry Solutions Negotiations Sourcing Team Tools Sourcing Team Tools analysis, sourcing Sourcing Team Supply Market Solutions approaches) ToolsDeliverables Category deep dive Category sourcing List of suppliers Savings estimate RFP analysis Implementation plan Ongoing category review strategy summary segmented by calculation Negotiation strategy Savings review process Internal spend Internal analysis capabilities Savings realization Strategy/team roles measurement and Supplier performance analysis Constraints Supplier qualification schedule Post negotiation tracking process report card Industry overview Category criteria analysis Conversion timeline and market positioning Supplier “short list” Supplier Supplier validation dynamics matrix for RFP recommendations Internal and Supplier terms and external conditions communications strategy
Managing Communication with SuppliersUnderstand the sales motivation/manipulation.Solicit early Strategic Sourcing involvement to manage thesupplier relationship and exercise our ability to influence.Foster a competitive environment through our actions andcommunication.Be aware at all times of the extent and specifics ofinformation shared with suppliers.Speak with one voice.
Process Related BenefitsThorough Understanding of Supply Market (Capabilities)Reduced CostValue-Added Services (being a partner)Best in Class PracticesContract Review (Legal and Procurement Input)Better Terms and ConditionsFaster Issue ResolutionContinuous Improvement CycleBuild team work
A few examples of progress……SHOW INTERNAL DEPT/COST AVOIDANCE/CONTACTOR-VENDOR SAVINGS AS 3 SPECIFIC AREAS ON THIS SLIDE We worked with [fill in who/what/group etc you worked with to save money, like IT/Contract/Supplies, etc here showing the exact dollars in whole numbers] [show cost avoidance from action here] We worked with _________ and avoided costs of $_________. [show external savings like contractors/vendors here] Working with _______ we negotiated Equipment savings 2012 through 2015 equaled $_______.
Progress……. SHOW SUCCESS IN DOLLARS10000 9000 000’s 8000 POs = $5,968 7000 6000 POs Non POs = $3,054 5000 Non POs Total = $9,022 4000 3000 Goal 2000 Comb. 1000 Goal = $7,975 0 2012- Progress-% 113.13% 2015
Summary of Action StepsSHOW WHAT YOU DID TO SAVE OR AVOID COSTS IN NARRATIVE HERE Got CEO buy in for one focus from the top What did you do for cost avoidance? What departments have contributed to the overall success of this plan? Cost savings to date are? Next Steps: Leverage our spend by working together, using our plans and forecasts. Manage our vendor relationships and purchases.