The Five Best Supply Management     Practices in Use Today     by F. Michael Babineaux, CPSM, C.P.M., A.P.P.              ...
Who Am I?• F. Michael “Mike” Babineaux, CPSM, C.P.M. – 40+ years Supply Management Experience – 30 year FedEx Veteran – SC...
Topic  The Five Best SupplyManagement Practices in Use          Today
World Class Excellence --           Strategic Processes          Establish        Establish        Integrate        and Le...
World Class Excellence --                 Enablers                    Develop                  Organization       Deploy  ...
12 World Class Supply           Management Practices      Strategic Processes           Enabler Processes•   Procurement S...
12 World Class Supply           Management Practices      Strategic Processes           Enabler Processes•   Procurement S...
The Five Best1.   Strategic Goal Alignment2.   Procurement Strategy Development3.   Supplier Integration4.   Teaming Strat...
The Five Best1.   Strategic Goal Alignment2.   Procurement Strategy Development3.   Supplier Integration4.   Teaming Strat...
Strategic Goal Alignment         "Strategic               Performance  Measurement for Purchasing and            Supply,“ ...
What happens when . . .CompanyStrategy           Internal   Supply Chain           Customer   Strategy           Strategy ...
Strategic Goal Alignment• Goal Alignment Concepts  – Vertical Alignment               Vision     • Business Vision & Missi...
Strategic Goal Alignment• Goal Alignment Concepts  – Vertically aligned  – Horizontally aligned     • Strategic objectives...
Strategic Goal Alignment• Goal Alignment Concepts  – Vertically aligned  – Horizontally aligned     • Stakeholder Alignmen...
Strategic Goal Alignment• Goal Alignment Concepts  – Vertically aligned  – Horizontally aligned     • Stakeholder Alignmen...
Strategic Goal Alignment• Goal Alignment Concepts  – Vertically aligned  – Horizontally aligned  – Externally aligned     ...
Critical Success Factors to          Achieving Alignment Visible top management direction and support Clearly defined st...
Critical Success Factors to                Achieving Alignment                   Rating Exercise                  Factor  ...
Critical Success Factors to                Achieving Alignment                Weighting and Rating                  Factor...
Key Point “If you’re not singing the samesong, you’re just making a bunch          of noise and –  your performance will s...
The Best Supply Management          Practices1.   Strategic Goal Alignment2.   Procurement Strategy Development3.   Suppli...
Procurement Strategy Development• Procurement Decision Tool  – Market Complexity        – Degree of Competition        – G...
Procurement Strategy Development• Procurement Decision Tool  – Market Complexity  – Impact on Business     • Risk     • Va...
Procurement Strategy Development• Procurement Decision Tool       – Market Complexity       – Impact on Business       – P...
Procurement Decision Tool  HighBusiness Impact                 Routine  Low                      Marketplace Complexity   ...
Procurement Decision Tool          Routine Quadrant Characteristics                                                High   ...
Procurement Decision Tool            Routine Quadrant Strategy                                          High              ...
Procurement Decision Tool  HighBusiness Impact                 Routine                Bottleneck  Low                     ...
Procurement Decision Tool        Bottleneck Quadrant Characteristics                                                High  ...
Procurement Decision Tool             Bottleneck Quadrant Strategy                                                 High   ...
Procurement Decision Tool  High                 LeverageBusiness Impact                 Routine                 Bottleneck...
Procurement Decision Tool          Leverage Quadrant Characteristics                                                   Hig...
Procurement Decision Tool          Leverage Quadrant Strategy                                     High                    ...
Procurement Decision Tool  High                 Leverage                 StrategicBusiness Impact                 Routine ...
Procurement Decision Tool          Strategic Quadrant Characteristics                                                   Hi...
Procurement Decision Tool          Strategic Quadrant Strategy                                      High                  ...
Procurement Decision Tool  High       Leverage                 StrategicBusiness Impact  Low               Routine        ...
Key Point“If you use the same strategy to buy airplanes as you do to buy             pencils,  your performance will suffer”
The Best Supply Management          Practices1.   Strategic Goal Alignment2.   Procurement Strategy Development3.   Suppli...
Supplier Integration in New     Product/Service Development“Firms looking for ways to –   – decrease concept to customer  ...
Supplier Integration in New   Product/Service Development• Early Supplier Involvement  – Manufacturing/Service Design Proc...
Supplier Integration in New   Product/Service Development• Early Supplier Involvement  – Manufacturing/Service Design Proc...
Supplier Integration in New   Product/Service Development• Early Supplier Involvement  – Manufacturing/Service Process  – ...
Supplier Integration in New      Product/Service Development• Early Supplier Involvement  –   Manufacturing/Service Proces...
Supplier Integration in New      Product/Service Development• Early Supplier Involvement  –   Manufacturing/Service Proces...
Supplier Integration in New      Product/Service Development• Early Supplier Involvement  –   Manufacturing/Service Proces...
Supplier Integration in New      Product/Service Development• Early Supplier Involvement  –   Manufacturing/Service Proces...
Supplier Integration in New      Product/Service Development• Early Supplier Involvement  –   Manufacturing/Service Proces...
Supplier Integration in New   Product/Service Development• Early Supplier Involvement  – Confidentiality Issues     • Prop...
Supplier Integration in New   Product/Service Development• Early Supplier Involvement  – Confidentiality Issues  – Product...
Key Point “Suppliers know more aboutwhat you buy than you do, so if   you don’t use them, your   performance will suffer”
The Best Supply Management          Practices1.   Strategic Goal Alignment2.   Procurement Strategy Development3.   Suppli...
An Action Plan for Creating          Effective Teams        by Robert M. Monczka, Ph.D., C.P.M. and                 Robert...
Teaming Strategies• Procurement Project Teams• Cross-Functional Teams
Teaming Strategies• Procurement Project Teams  – Definition - The application of project knowledge,    skills, tools and t...
Teaming Strategies• Procurement Project Team Stages  – Initiation     • Root Cause analysis     • SWOT     • Feasibility A...
Teaming Strategies• Procurement Project Team Stages  – Planning     • Scope Development     • Roles & Responsibilities    ...
Teaming Strategies• Procurement Project Team Stages  – Execution     • Change Management
Teaming Strategies• Procurement Project Team Stages  – Monitoring & Control     • Contract Management        – Performance...
Teaming Strategies• Procurement Project Team Stages  – Closure     • Process     • Post Project Audit
Teaming Strategies• Cross-Functional Teams  – Purpose     • To permit different viewpoints and       perspectives
Teaming Strategies• Cross-Functional Teams  – Purpose  – Supply Management Roles     • Leadership     • Facilitation     •...
Teaming Strategies• Cross-Functional Teams  – Purpose  – Supply Management Roles  – Advantages/Disadvantages     • Consens...
Teaming Strategies• Cross-Functional Teams  –   Purpose  –   Supply Management Roles  –   Advantages/Disadvantages  –   Or...
Key Point“Two heads are better than one,so if you’re not including them inthe decisions, your performance            will ...
The Best Supply Management          Practices1.   Strategic Goal Alignment2.   Procurement Strategy Development3.   Suppli...
Performance Measurement              Aberdeen Benchmarking Research• Best-in-Class companies are more than 2.5x more likel...
Performance MeasurementDepartment   Staff     Suppliers
Performance Measurement • Department   – Organizational Expectations      • Objectives Congruence         – Organization  ...
Performance Measurement • Department   – Organizational Expectations      • Objectives Congruence      • Scorecard        ...
Performance Measurement • Department   – Reasons for Scorecard      • Determine effectiveness         – To objectives     ...
Performance Measurement• Staff  – Issues      • Objective Alignment         – Vertical & Horizontal      • Success Criteri...
Performance Measurement• Staff  – Issues  – 360o Reviews      • Users      • Management      • Peers      • Suppliers     ...
Performance Measurement• Staff  – Issues  – 360o Reviews  – Feedback      • Timely      • Corrective actions      • Indivi...
Performance Measurement• Suppliers  – Scorecards     • Qualitative measures     • Quantitative measures     • Price, Deliv...
Performance Measurement• Suppliers  – Scorecards  – Others/specific     • Cycle/Lead time Reductions     • Productivity Im...
Key Point“You can’t manage whatyou don’t measure, so if you’re not measuring   performance . . .”
The Five Best SupplyManagement Practices in Use          Today1.   Strategic Goal Alignment2.   Procurement Strategy Devel...
Thanks for your Time and       Attention
Upcoming SlideShare
Loading in...5
×

Five Best Supply Management Practices in use Today

117

Published on

Published in: Business
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
117
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
11
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Five Best Supply Management Practices in use Today

  1. 1. The Five Best Supply Management Practices in Use Today by F. Michael Babineaux, CPSM, C.P.M., A.P.P. President/CEO Babineaux Educational Services and Training, Inc. www.BESTraining.com 901.853.0539
  2. 2. Who Am I?• F. Michael “Mike” Babineaux, CPSM, C.P.M. – 40+ years Supply Management Experience – 30 year FedEx Veteran – SCM Educator and Trainer • Babineaux Educational Services and Training, Inc. • www.BESTraining.com • 901.853.0539
  3. 3. Topic The Five Best SupplyManagement Practices in Use Today
  4. 4. World Class Excellence -- Strategic Processes Establish Establish Integrate and Leverage a Appropriate Suppliers into World-Class Strategic New Product & Supply Base Service Alliances Development Develop Commodity/ INTEGRATED ANDPurchase Family Strategies ALIGNED Manage Costs Integrate Supplier Suppliers into Strategically the Order Development Across the Fulfillment and Quality Supply Chain Process
  5. 5. World Class Excellence -- Enablers Develop Organization Deploy and Teaming Globalization Strategies Establish INTEGRATED DevelopGlobally Integrated Procurement andand Aligned P&SC Strategies/Plans AND ALIGNED Supply Chain Measurements Establish Develop Human Resource and Implement Development/ Enabling IS/IT Training Systems
  6. 6. 12 World Class Supply Management Practices Strategic Processes Enabler Processes• Procurement Strategy • Strategic Goal Alignment Development • Teaming Strategies• Supplier Integration • Performance Measurement• Leverage the Supply Base • Globalization• Develop Strategic • Information Systems Alliances Integration• Quality Management • Human Resource• Cost Management Development
  7. 7. 12 World Class Supply Management Practices Strategic Processes Enabler Processes• Procurement Strategy • Strategic Goal Alignment Development • Teaming Strategies• Supplier Integration • Performance Measurement• Leverage the Supply Base • Globalization• Develop Strategic • Information Systems Alliances Integration• Quality Management • Human Resource• Cost Management Development
  8. 8. The Five Best1. Strategic Goal Alignment2. Procurement Strategy Development3. Supplier Integration4. Teaming Strategies5. Performance Measurement
  9. 9. The Five Best1. Strategic Goal Alignment2. Procurement Strategy Development3. Supplier Integration4. Teaming Strategies5. Performance Measurement
  10. 10. Strategic Goal Alignment "Strategic Performance Measurement for Purchasing and Supply,“ (A CAPS Research study in collaboration with McKinsey & Co)“Best-in-class companies align the strategyand objectives of the supply managementorganization with those of the rest of theorganization."
  11. 11. What happens when . . .CompanyStrategy Internal Supply Chain Customer Strategy Strategy Misalignment Creates Confusion for You
  12. 12. Strategic Goal Alignment• Goal Alignment Concepts – Vertical Alignment Vision • Business Vision & Mission – Low cost producer Mission • Key Corporate Objectives – Reduce expenses • Supply Management Goals Objectives – Cost reduction • Individual/Management Goals Performance Objectives – Cost Savings IPO/MBO
  13. 13. Strategic Goal Alignment• Goal Alignment Concepts – Vertically aligned – Horizontally aligned • Strategic objectives of strategic business units • Strategic objectives of functional groups. – Conflict » Bulk buying discount vs. Inventory holding cost
  14. 14. Strategic Goal Alignment• Goal Alignment Concepts – Vertically aligned – Horizontally aligned • Stakeholder Alignment Process Evaluate Identify Levels of Stakeholder Evaluate Evaluate Alignment & Groups Importance Relationship Involvement
  15. 15. Strategic Goal Alignment• Goal Alignment Concepts – Vertically aligned – Horizontally aligned • Stakeholder Alignment Process Define Tract Results Develop Implement Outcome & Design Alignment Alignment Of Follow up Strategies Strategies Alignment Actions
  16. 16. Strategic Goal Alignment• Goal Alignment Concepts – Vertically aligned – Horizontally aligned – Externally aligned • Customers and Suppliers
  17. 17. Critical Success Factors to Achieving Alignment Visible top management direction and support Clearly defined strategy and goals Buy-in from key stakeholders Establishment of uniform metrics Implementation of cross-functional/ cross- organizational teams Internal and external education and training Information technology and systems support Elimination of functional barriers Customer focus Continuous communication and feedback throughout the supply chain
  18. 18. Critical Success Factors to Achieving Alignment Rating Exercise Factor Rate• Visible top management direction and support ____• Clearly defined strategy and goals ____• Buy-in from key stakeholders ____• Establishment of uniform metrics ____• Implementation of cross-functional teams ____• Internal and external education and training ____• Information technology and systems support ____• Elimination of functional barriers ____• Customer focus ____• Continuous communication and feedback ____
  19. 19. Critical Success Factors to Achieving Alignment Weighting and Rating Factor Weight X Rate = ____• Visible top management direction and support ____ _____ ____• Clearly defined strategy and goals ____ _____ ____• Buy-in from key stakeholders ____ _____ ____• Establishment of uniform metrics ____ _____ ____• Implementation of cross-functional teams ____ _____ ____• Internal and external education and training ____ _____ ____• Information technology and systems support ____ _____ ____• Elimination of functional barriers ____ _____ ____• Customer focus ____ _____ ____• Continuous communication and feedback ____ _____ ____ Total 100 ____
  20. 20. Key Point “If you’re not singing the samesong, you’re just making a bunch of noise and – your performance will suffer”
  21. 21. The Best Supply Management Practices1. Strategic Goal Alignment2. Procurement Strategy Development3. Supplier Integration4. Teaming Strategies5. Performance Measurement
  22. 22. Procurement Strategy Development• Procurement Decision Tool – Market Complexity – Degree of Competition – Geographical Dispersion – Supplier Cooperation “Price concessions and collaboration”
  23. 23. Procurement Strategy Development• Procurement Decision Tool – Market Complexity – Impact on Business • Risk • Value “What happens if you don’t have it?”
  24. 24. Procurement Strategy Development• Procurement Decision Tool – Market Complexity – Impact on Business – Prioritization • High to LowHighLow High
  25. 25. Procurement Decision Tool HighBusiness Impact Routine Low Marketplace Complexity High Low
  26. 26. Procurement Decision Tool Routine Quadrant Characteristics High Strategic• Many capable suppliers Business Impact Leverage Routine Bottleneck• Fewer total dollars spent Low Low Marketplace Complexity High• Low priority items• May consume a disproportionate amount of time and dollars to acquire• Developed quality and technology• Able to move easily between suppliers--low switching costs
  27. 27. Procurement Decision Tool Routine Quadrant Strategy High Leverage Strategic• Focus - Removing transaction Business Impact Routine Bottleneck effort Low Low Marketplace Complexity High – Standardized contracts – p-cards• The primary goal – Minimize the procurement costs of these items.
  28. 28. Procurement Decision Tool HighBusiness Impact Routine Bottleneck Low Marketplace Complexity High Low
  29. 29. Procurement Decision Tool Bottleneck Quadrant Characteristics High Strategic• Small number of suppliers Business Impact Leverage Routine Bottleneck• Low to medium annual dollars Low Low Marketplace Complexity High• Customized specification and technology
  30. 30. Procurement Decision Tool Bottleneck Quadrant Strategy High Leverage Strategic• Focus on continuous supply Business Impact Routine Bottleneck – Reduce Custom specifications Low Low Marketplace Complexity High or technology – Purchase in quantity – Monitor Inventory closely – The relationship is important but, search for alternative suppliers
  31. 31. Procurement Decision Tool High LeverageBusiness Impact Routine Bottleneck Low Marketplace Complexity High Low
  32. 32. Procurement Decision Tool Leverage Quadrant Characteristics High Leverage Strategic• Greater number of suppliers Business Impact Routine Bottleneck• Medium to high annual dollars Low Low Marketplace Complexity High• Low risk to obtain, but major disruption• Multiple users• Developed quality and technology• Able to move easily between suppliers
  33. 33. Procurement Decision Tool Leverage Quadrant Strategy High Strategic• Focus on volume Business Impact Leverage Routine Bottleneck – Leverage the organization’s Low Low Marketplace Complexity High volume to get lower prices – Combine user requirements – Form categories of items
  34. 34. Procurement Decision Tool High Leverage StrategicBusiness Impact Routine Bottleneck Low Marketplace Complexity High Low
  35. 35. Procurement Decision Tool Strategic Quadrant Characteristics High Leverage Strategic• Few capable suppliers Business Impact Routine Bottleneck• Product/services success critical Low Low Marketplace Complexity High• Unique or customized items• Unable to move between suppliers easily• Cost analysis yields high benefits• Unproven or undeveloped technology
  36. 36. Procurement Decision Tool Strategic Quadrant Strategy High Strategic• Focus on Building Relationships Business Impact Leverage Routine Bottleneck – Collaborative or Low Low Marketplace Complexity High interdependent relationships (e.g. Strategic Alliances)
  37. 37. Procurement Decision Tool High Leverage StrategicBusiness Impact Low Routine Bottleneck Low Marketplace Complexity High
  38. 38. Key Point“If you use the same strategy to buy airplanes as you do to buy pencils, your performance will suffer”
  39. 39. The Best Supply Management Practices1. Strategic Goal Alignment2. Procurement Strategy Development3. Supplier Integration4. Teaming Strategies5. Performance Measurement
  40. 40. Supplier Integration in New Product/Service Development“Firms looking for ways to – – decrease concept to customer development time – improve quality – significantly reduce the cost of the resulting productare involving suppliers earlier in the designprocess.” “Best of the Best” by Aberdeen Research
  41. 41. Supplier Integration in New Product/Service Development• Early Supplier Involvement – Manufacturing/Service Design Process • Use of Supplier expertise and experience
  42. 42. Supplier Integration in New Product/Service Development• Early Supplier Involvement – Manufacturing/Service Design Process – Product/Service Development • Prototypes/Demonstrations • Replacement materials/alternative methods
  43. 43. Supplier Integration in New Product/Service Development• Early Supplier Involvement – Manufacturing/Service Process – Product/Service Development – Cost • Cost projections of a new product or service
  44. 44. Supplier Integration in New Product/Service Development• Early Supplier Involvement – Manufacturing/Service Process – Product/Service Development – Cost – Quality • Supplier knowledge of quality requirements
  45. 45. Supplier Integration in New Product/Service Development• Early Supplier Involvement – Manufacturing/Service Process – Product/Service Development – Cost – Quality – Technology • Influence final material/application selection
  46. 46. Supplier Integration in New Product/Service Development• Early Supplier Involvement – Manufacturing/Service Process – Product/Service Development – Cost – Quality – Technology – Design • Experience in serving a particular market
  47. 47. Supplier Integration in New Product/Service Development• Early Supplier Involvement – Manufacturing/Service Process – Product/Service Development – Cost – Quality – Technology – Design – Co-Development • Sharing costs
  48. 48. Supplier Integration in New Product/Service Development• Early Supplier Involvement – Manufacturing/Service Process – Product/Service Development – Cost – Quality – Technology – Design – Co-Development – Cycle Time • Through reduction in redundancies
  49. 49. Supplier Integration in New Product/Service Development• Early Supplier Involvement – Confidentiality Issues • Proper controls – Disclosure Parameters – MN-DAs – Dispute resolution clause
  50. 50. Supplier Integration in New Product/Service Development• Early Supplier Involvement – Confidentiality Issues – Product/Service Life Cycle • Pre-commercialization • Introduction • Growth • Maturity • Decline
  51. 51. Key Point “Suppliers know more aboutwhat you buy than you do, so if you don’t use them, your performance will suffer”
  52. 52. The Best Supply Management Practices1. Strategic Goal Alignment2. Procurement Strategy Development3. Supplier Integration4. Teaming Strategies5. Performance Measurement
  53. 53. An Action Plan for Creating Effective Teams by Robert M. Monczka, Ph.D., C.P.M. and Robert J. Trent, Ph.D. Studies by MSU reveals – 80% of Best-in-Class organizations emphasize the use of Supply Management Project teams.
  54. 54. Teaming Strategies• Procurement Project Teams• Cross-Functional Teams
  55. 55. Teaming Strategies• Procurement Project Teams – Definition - The application of project knowledge, skills, tools and techniques to procurement project activities to meet customer requirements
  56. 56. Teaming Strategies• Procurement Project Team Stages – Initiation • Root Cause analysis • SWOT • Feasibility Analysis – Net Present Value – ROI • Business Case
  57. 57. Teaming Strategies• Procurement Project Team Stages – Planning • Scope Development • Roles & Responsibilities • Project Plan Approval
  58. 58. Teaming Strategies• Procurement Project Team Stages – Execution • Change Management
  59. 59. Teaming Strategies• Procurement Project Team Stages – Monitoring & Control • Contract Management – Performance measurement – Risk Monitoring • Project Management Software – PERT & Gant Charts • Performance Reporting – Cost – Schedule
  60. 60. Teaming Strategies• Procurement Project Team Stages – Closure • Process • Post Project Audit
  61. 61. Teaming Strategies• Cross-Functional Teams – Purpose • To permit different viewpoints and perspectives
  62. 62. Teaming Strategies• Cross-Functional Teams – Purpose – Supply Management Roles • Leadership • Facilitation • Contributor
  63. 63. Teaming Strategies• Cross-Functional Teams – Purpose – Supply Management Roles – Advantages/Disadvantages • Consensus Building • Group Think
  64. 64. Teaming Strategies• Cross-Functional Teams – Purpose – Supply Management Roles – Advantages/Disadvantages – Organizational cultures • Traditional vs. Team • Skill Considerations • Personality Considerations • Leadership
  65. 65. Key Point“Two heads are better than one,so if you’re not including them inthe decisions, your performance will suffer”
  66. 66. The Best Supply Management Practices1. Strategic Goal Alignment2. Procurement Strategy Development3. Supplier Integration4. Teaming Strategies5. Performance Measurement
  67. 67. Performance Measurement Aberdeen Benchmarking Research• Best-in-Class companies are more than 2.5x more likely to use performance monitoring, management, and optimization solutions.• Best-in-Class companies are 1.67x more likely to use portals or dashboards for consolidating and reporting of performance data.
  68. 68. Performance MeasurementDepartment Staff Suppliers
  69. 69. Performance Measurement • Department – Organizational Expectations • Objectives Congruence – Organization – Suppliers & Customers
  70. 70. Performance Measurement • Department – Organizational Expectations • Objectives Congruence • Scorecard – Quantitative – Qualitative
  71. 71. Performance Measurement • Department – Reasons for Scorecard • Determine effectiveness – To objectives – To department management • Measure improvement/deterioration • Provide Resources • Determine Value
  72. 72. Performance Measurement• Staff – Issues • Objective Alignment – Vertical & Horizontal • Success Criteria – Known in advance • Appraisal Factors – Quantitative – Qualitative
  73. 73. Performance Measurement• Staff – Issues – 360o Reviews • Users • Management • Peers • Suppliers • Others
  74. 74. Performance Measurement• Staff – Issues – 360o Reviews – Feedback • Timely • Corrective actions • Individual Development Plans
  75. 75. Performance Measurement• Suppliers – Scorecards • Qualitative measures • Quantitative measures • Price, Delivery & Quality (PDQ) • Other/specific
  76. 76. Performance Measurement• Suppliers – Scorecards – Others/specific • Cycle/Lead time Reductions • Productivity Improvements • Flexibility and Responsiveness • e-Commence Capabilities • Innovation
  77. 77. Key Point“You can’t manage whatyou don’t measure, so if you’re not measuring performance . . .”
  78. 78. The Five Best SupplyManagement Practices in Use Today1. Strategic Goal Alignment2. Procurement Strategy Development3. Supplier Integration4. Teaming Strategies5. Performance Measurement
  79. 79. Thanks for your Time and Attention
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×