Supply Management as a Core Capability (SMCC)

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As a supporter of open innovation in SM we present our thoughts on what is involved
in advancing Supply Management as a core competence and invite interested parties to share their views to develop this theme.

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Supply Management as a Core Capability (SMCC)

  1. 1. Supply Management as a Core Competency (SMCC) Jan 2010 (rev 1)
  2. 2. Welcome to Purchasing Practice Purchasing Practice is a specialist niche consultancy specialising in procurement - Procurement is all we do. We are passionate about helping you realise the powerful benefits to be gained by developing key capabilities in supply management (SM). So passionate we believe SM must become a core capability In all organisations. As a supporter of open innovation in SM we present our thoughts on what is involved in advancing Supply Management as a core competence and invite interested parties to share their views to develop this theme. Thanking you in advance, David Henshall Founder Purchasing Practice Building Capability in Procurement & Supply www.purchasingpractice.com Copyright Corporate Purchasing Practice Inc
  3. 3. Aligning Business & Supply Management (SM) Strategy Integrating Supply & Demand Side Plans is Critical to Delivery of the Business Plan Business Strategy SM Strategy Branding & Reputation CSR Revenue Growth CRM & SRM Organisation Structure Cost Optimisation Product Differentiation Innovation Customers & Supply Market Stakeholders SCM Capabilities Copyright Corporate Purchasing Practice Inc
  4. 4. Supply Management as a Core Competency(SMCC): SMCC is a key enabler of the management of risk from threats and the exploitation of opportunities in a company’s external environment. Core business competency = strategic capability Primary Sales & Source & Convert Service Business Marketing Procure (Add Value) Delivery Competency Sustain competitive advantage Primary Value Chain + Tangible Resource In -Tangible Resource Organize Resources to Finances People exploit Structure Planning & control + Innovation Reputation Technology Copyright Corporate Purchasing Practice Inc
  5. 5. Supply Management as a Core Competency(SMCC): A core competency must be invested in to build capability Core business competency = strategic capability Primary Business Sales & Source & Convert Service Marketing Procure (Add Value) Delivery Competency Sustain competitive advantage Follower Leader Innovator Capabilities Capabilities Capabilities  Market Making Planning  Leadership  Maximise Opportunity Build Supply Category Management  Cost Management  Balance Risk Management Strategic sourcing  Collaboration  Cost Optimisation Capabilities Opportunity Assessment  Innovation  Entrepreneurial Core Contracts Management  Risk Management  Agility Supplier relationship  HR & Talent Mgt  Market Sensing Mgt  Brand & Reputation P2P Mgt Copyright Corporate Purchasing Practice Inc
  6. 6. SMCC and Capability Maturity The more Highly Developed SM Competency is the More Strategic Value is Gained Process & Behaviour Market Cost Optimised – Management Capability Focus Stage 3 Differentiated Product Value Market Management Making Collaborative Demand & Supplier Management Customer Strategies Cost Out Stage 2 Focus Supplier Relationship Management Category Category Management Stage 1 Cost Down Focus Strategic Leverage Sourcing Strategies Value Copyright Corporate Purchasing Practice Inc
  7. 7. SMCC at the Market Management Level: SMCC Is at its Optimal State when Procurement Develops its Entrepreneurial Core Sensing & Responding Maximise Opportunities Optimise Cost Market Making Opportunities Drive Entrepreneurial Growth Core Innovate Balance Risk The Entrepreneurial Core Collects & Disseminates External Information to Formulate Strategies to Capture New Business Opportunities Copyright Corporate Purchasing Practice Inc
  8. 8. SMCC Becomes a Primary Business Process in the New Business Value Chain The Value Chain has evolved - modern businesses are much less vertically integrated and continue to outsource more and more and SM has become a core competency: Value Chain Strategy Business Processes Strategic Responding Primary Supply Chain Convert Service Planning (Add Value) Delivery External Sensing Business Procurement & SC Sales & Marketing Strategy Delivery Business Processes Information Technology Secondary Enablers Finance & Accounting Human Resources 8 Copyright Corporate Purchasing Practice Inc
  9. 9. SMCC + Entrepreneurial Core = Deep External Market Understanding External Forces Need to be Monitored, Filtered, Processed & Acted Upon: Knowledge Management Sensing & Responding Sales & Sensing & Responding Marketing Product Strategy Category +/- Supply Demand +/- Market Market & Plans Impacts Impacts Forces Forces Marketing Procurement Plan Opportunities & Risk & SCM Opportunities & Risk Framework Copyright: Corporate Purchasing Practice Inc © The ability to respond to external forces faster and more effectively than competitors delivers a clear competitive advantage – Category & Marketing Plans Provide the Link to Business Strategy Delivery Copyright Corporate Purchasing Practice Inc
  10. 10. The New Competency Driven Value Chain Must Evolve & Respond to External Forces Strategic competencies in this less vertically integrated environment are significantly different: Environmental Competitor Concerns & Activity Events Political Activity Customer Activity Supplier Activity Trends Social Substitute Technological Products Developments Copyright Corporate Purchasing Practice Inc
  11. 11. Integrating Supply & Demand Side Plans External Sensing is Translated into Responses via Category & Marketing Plans: Marketing Demand Environment Forces +/- Impact on Plan Supply Market Internal Factors = Macro-environment Micro-environment Sales & Marketing Strengths & Company Weaknesses Customers Product Maximise = Opportunities or Threats = Opportunities or Threats Competition Opportunities Policy External Factors External Factors Optimise Promotion Cost Company Balance Cultural Price Environment Forces Risk Micro-environment Procurement Capture Company Place Innovation Internal Factors Suppliers = Strengths & Innovation Weaknesses Policy Demand Market Category Plans +/- Impact on Supply Environment Forces Copyright Corporate Purchasing Practice Inc
  12. 12. SMCC Supports Business Strategy Optimisation Organising and defining what will be done as part of any Strategy Optimisation programme Category Category Evaluation Setting Prioritising Plans Cost Targets Initiatives Optimisation Process Internal View Re-engineering Baseline Strategy Competitor View Outsourcing Strategy Evaluation Optimisation Best in Class View Strategic Sourcing Investor View Investments Product Resources, Governance, Alignment Differentiation Marketing Marketing Evaluation Plan Supporting Organisation Copyright Corporate Purchasing Practice Inc
  13. 13. SMCC Requires World Class Organisation and Capabilities: Purchasing Practice Model of Procurement Excellence Vision & Leadership Organizational Policies & Roles & Structure Alignment Procedures Responsibilities Supplier Operational Sourcing Processes Relationship Purchasing Market Management Management Management Making Opportunities Standards & Performance Knowledge Drive e-enabled Growth Tools Measures Management Contract & Continuous Performance Compliance Supplier Improvement Measurement Management & Innovation HR Management Copyright Corporate Purchasing Practice Inc
  14. 14. Find Us Source Title Link Purchasing Practice http://www.linkedin.c Group om/e/gis/771367 Purchasing Practice – http://www.linkedin.c Executive Search Link om/e/gis/866537 The source for http://purchasingprac thought leadership tice.com/information/ on-line forum for http://purchasingprac procurement tice.com/blog/ professionals Copyright: Corporate Purchasing Practice Inc ©
  15. 15. Contact us at: info@purchasingpractice.com Copyright Corporate Purchasing Practice Inc

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