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Strategic Sourcing And Supplier Development Strategy
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Strategic Sourcing And Supplier Development Strategy


Supply Chain Strategy

Supply Chain Strategy

Published in Business , Technology
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  • 1.  
  • 2. Supply Chain Strategy Proposal Development of Agreements and/or Alliances with Suppliers Thursday, December 11, 2008
  • 3. Comprehensive Sourcing Solutions to Minimize Risk Experienced professionals located globally who can complement NATCO’s existing sourcing staff. Acceleration of NATCO sourcing project from creation to completion – streamlining and managing all aspects of RFQ preparation; validate, consolidate and update supplier / item master data Oracle release 12.06, a new “Global” Enterprise Resource Planning (ERP) system with a target go-live date of July 1, 2009; sophisticated and easy-to-use platform that enables NATCO to expedite cost comparisons, standardize the RFQ process and track it online. A constantly updated global database that you can search for the most qualified suppliers by geography, materials, process, equipment and certifications.
    • A supply-chain configuration is driven by:
      • Plan levels of aggregation and information sources
      • Source locations and products
      • Make production sites and methods
      • Deliver channels, inventory deployment and products
      • Return locations and methods defined
  • 4. Change Management
      • Define team
      • Define decision process
      • Develop communication plan
      • Prepare stakeholder analysis
      • Develop “Push” Strategies for Strategic Sourcing
      • Develop “Pull” Strategies for Strategic Sourcing
  • 5. Launch Effort
      • Establish governance structure
      • Identify owners for categories
      • Develop detailed work plans
      • Determine resource requirements for each category
      • Notify Legal, A/P, Risk Mgmt of project timeline
  • 6. Scope
      • Demand/Supply Planning and Management
        • Balance resources with requirements to establish and communicate plans to align the supply chain supplier development plan with corporate financial objectives:
        • Management of business rules / stage gate process
        • Supply chain performance objectives
        • Data collection requirements
        • Logistics & transportation
        • Planning configuration
        • Regulatory requirements and compliance
    • Sourcing Stocked, Make-to-Order, and Engineer-to-Order Product
      • Manage inventory, capital assets, incoming product, supplier network, import/export requirements, and supplier agreements:
        • Schedule deliveries; receive, verify, and transfer product; and authorize supplier payments
        • Identify and select supply sources when not predetermined, as for engineer-to-order product
        • Manage business rules, assess supplier performance, and maintain data
  • 7. Scope
      • Make-to-Stock, Make-to-Order, and Engineer-to-Order Production Execution
        • Schedule production activities, issue product, produce and test, package, stage product, and release product to deliver
        • All order management steps from processing customer inquiries and quotes to routing shipments and selecting carriers.
        • Manage rules, performance, data, in-process products (WIP), equipment and facilities, transportation, production network, and regulatory compliance for production
        • Finalize engineering for engineer-to-order product
      • Return of Raw Materials and Receipt of Returns of Finished Goods
        • Identify product condition, disposition product, request product return authorization, schedule product shipment, and return defective product deliver – authorized product return, schedule return receipt, receive product, and transfer defective product
        • All Return Defective Product steps from source
        • All Return Maintenance, Repair, and Overhaul product steps from source
        • All Return Excess Product steps from source
  • 8. Objectives
      • Reduce supplier risk and disruption within supply chain
        • Increase key suppliers capacity
        • Improve forecasting and capacity load planning
        • Drive process improvement & standardization
      • Establish strategic partnerships with suppliers
        • Drive cost reductions for procured material
        • Establish sourcing agreements
        • Vendor Managed Inventory (VMI)
        • Stocking Programs
        • Preferred pricing
        • Turnkey Solutions
      • Maintain corporate alignment with Global counterparts
        • Develop strategies for global commodities
        • Identifying opportunities to aggregate spend and negotiate superior contracts
        • Improving procurement operations and supplier performance
  • 9. Comprehensive eight-step solution Step 1: Collect Category / Supplier Data
    • Define scope of the sourcing category
    • Develop a demand profile by collecting usage data for each category
    • Investigate and document major cost drivers
    • Document supplier relationships
    • Identify preliminary opportunities
    Step 2: Evaluate Category / Customer Requirements
    • Establish current product / services specifications & requirements (wants vs. needs)
    • Investigate specifications options / products substitutes
    • Challenge product requirements and evaluate demand management opportunities
    Step 3: Access Supply Base
    • Gather market data on industry in order to understand the supplier’s market place
    • Identify potential suppliers (who are market leaders, key players, competitors)
    • Establish supplier selection criteria and weights
    • Evaluate supplier & compile list of qualified suppliers
    Step 4: Determine Strategic Sourcing Strategy
    • Select a sourcing approach & identify souring strategy / strategies
    • Develop strategic sourcing action plan
    Step 5: Engage Suppliers
    • Select supplier engagement path & develop request for proposal (RFP) package
    • Develop criteria and weights for evaluation of RFP & compile / analyze responses
    • Identify short list of bidders for negotiations
    Step 6: Conduct Negotiations
    • Formulate negotiation objectives
    • Identify negotiation issues and prepare negotiation plans
    • Apply final screening criteria & select supplier
    Step 7: Manage Suppliers
    • Monitor results, track savings
    • Ensure savings are correctly accounted for each month
    Step 8: Institutionalize Strategic Sourcing
    • Communicate successes
    • Develop performance metrics
  • 10. Supplier Development Strategy
    • This opportunity will exist across all locations. Steps in this project include:
    • Identify suppliers unique to locations and define classes/commodities purchased.
    • Examine classes/commodities purchased vs. capabilities of multi-site suppliers for same product classes.
    • Evaluate if local, unique supplier is justified (i.e. geographic constraints, shipping costs).
    • Identify redundant suppliers and establish preferred supplier list.
    • Establish supplier selection policy, procedures, governance and accountability.
    • Define training and change management requirements.
    • Implement supplier consolidation plan.
    • Identify low dollar value commodities with frequent use.
    • Identify high dollar value commodities with infrequent use
    • Evaluate supplier and NATCO capability for VMI programs.
    • Determine if VMI, zone stores, regional stores or other management approaches are applicable apply.
    • Evaluate risks and impacts of a change in procurement, logistics, and handling.
    • Define policies, process, procedures and metrics for supplier governance
    • Implement solution(s)
    • Determine the risks and impacts of the change(s) of alternative strategies.
    • Decision review by team and management (buy in by plants impacted)
    • Identify policy, process and procedural issues addressing alternative strategies.
  • 11. Potential Supplier Profile Factors
      • Technology
        • Product or process innovation
        • ERP Systems compatibility
        • Research & Development
        • Patents & Awards
      • Financial
        • Provide cost advantage for project deliverables
        • Capture expenditure requirements
        • Market price volatility
      • Performance
        • Product launch integration
        • Frequent design change flexibility
        • Continuous improvement programs
        • On time delivery accuracy
      • Geography
        • Logistics/ transportation cost
        • Local / Intl. market regulations
        • Tariffs / Taxes
        • Multi-platform sourcing
      • Quality
        • Health, Safety, & Environmental (HSE)
        • Manufacturing complexity / simplicity
        • Potential warranty cost
  • 12. Conclusion
    • Q&A