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Effective supplier management can provide step change impact to a business
Effective supplier management can provide step change impact to a business
Effective supplier management can provide step change impact to a business
Effective supplier management can provide step change impact to a business
Effective supplier management can provide step change impact to a business
Effective supplier management can provide step change impact to a business
Effective supplier management can provide step change impact to a business
Effective supplier management can provide step change impact to a business
Effective supplier management can provide step change impact to a business
Effective supplier management can provide step change impact to a business
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Effective supplier management can provide step change impact to a business

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  • 1. "Effective supplier management can provide step changeimpact to a business" Jeremy Smith
  • 2. Definition & ScopeDefinition:• The discipline of working collaboratively with the suppliers that are vital to the success of the organisation, to build trust and maximise value.Objectives: Competitive advantage inLower costs / Improved Enhanced areas such as increased Reduced risk quality/ supply chain speed to revenue service levels efficiency market and innovationScope:We are only discussing SRM in todays debate Supplier Supplier Relation- Perform- ship ance Manage- Manage- ment ment Contract Manage- ment
  • 3. How SRM provides step change to an organisation• Most organisations have significant external spend which requires management. Relying on contract and performance management alone will only retain the status- quo• Step change in business performance requires Supplier Relationship Management SRM Sustains and enhances sourcing benefits Enables leverage of scale and volume Moves beyond traditional procurement Mitigates post contractual opportunism Mitigates impactful events / risks 3
  • 4. Sustains and enhances sourcing benefitsIf supplier engagement stops at the point of contract signature then benefits to thebuyer are likely to be restricted to the contractual requirement, but SRM assisteddelivery is more than the sum of its parts High Value Delivered* Low SRM (including SPM & CM) Contract Management (incl. SPM) Delivery of contracted Collaboration on identification of 1 1 requirements only mutually beneficial new value Reduction in supply risk through 2 Relies on static KPIs, if any 2 combined ownership Often, no incentivisation for Improved supply chain efficiency 3 3 added value – process optimisation Consequences for poor Improved supply quality – TQM / 4 performance not applied / 4 Lean available Risks allocated to specific party Innovation / collaboration on new 5 and not mutually managed – 5 product development blame culture* Not to scale
  • 5. Enables leverage of scale and volumeTraditional contract management, however well implemented, only focuses onthat specific contract.It is not uncommon in complex organisations to have multiple contracts with thesame supplier • Prevent business unit silo mentality SRM • Stop competing against each other • Cross category or contract focus Contract Management • Coordinated approach to communications Buying Org • Promote organisation alignment • Restricts ability of supplier to ‘Divide & Conquer’ • Leverage cross supplier P&L Contract instance spend • Provides single point of accountability for both parties 5
  • 6. Moves beyond traditional procurementTraditional procurement is often short term and involves an up front battle overcommercial terms following by contract management to ensure it is delivered. Someindustries have identified this is not the best approach and that collaboration canprovide competitive advantage2012 winner of Best SRM at CIPS SM Groningen Gas FieldAwards • Formation of 5 supplier consortium based on• Tarmac and Brammer held joint workshops long term contract selected from design to explain the benefits and deliverables competition• First stage demand / compliance quick wins • Technical solution had no existing implemented technological solution• Full service support and improvements delivered against clearly defined guidelines • Each company in the consortium brings own specialist skills• The benefits were numerous. • Direct interaction between buyer and - Total cost saving of (28%) supplier to drive innovation - Supply base rationalised reducing risk potential and internal management time • The benefits were numerous. - Transactions were reduced by 80 per - Year on year incentivised cost cent reduction - Management information accurate - Uptime above industry average and relevant - New product solution developed for further use on other projects Solves short term technical problem whilst Sourcing approach not possible without developing innovative solutions for further SRM application 6
  • 7. Mitigates post contractual opportunismSuppliers are in business to maximise return on investment as well as the buyershaving the same objective. With traditional procurement this is a zero sum game,SRM helps to increase the potential returns available Buyer Objective Objective Buyer Supplier Supplier Without SRM – commercial tensions With SRM – shared objectives removes remain commercial tension• Traditional procurement approaches are often adversarial - Work against each other to achieve their own outcomes• SRM supports both parties to be working to shared objectives and mutual benefit - Incentivisation retains commercial focus throughout the life of the contract• SRM enables greater post contractual control of suppliers - Beyond what was envisaged at the point in time of the contract - Power circumstance change over time – e.g. BP Gulf of Mexico - Good relationships allow organisations to adjust to the new circumstances 7
  • 8. Mitigates impactful events / risksThe Japanese earthquake was devastating not only the people living in Japan but itsknock-on impacts on Western supply chains. This was a wake up call for riskmanagement but also for the implementation of supplier relationship management 8
  • 9. SummarySRM enables a step change in business performance by removing commercialtensions and building long term aligned relationship Benefit Examples • On-going cost and performance improvement, reduced Sustains and enhances risk, process optimisation, quality improvements and sourcing benefits new product development Enables leverage of • Aggregate internal volumes scale and volume • Aggregate within supplier • Long term commitments Moves beyond • Mutually beneficial sourcing and commercial models traditional procurement • Shell / Tarmac & Brammer Mitigates post • Build relationships to prevent opportunism after change contractual opportunism • BP Gulf of Mexico • Japanese earthquake – Airbus Mitigates impactful • Boeing Dreamliner events / risks • Horsemeat – Marks & Spencer vs. Tesco 9
  • 10. "Effective supplier management can provide step changeimpact to a business" Vote Yes!!

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