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Procurement and Supply Chain Strategy Procurement Models for the Future Jyoti Bhattacharjya & Yujie Cai University of Sydney David Walters Professor, SCM University of Sydney Raj Dhawan Consultant, SCM Accenture
Future: Advanced Analytics Conclusion Native ability to comprehend complex procurement issues is limited – too many variables to process Fact-based decision making leads to better results – accurate, measurable, resulting in lower costs and greater savings.
improve our ability to capture right information, process it and help in informed decision making.
Future: Risk Management Five ‘Essentials’ of Risk Management • Organisation & Governance
Design a well-defined organisation structure with explicit roles and responsibilities and accountabilities to decisions and identify risk ownership.
• Risk Management Processes
That identify critical supply categories and vendors. The processes should capture risks and include monitoring activities to identify potential problems. They must be consistent throughout the organisation.
• Risk Analytics
To identify, measure and monitor operational risks. They should comprise metrics that allow a company to see when and where an operational risk exists and focus it with related management initiatives. Analytical tools should also quantify the impacts of risk items.
• Risk Reporting
That delivers focused, relevant and timely information that enables management to make informed decisions Ideally analytics should help management predict an event or risk.
• Information Management and Data Governance
Should help maximise performance by integrating and coordinating processes across organisational boundaries, and regions. It requires managing and making internal and external information transparent to management to achieve an enterprise-wide perspective of risk that contributes to better decision making.
Future: Closed Loop Spend Management Category Ownership & Policies Each Cost Category owner is responsible for identifying and prioritising significant opportunities in their area which are easy to implement Low Hanging Fruit ILLUSTRATIVE High Size of opportunity Priority for Implementation
Future: Closed Loop Spend Management Procurement Actual consumption is triggered by the “I need” portal in which policies and how to order/work with procurement is guided in the so-called buying channels “I need” Portal
Policies and how to order/work with procurement is guided in the so-called buying channels
Future: Closed Loop Spend Management Zero-based Budget Budget holders build their budget zero-base with great amount of detail, adhering to top down targets and strict global policies Travel Budget Template Budget Templates ILLUSTRATIVE
Are built for all (Sub-)Categories
Contain enough details to allow full understanding on the budget construction
Might have a different level of detail, depending on the Category
Contain enough attributes to enable powerful analysis and benchmarking
Future: Closed Loop Spend Management Category Ownership & Policies Challenging cost is no longer a Finance-only activity; Category ownership creates a shared responsibility driving sustainable savings opportunities ILLUSTRATIVE …who has a set of responsibilities but is also empowered to make tough decisions For each category, an owner is appointed at the top level…
Internal Business users Local User interface: Local Purchasing Representation Perform Requisitions & Fulfillment Execute local Contract Implementation Perform Customer Services (Helpdesk) Provide Sourcing Support Execute Spot Buys (<2.5k) Corporate Procurement – Zone(s) Roles: Cat. Leader and Manager Front Office: