The document discusses high-definition sourcing as a method to enhance procurement strategies beyond traditional techniques. It describes various customer scenarios across different industries and demonstrates how this approach can lead to significant cost savings by re-evaluating sourcing criteria and engaging suppliers effectively. Additionally, it highlights the importance of adapting to market conditions and incorporating detailed analysis to uncover further savings opportunities.

1. High-Definition Sourcing: Going Beyond Traditional Sourcing 4/22/2011

2. When It’s Time to Seek New Opportunities Marketplace not responsive to leverage-based approachCategory already sourced effectively and in controlProblem confounded with other issuesSpend currently in houseLimited marketplace optionsTraditional barriers to changeObvious problems with upstream decision-makingNeed to change what is being boughtDemand managementSKU rationalizationAlternate specifications

3. High-Def Sourcing: When the Market’s in ControlThe Customer: Consumer Packaged Goods Company The Situation ~$160 MM Tight market conditionsPeriodic one-on-one direct negotiationHigh-Definition Sourcing Approach: Collect expressive proposals that drive consideration of historically overlooked opportunitiesAllow savings even when prices are increasing for business-as-usualScenario generation allows for consensus building with suppliers Result: Over 25% savings

4. High-Def Sourcing: When Everything’s Good The Customer: Global Leader in TobaccoThe Situation: $10 M Pilot to reduce packaging costs Strong supply base Order management outside of procurement responsibilityHigh-Definition Sourcing Approach: Formula-based approach to RFPsDetailed spend analysisAccelerate re-cost calculations under various order policy/demand aggregation scenariosResult:Uncovered an additional 25% reduction in costs

5. High-Def Sourcing: When the Problem Isn’t Cost The Customer: Worldwide leader in pharmaceuticals The Situation: Need for highly specialized service varies dramatically year to yearTeam didn’t believe sourcing could solve the problem High-Definition Sourcing Approach: Integrated intangibles such as therapeutic expertise, qualification and experience into analysis Result:Good or better supply choices for less money

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