The document discusses the value of supply strategy and strategic category management. It outlines how taking a strategic approach to category management can connect internal and external business intelligence to improve innovation, efficiency, and total cost of ownership. The document provides examples of how strategic category management processes, such as spend analysis, supplier segmentation, and cost modeling, can help organizations achieve cost savings of 5-15% through more favorable pricing, reduced price variability, lower logistics costs, and other efficiencies.
The strategic sourcing process involves identifying a company's current category usage, conducting a supplier and market analysis, selecting an appropriate sourcing strategy, and choosing a sourcing method. Key steps include developing requests for information and proposals, evaluating responses, negotiating with suppliers, integrating new suppliers, and monitoring market performance and supplier relationships on an ongoing basis. The process aims to identify all viable suppliers, execute the best sourcing approach, conduct negotiations to select suppliers, and operationalize agreements while monitoring the category.
The document outlines a commodity management and strategic sourcing methodology with the following key steps:
1) Develop a commodity team to identify opportunities, understand needs, prioritize opportunities, and obtain stakeholder buy-in.
2) Conduct spend analysis and market intelligence to understand external spending, costs, and the supplier market.
3) Develop supplier selection criteria, evaluate supplier responses, select suppliers for negotiation, and make a final selection.
4) Implement the selection through developing service level agreements, selecting an implementation team, and establishing performance measures and continuous improvement processes.
Strategic sourcing involves systematically analyzing internal and external data to develop an optimal supplier strategy. It aims to optimize spend, improve quality, increase ROI, and cut costs through partnership with a limited number of suppliers. The process identifies current spending and viable suppliers, develops sourcing approaches, issues RFPs, negotiates with suppliers, and integrates and monitors selected suppliers. Benefits include estimated 5-10% savings, collaborative spending improvements, new performance metrics, innovation, and better teamwork. Most Fortune 500 companies use strategic sourcing.
Pionnier Consulting Services is an Indian research, consulting, and outsourcing firm founded in 2009 that provides strategic sourcing services to automotive, appliance, engineering, and retail companies worldwide. The firm helps clients manage spending, evaluate suppliers, negotiate contracts, and implement process improvements to achieve annual savings of over 15% in some categories. Pionnier uses Six Sigma and other process methodologies along with should-cost modeling to benchmark practices and move clients to best-in-class supply chain performance.
This document discusses strategic sourcing and developing a globally integrated supply chain. It begins by outlining the benefits of strategic sourcing, such as rising profitability and competitive advantage. It then defines strategic and tactical, and discusses how sourcing is typically done incorrectly. The rest of the document provides information on developing a strategic global sourcing process, including spend analysis, goals alignment, and developing relationships with global suppliers. It emphasizes quality, product development, and project management in global sourcing.
The 7 step strategic sourcing framework is a popular model developed by ATKearney consulting to help companies lower costs through strategic procurement. The 7 steps include: 1) developing a category profile through spending and supply market analysis, 2) creating a sourcing strategy, 3) generating a supplier portfolio, 4) selecting an implementation plan such as negotiations or auctions, 5) negotiating and selecting suppliers, 6) implementing agreements, and 7) continuous improvement of the sourcing process. Major companies like P&G, HUL, IBM and Dell have used this framework to achieve cost savings of 10-20%.
1. Strategic sourcing is a continuous process that involves discovering, prioritizing, improving, and re-evaluating sourcing activities to achieve cost savings and meet business needs.
2. The document outlines a 9-step process for strategic sourcing, beginning with internal research to analyze company spend data, categorize spending, evaluate risks, select project scope, and conduct spend, cost structure, and total cost of ownership analyses.
3. The first step of internal research lays the groundwork for subsequent steps by gathering and analyzing internal company data to understand spending patterns and costs. This information is then used to inform strategic sourcing decisions.
This document outlines the strategic sourcing process which includes defining needs, researching the market, creating requests for proposals or information, selecting suppliers through a competitive bidding process, negotiating contracts, and ongoing management of supplier performance to ensure the agreed upon terms and key performance indicators are being met.
The strategic sourcing process involves identifying a company's current category usage, conducting a supplier and market analysis, selecting an appropriate sourcing strategy, and choosing a sourcing method. Key steps include developing requests for information and proposals, evaluating responses, negotiating with suppliers, integrating new suppliers, and monitoring market performance and supplier relationships on an ongoing basis. The process aims to identify all viable suppliers, execute the best sourcing approach, conduct negotiations to select suppliers, and operationalize agreements while monitoring the category.
The document outlines a commodity management and strategic sourcing methodology with the following key steps:
1) Develop a commodity team to identify opportunities, understand needs, prioritize opportunities, and obtain stakeholder buy-in.
2) Conduct spend analysis and market intelligence to understand external spending, costs, and the supplier market.
3) Develop supplier selection criteria, evaluate supplier responses, select suppliers for negotiation, and make a final selection.
4) Implement the selection through developing service level agreements, selecting an implementation team, and establishing performance measures and continuous improvement processes.
Strategic sourcing involves systematically analyzing internal and external data to develop an optimal supplier strategy. It aims to optimize spend, improve quality, increase ROI, and cut costs through partnership with a limited number of suppliers. The process identifies current spending and viable suppliers, develops sourcing approaches, issues RFPs, negotiates with suppliers, and integrates and monitors selected suppliers. Benefits include estimated 5-10% savings, collaborative spending improvements, new performance metrics, innovation, and better teamwork. Most Fortune 500 companies use strategic sourcing.
Pionnier Consulting Services is an Indian research, consulting, and outsourcing firm founded in 2009 that provides strategic sourcing services to automotive, appliance, engineering, and retail companies worldwide. The firm helps clients manage spending, evaluate suppliers, negotiate contracts, and implement process improvements to achieve annual savings of over 15% in some categories. Pionnier uses Six Sigma and other process methodologies along with should-cost modeling to benchmark practices and move clients to best-in-class supply chain performance.
This document discusses strategic sourcing and developing a globally integrated supply chain. It begins by outlining the benefits of strategic sourcing, such as rising profitability and competitive advantage. It then defines strategic and tactical, and discusses how sourcing is typically done incorrectly. The rest of the document provides information on developing a strategic global sourcing process, including spend analysis, goals alignment, and developing relationships with global suppliers. It emphasizes quality, product development, and project management in global sourcing.
The 7 step strategic sourcing framework is a popular model developed by ATKearney consulting to help companies lower costs through strategic procurement. The 7 steps include: 1) developing a category profile through spending and supply market analysis, 2) creating a sourcing strategy, 3) generating a supplier portfolio, 4) selecting an implementation plan such as negotiations or auctions, 5) negotiating and selecting suppliers, 6) implementing agreements, and 7) continuous improvement of the sourcing process. Major companies like P&G, HUL, IBM and Dell have used this framework to achieve cost savings of 10-20%.
1. Strategic sourcing is a continuous process that involves discovering, prioritizing, improving, and re-evaluating sourcing activities to achieve cost savings and meet business needs.
2. The document outlines a 9-step process for strategic sourcing, beginning with internal research to analyze company spend data, categorize spending, evaluate risks, select project scope, and conduct spend, cost structure, and total cost of ownership analyses.
3. The first step of internal research lays the groundwork for subsequent steps by gathering and analyzing internal company data to understand spending patterns and costs. This information is then used to inform strategic sourcing decisions.
This document outlines the strategic sourcing process which includes defining needs, researching the market, creating requests for proposals or information, selecting suppliers through a competitive bidding process, negotiating contracts, and ongoing management of supplier performance to ensure the agreed upon terms and key performance indicators are being met.
Practically Applying Sourcing Grids for Risk Management Thomas Tanel
Purchasing and supply management have never been easy. The past several years have caused many executives and professionals to lose more sleep and gain more gray hair (or lose more hair) than usual; therefore, the next decade requires upgraded skill sets to survive.
Portfolio analysis is one of the most powerful techniques
used by the purchaser, despite its simplicity. It is a simple “grid” tool that charts the amount we spend on products or services and the complexity of its acquisition.
Portfolio analysis helps us define our sourcing strategy and the best sourcing techniques to use dependent upon the position on the sourcing grid. It also defines the relationships (supplier positioning) we need to have with our key suppliers and gives us an insight in how the key suppliers may see us in perception model. It allows you to organize your time and
resources for maximum benefit and it encourages strategic thinking and analysis to reduce cost, add value, and minimize risk.
The strategic sourcing process involves continuously improving a company's purchasing activities through a professional, disciplined process that saves on total costs without requiring capital investment. The key steps are:
1) Profiling the spend category to understand usage and suppliers;
2) Developing a sourcing strategy by identifying new suppliers and analyzing costs;
3) Surveying the marketplace to find alternatives and negotiate competitively;
4) Negotiating and selecting suppliers for implementation. Continuous evaluation ensures full value is achieved through benchmarking and monitoring results.
Strategic Sourcing and B2B E Commerce Solutions For ASEAN Purchasing Professi...Bill Kohnen
The document discusses strategic sourcing and e-procurement solutions for purchasing professionals in ASEAN countries. It notes that ASEAN is a rapidly growing region shifting from exports to serving regional consumer demand. Next-generation skills and solutions are needed to adapt products to diverse ASEAN markets and build innovative supply networks. However, current ASEAN purchasing models and technologies are still developing and lag traditional strategic sourcing processes. An ideal future solution would seamlessly integrate spend analysis, sourcing, transactions and insights in a mobile-accessible cloud platform tailored specifically to ASEAN's unique needs and skills.
The document discusses two strategic sourcing examples that provided high customer value:
1. Sourcing antiperspirant salt from China through a supplier's new plant. This saved $1.05 million annually and established a long-term strategic supplier.
2. Toll buying silicone feedstock from a supplier and shipping to a converter to produce emulsions. This introduced competition and saved $400,000 annually. Both created ongoing value through competitive pricing and security of supply.
Strategic sourcing is a disciplined process to define appropriate supplier relationships to enhance a company's competitive position. It engages with high spend categories across a company to provide a sourcing perspective, reduce costs, and achieve common objectives. The strategic sourcing team collaborates with business units, assesses processes, understands the market, and proposes solutions to maximize spending effectiveness and leverage scale in negotiations. This results in more effective spending and cost savings for the company.
This document provides a guide for developing a strategic sourcing strategy in 6 steps: 1) Analyze current spending, 2) Assess supplier markets, 3) Issue a supplier survey, 4) Review responses and select finalists, 5) Define target performance metrics and costs, and 6) Select and communicate with suppliers. The goal is to take an organized, collaborative approach to leverage spending and select suppliers that can create the most value by meeting quality, cost, and other objectives. Key aspects include understanding total cost of ownership, defining a target "to be" state, and setting clear performance metrics for supplier evaluation and continuous improvement.
MCH Scm2903 t2 power_point slides_sourcing and supply managementInstructor2014
The document discusses key concepts in managing supply chains through a logistics approach to sourcing and procurement. It covers the strategic sourcing process, which involves seven steps: project planning, profiling spend, assessing suppliers, developing a sourcing strategy, executing the strategy, transitioning, and measuring performance. Effective management of sourcing requires determining the type and importance of purchases, managing supplier relationships, and understanding total procurement costs. New technologies like e-sourcing and e-procurement can lower costs and improve efficiency.
Importance of having a right Sourcing strategy is key to success for CXO. It has to be correct blend of partners both internal as well as external. The strategy can be arrived only if business goals are understood correctly. This deck shares an approach and ways to arrive at IT Sourcing Strategy.
This article discusses how purchasing managers can adopt a more strategic approach to managing suppliers and supplies. It outlines a four phase process for classifying suppliers based on profit impact and supply risk. This allows purchasing managers to differentiate between supplier types and tailor strategies. The four phases include classifying supplies, analyzing supply markets, strategically positioning supplies based on the classification, and developing action plans to strengthen organizational structures, systems, and staff to support the strategic supply management approach. Adopting this strategic perspective helps companies better guard against supply disruptions.
The document outlines the strategic sourcing process for the University of California system. It aims to develop an effective collaborative purchasing process across the UC system to lower total costs while maintaining or increasing customer satisfaction. The goals are to achieve complete customer satisfaction, continuous process and service improvements, and reduce total costs by 5-15%. Critical success factors include executive sponsorship, end user focus and involvement, data-driven decision making, appropriate technology use, and continuous process improvement. Current strategic sourcing teams focus on areas like purchasing cards, office products, shipping, and lab supplies. Major commodity groups are organized into relationship groups like professional services, miscellaneous goods and services, supplies, and telecommunications/computers.
Strategic Sourcing: Walking the Tightrope in Developing Sourcing StrategyThomas Tanel
This presentation will focus on developing the sourcing strategy as a fundamental and logical process involving the application of tools by skilled, competent, and knowledgeable purchasers. Simply put, our focus will be on the “how to” in developing a sourcing strategy. Are you experienced?
Topics that will be addressed include spend analysis, categorizing the best opportunities for sourcing group profiles, Porter’s Five Force Model and Sourcing Grids, establishing sourcing group portfolios and supplier portfolios, using the proper RFX format for sourcing, and making strategic sourcing the focal point for supplier negotiations. Participants will view “good practice” examples of the above.
If you find yourself “walking the tightrope” with a strategic sourcing initiative or an ongoing effort, you’ll get valuable information in developing your sourcing strategy. With our five phase approach, we will discuss the following “how to”:
1. Develop sourcing strategies differentiated by expenditure category and based on market dynamics.
2. Deeply involve end-users in sourcing for knowledge and buy-in.
3. Apply a rigorous sourcing approach that examines internal needs against supply market options to find the lowest total cost.
4. Challenge specifications and usage patterns to ensure that each expenditure is providing the best value for the company.
5. Identify, analyze, select, and negotiate with strategically advantaged suppliers, not just the ones with the lowest price today.
This presentation will conclude with a presentation review that can refine your understanding of the factors, tools, and guidelines you need to make your sourcing process more effective and more profitable for your organization.
Untuk memilih vendor/supplier yang dapat diandalkan dengan produk terbaik & jasa, spesifikasi yang tepat, kualitas yang tepat, ketepatan waktu pengiriman, layanan terbaik, dan juga harga yang terbaik, maka perusahaan harus melakukan proses seleksi dan evaluasi vendor/supplier secara komprehensif diukur dengan metode yang tepat.
Tactical Vs Strategic Procurement Shifting Focus Towards Value Creationjamie.mahoney
The document discusses shifting the focus of procurement from tactical to strategic to create more value. It outlines 10 dimensions for an effective procurement organization, including developing a procurement strategy aligned with corporate strategy, implementing tools and technology for spend analysis, establishing an efficient source-to-pay process, ensuring the right organizational structure, managing supplier relationships strategically, and mitigating risks. Moving these dimensions from tactical to strategic can help procurement optimize results and deliver expected savings and value.
This document discusses product innovation and the involvement of suppliers in new product development. It defines different types of innovation and explains concepts like kaizen, continuous improvement. Early supplier involvement aims to include suppliers early in the development process to leverage their expertise. Different relationship types between buyers and suppliers are described like co-development, co-makership and co-destiny. The advantages and disadvantages of early supplier involvement are provided. Finally, the document outlines the process of supplier development to improve supplier performance and capabilities.
The document discusses strategies for developing model suppliers and optimizing a company's supply base. It defines attributes of model suppliers, such as managing quality systems, demonstrating technology leadership, and supporting business goals. It also outlines steps for a mature supply management process, including defining a preferred supplier base, establishing strategic partnerships, integrating suppliers, and conducting supply base segmentation. Commodity source plans are developed annually based on supplier performance data and input from stakeholders to guide one-year and three-to-five-year sourcing strategies.
Transforming Strategic Sourcing and Procurement – The New ModelSAP Ariba
This session will provide an overview on how Grupo Posadas, a leading Mexican hospitality company, transformed its Sourcing and Procurement model.
Key Achievements:
• A standardized sourcing and supplier management process. USD 27.3 million in savings in 2.5 years which accounts for 18% savings against the baseline
• Improved leveraging of customer needs and buying power
• Focused compliance and use of contracts. In 2012 compliance has improved to 96%
• Enhanced communication of customer requirements
• Standard key performance metrics
The ways of SCM transformation in the main competitive advantage of the companyVladislav Mandryka
Strategic sourcing is a systematic process of analyzing spending data, both internally and externally, to develop an optimal supplier strategy. The goals are to reduce costs, improve quality, increase ROI, and facilitate just-in-time delivery. The classic strategic sourcing process involves 7 steps: 1) identifying commodity groups, 2) developing a sourcing strategy, 3) generating a supplier portfolio, 4) implementing the strategy, 5) managing negotiations, 6) operational integration, and 7) continuous benchmarking and market monitoring. This ensures strategic sourcing remains an ongoing process that adapts to changes in the supply market.
Strategic Sourcing And Supplier Development Strategymashley
This document proposes developing strategic agreements and alliances with suppliers to minimize supply chain risks. It discusses implementing a new ERP system, qualifying suppliers globally through an updated database, and establishing a change management process. The objectives are reducing costs, increasing capacity and performance, and standardizing processes through strategic partnerships and sourcing agreements. An eight-step comprehensive sourcing solution is outlined. The supplier development strategy examines consolidating redundant suppliers through a selection policy and implementing solutions like vendor managed inventory programs.
The document discusses strategic sourcing and ADMA-OPCO's plans to implement it. The goals of strategic sourcing are to increase customer satisfaction, improve internal service levels and product quality, and significantly reduce total costs through coordinated purchasing across the organization. ADMA-OPCO aims to leverage its buying power to obtain goods and services efficiently for end users. The document outlines the strategic sourcing process and opportunities for ADMA-OPCO to analyze spending, the supply base, develop a sourcing strategy, manage negotiations, award contracts, and implement the strategy.
The document discusses strategies for managing strategic supplier relationships and collaboration. It outlines key questions purchasing officers should consider around understanding their supply base and spend. It then covers the strategic sourcing process, including analyzing spend, identifying requirements, analyzing the market, developing a strategy, managing negotiations, awarding contracts, and implementing the strategy. It also discusses optimizing the supplier base, performing supplier financial analysis, managing risk, and improving supplier performance.
Realizing the Strategic Sourcing Vision through an Ecosystem ApproachSAP Ariba
Gaining actual savings from the best laid sourcing plans requires organizations to put in place a closed loop strategy―one that addresses operational sourcing as well as the processes around it. Be it cutting-edge analytics to drive better decisions, water-tight contract management to improve adherence, or disciplined supplier management to improve performance, this session features stories from organizations that have translated savings from paper to the bottom line through a tightly woven collaborative sourcing process.
The document discusses relationship management in the construction supply chain. It explains that (1) maintaining strong relationships with subcontractors and suppliers is important for contractors to control costs and ensure quality work is done on time, (2) factors like specialization and outsourcing mean contractors rely heavily on subcontractors, and (3) with fewer subcontractors and suppliers, strong relationships are even more crucial for success.
Practically Applying Sourcing Grids for Risk Management Thomas Tanel
Purchasing and supply management have never been easy. The past several years have caused many executives and professionals to lose more sleep and gain more gray hair (or lose more hair) than usual; therefore, the next decade requires upgraded skill sets to survive.
Portfolio analysis is one of the most powerful techniques
used by the purchaser, despite its simplicity. It is a simple “grid” tool that charts the amount we spend on products or services and the complexity of its acquisition.
Portfolio analysis helps us define our sourcing strategy and the best sourcing techniques to use dependent upon the position on the sourcing grid. It also defines the relationships (supplier positioning) we need to have with our key suppliers and gives us an insight in how the key suppliers may see us in perception model. It allows you to organize your time and
resources for maximum benefit and it encourages strategic thinking and analysis to reduce cost, add value, and minimize risk.
The strategic sourcing process involves continuously improving a company's purchasing activities through a professional, disciplined process that saves on total costs without requiring capital investment. The key steps are:
1) Profiling the spend category to understand usage and suppliers;
2) Developing a sourcing strategy by identifying new suppliers and analyzing costs;
3) Surveying the marketplace to find alternatives and negotiate competitively;
4) Negotiating and selecting suppliers for implementation. Continuous evaluation ensures full value is achieved through benchmarking and monitoring results.
Strategic Sourcing and B2B E Commerce Solutions For ASEAN Purchasing Professi...Bill Kohnen
The document discusses strategic sourcing and e-procurement solutions for purchasing professionals in ASEAN countries. It notes that ASEAN is a rapidly growing region shifting from exports to serving regional consumer demand. Next-generation skills and solutions are needed to adapt products to diverse ASEAN markets and build innovative supply networks. However, current ASEAN purchasing models and technologies are still developing and lag traditional strategic sourcing processes. An ideal future solution would seamlessly integrate spend analysis, sourcing, transactions and insights in a mobile-accessible cloud platform tailored specifically to ASEAN's unique needs and skills.
The document discusses two strategic sourcing examples that provided high customer value:
1. Sourcing antiperspirant salt from China through a supplier's new plant. This saved $1.05 million annually and established a long-term strategic supplier.
2. Toll buying silicone feedstock from a supplier and shipping to a converter to produce emulsions. This introduced competition and saved $400,000 annually. Both created ongoing value through competitive pricing and security of supply.
Strategic sourcing is a disciplined process to define appropriate supplier relationships to enhance a company's competitive position. It engages with high spend categories across a company to provide a sourcing perspective, reduce costs, and achieve common objectives. The strategic sourcing team collaborates with business units, assesses processes, understands the market, and proposes solutions to maximize spending effectiveness and leverage scale in negotiations. This results in more effective spending and cost savings for the company.
This document provides a guide for developing a strategic sourcing strategy in 6 steps: 1) Analyze current spending, 2) Assess supplier markets, 3) Issue a supplier survey, 4) Review responses and select finalists, 5) Define target performance metrics and costs, and 6) Select and communicate with suppliers. The goal is to take an organized, collaborative approach to leverage spending and select suppliers that can create the most value by meeting quality, cost, and other objectives. Key aspects include understanding total cost of ownership, defining a target "to be" state, and setting clear performance metrics for supplier evaluation and continuous improvement.
MCH Scm2903 t2 power_point slides_sourcing and supply managementInstructor2014
The document discusses key concepts in managing supply chains through a logistics approach to sourcing and procurement. It covers the strategic sourcing process, which involves seven steps: project planning, profiling spend, assessing suppliers, developing a sourcing strategy, executing the strategy, transitioning, and measuring performance. Effective management of sourcing requires determining the type and importance of purchases, managing supplier relationships, and understanding total procurement costs. New technologies like e-sourcing and e-procurement can lower costs and improve efficiency.
Importance of having a right Sourcing strategy is key to success for CXO. It has to be correct blend of partners both internal as well as external. The strategy can be arrived only if business goals are understood correctly. This deck shares an approach and ways to arrive at IT Sourcing Strategy.
This article discusses how purchasing managers can adopt a more strategic approach to managing suppliers and supplies. It outlines a four phase process for classifying suppliers based on profit impact and supply risk. This allows purchasing managers to differentiate between supplier types and tailor strategies. The four phases include classifying supplies, analyzing supply markets, strategically positioning supplies based on the classification, and developing action plans to strengthen organizational structures, systems, and staff to support the strategic supply management approach. Adopting this strategic perspective helps companies better guard against supply disruptions.
The document outlines the strategic sourcing process for the University of California system. It aims to develop an effective collaborative purchasing process across the UC system to lower total costs while maintaining or increasing customer satisfaction. The goals are to achieve complete customer satisfaction, continuous process and service improvements, and reduce total costs by 5-15%. Critical success factors include executive sponsorship, end user focus and involvement, data-driven decision making, appropriate technology use, and continuous process improvement. Current strategic sourcing teams focus on areas like purchasing cards, office products, shipping, and lab supplies. Major commodity groups are organized into relationship groups like professional services, miscellaneous goods and services, supplies, and telecommunications/computers.
Strategic Sourcing: Walking the Tightrope in Developing Sourcing StrategyThomas Tanel
This presentation will focus on developing the sourcing strategy as a fundamental and logical process involving the application of tools by skilled, competent, and knowledgeable purchasers. Simply put, our focus will be on the “how to” in developing a sourcing strategy. Are you experienced?
Topics that will be addressed include spend analysis, categorizing the best opportunities for sourcing group profiles, Porter’s Five Force Model and Sourcing Grids, establishing sourcing group portfolios and supplier portfolios, using the proper RFX format for sourcing, and making strategic sourcing the focal point for supplier negotiations. Participants will view “good practice” examples of the above.
If you find yourself “walking the tightrope” with a strategic sourcing initiative or an ongoing effort, you’ll get valuable information in developing your sourcing strategy. With our five phase approach, we will discuss the following “how to”:
1. Develop sourcing strategies differentiated by expenditure category and based on market dynamics.
2. Deeply involve end-users in sourcing for knowledge and buy-in.
3. Apply a rigorous sourcing approach that examines internal needs against supply market options to find the lowest total cost.
4. Challenge specifications and usage patterns to ensure that each expenditure is providing the best value for the company.
5. Identify, analyze, select, and negotiate with strategically advantaged suppliers, not just the ones with the lowest price today.
This presentation will conclude with a presentation review that can refine your understanding of the factors, tools, and guidelines you need to make your sourcing process more effective and more profitable for your organization.
Untuk memilih vendor/supplier yang dapat diandalkan dengan produk terbaik & jasa, spesifikasi yang tepat, kualitas yang tepat, ketepatan waktu pengiriman, layanan terbaik, dan juga harga yang terbaik, maka perusahaan harus melakukan proses seleksi dan evaluasi vendor/supplier secara komprehensif diukur dengan metode yang tepat.
Tactical Vs Strategic Procurement Shifting Focus Towards Value Creationjamie.mahoney
The document discusses shifting the focus of procurement from tactical to strategic to create more value. It outlines 10 dimensions for an effective procurement organization, including developing a procurement strategy aligned with corporate strategy, implementing tools and technology for spend analysis, establishing an efficient source-to-pay process, ensuring the right organizational structure, managing supplier relationships strategically, and mitigating risks. Moving these dimensions from tactical to strategic can help procurement optimize results and deliver expected savings and value.
This document discusses product innovation and the involvement of suppliers in new product development. It defines different types of innovation and explains concepts like kaizen, continuous improvement. Early supplier involvement aims to include suppliers early in the development process to leverage their expertise. Different relationship types between buyers and suppliers are described like co-development, co-makership and co-destiny. The advantages and disadvantages of early supplier involvement are provided. Finally, the document outlines the process of supplier development to improve supplier performance and capabilities.
The document discusses strategies for developing model suppliers and optimizing a company's supply base. It defines attributes of model suppliers, such as managing quality systems, demonstrating technology leadership, and supporting business goals. It also outlines steps for a mature supply management process, including defining a preferred supplier base, establishing strategic partnerships, integrating suppliers, and conducting supply base segmentation. Commodity source plans are developed annually based on supplier performance data and input from stakeholders to guide one-year and three-to-five-year sourcing strategies.
Transforming Strategic Sourcing and Procurement – The New ModelSAP Ariba
This session will provide an overview on how Grupo Posadas, a leading Mexican hospitality company, transformed its Sourcing and Procurement model.
Key Achievements:
• A standardized sourcing and supplier management process. USD 27.3 million in savings in 2.5 years which accounts for 18% savings against the baseline
• Improved leveraging of customer needs and buying power
• Focused compliance and use of contracts. In 2012 compliance has improved to 96%
• Enhanced communication of customer requirements
• Standard key performance metrics
The ways of SCM transformation in the main competitive advantage of the companyVladislav Mandryka
Strategic sourcing is a systematic process of analyzing spending data, both internally and externally, to develop an optimal supplier strategy. The goals are to reduce costs, improve quality, increase ROI, and facilitate just-in-time delivery. The classic strategic sourcing process involves 7 steps: 1) identifying commodity groups, 2) developing a sourcing strategy, 3) generating a supplier portfolio, 4) implementing the strategy, 5) managing negotiations, 6) operational integration, and 7) continuous benchmarking and market monitoring. This ensures strategic sourcing remains an ongoing process that adapts to changes in the supply market.
Strategic Sourcing And Supplier Development Strategymashley
This document proposes developing strategic agreements and alliances with suppliers to minimize supply chain risks. It discusses implementing a new ERP system, qualifying suppliers globally through an updated database, and establishing a change management process. The objectives are reducing costs, increasing capacity and performance, and standardizing processes through strategic partnerships and sourcing agreements. An eight-step comprehensive sourcing solution is outlined. The supplier development strategy examines consolidating redundant suppliers through a selection policy and implementing solutions like vendor managed inventory programs.
The document discusses strategic sourcing and ADMA-OPCO's plans to implement it. The goals of strategic sourcing are to increase customer satisfaction, improve internal service levels and product quality, and significantly reduce total costs through coordinated purchasing across the organization. ADMA-OPCO aims to leverage its buying power to obtain goods and services efficiently for end users. The document outlines the strategic sourcing process and opportunities for ADMA-OPCO to analyze spending, the supply base, develop a sourcing strategy, manage negotiations, award contracts, and implement the strategy.
The document discusses strategies for managing strategic supplier relationships and collaboration. It outlines key questions purchasing officers should consider around understanding their supply base and spend. It then covers the strategic sourcing process, including analyzing spend, identifying requirements, analyzing the market, developing a strategy, managing negotiations, awarding contracts, and implementing the strategy. It also discusses optimizing the supplier base, performing supplier financial analysis, managing risk, and improving supplier performance.
Realizing the Strategic Sourcing Vision through an Ecosystem ApproachSAP Ariba
Gaining actual savings from the best laid sourcing plans requires organizations to put in place a closed loop strategy―one that addresses operational sourcing as well as the processes around it. Be it cutting-edge analytics to drive better decisions, water-tight contract management to improve adherence, or disciplined supplier management to improve performance, this session features stories from organizations that have translated savings from paper to the bottom line through a tightly woven collaborative sourcing process.
The document discusses relationship management in the construction supply chain. It explains that (1) maintaining strong relationships with subcontractors and suppliers is important for contractors to control costs and ensure quality work is done on time, (2) factors like specialization and outsourcing mean contractors rely heavily on subcontractors, and (3) with fewer subcontractors and suppliers, strong relationships are even more crucial for success.
Supply Chain Management, Sourcing Pricing and Procurement Process ,
Presentations By Rajendran Ananda Krishnan, https://www.facebook.com/ialwaysthinkprettythings
Purchasing, Procurement, Vendor, Contract and RFP Process Management with Sha...Optimus BT
Using the Document management, Collaborative and Self service features of SharePoint to implement a turn key procurement management business solution, that will streamline the procurement process, help you comply with regulations, enable you manage contracts, empower self service and participative procurement, aid in informed procurement decisions, in executing an effective procurement strategy and make your procurement function hassle free. Optimus BT is a leader in providing Procurement software and other turnkey solutions using SharePoint.
The document discusses implementing lean six sigma principles and eProcurement/strategic sourcing in a heavy machinery industry's MRO environment. It outlines the implementation highlights, including a focus on change management over technology. Benefits achieved included reduced costs, improved compliance, and faster processing times. The strategic sourcing roadmap included spend analysis, supplier evaluation, contracting, and an eProcurement system to streamline the procure-to-pay process. Key success factors included cross-functional involvement, standardization, and benefits realization monitoring.
Introduction to Category Management And Assortment Planning in the Retail Ind...KINDUZ Consulting
Category management and assortment planning are important retail strategies. Category management involves identifying product groups, space planning, assortment planning, visual merchandising, and inventory management to get the right products at the right price and location to meet sales projections. An effective assortment plan is based on customer analytics, financial projections, benchmarking competitors, and defines the merchandise mix. Visual merchandising and planogramming are also crucial to optimize store layout and product displays.
The document discusses creativity and innovation, providing frameworks and processes to build capability and drive growth. It outlines an innovation model and roadmap, highlighting data sources, relationships, and how to use the DMAIC process for idea generation. Metrics and measures for innovation are also presented, including financial, project performance, process performance, and market launch indicators. The overall goal is to establish innovation as a core competency and strategic imperative.
This guide is developed to provide a structured approach for conducting a high quality competitive analysis.
It provides a detailed approach and methodology for competitor assessment in five key topic areas:
- business/portolio overview
- management and people
- product/service and technology
- cost structure and operations
- marketing and sales
The competitor and information analysis is divided into several steps:
- develop internal cost model and capability baseline
- conduct competitor data collection and synthesis
- evaluate size and nature of competitive differences
- assess potential competitor strategies and implications
Each steps contain detail description of activities, examples, and tools used.
The document also includes an interview guide for the user to jump-start the process.
gazhoo.com
Business marketing M.COM 2nd semester bang lore university NawazPashaS
This document provides summaries of important topics related to business marketing. It covers 16 topics including: 1) the significance of customer relationship management, 2) formulating business unit level strategies, 3) types of business controls, 4) strategic planning at the corporate level, 5) diversification strategies, 6) industrial demand factors, 7) types of business customers, 8) classification of industrial products and services, 9) the lead user method in new product development, 10) two dimensional perceptual mapping and brand positioning, 11) the technology adoption life cycle, 12) pricing objectives, 13) major trends in business-to-business marketing, 14) channel design, 15) why decision support systems are prioritized over business management information systems,
Trade shows and exhibitions are effective promotional strategies for industrial marketing for several reasons:
1) They allow companies to efficiently introduce new products to a large audience and make direct sales.
2) They facilitate establishing valuable personal contacts with new customers as well as key decision makers.
3) They provide opportunities to display and demonstrate products, evaluate competitors, discover new suppliers/distributors, and generate sales leads - helping salespersons close sales with fewer calls.
The webinar covered procurement strategy development. It discussed NLPA's 10 phase approach to world class sourcing, leveraging customer requirements in procurement strategy and customer experience. Attendees learned how to understand the 10 phase approach, leverage customer and supplier matrices, and prioritize future learning. Polling questions gauged experience levels and interests in different procurement strategy topics.
This document outlines the components and structure of a feasibility study for an MBA program project. It includes sections on project details, phases, pre-investment analysis including opportunity studies and feasibility reports. Feasibility studies evaluate market viability, technical viability, management viability, economic viability and other dimensions. They assess opportunities, production requirements, competition, financial projections and make recommendations to determine project viability. The document provides guidance on the key parts and considerations of a feasibility report.
Download our content ready supply chain management PowerPoint presentation to showcase the flow of goods and services to the management and client. This predesigned supply chain analysis PPT presentation comprises 77 slides. The Supply Chain Management presentation covers slide on various relevant subjects such as supply chain management process, SCM decision phases, strategic sourcing process, logistics, and it, planning and forecasting, inventory management, inventory management models, performance measures, and common problems with supply chain management. A team of the researcher has researched the content of the presentation, and top professional graphics designers have converted it into a stunning presentation. Use this SCM PowerPoint PPT to represent the process of design, planning, implementation, control, and monitoring of supply-chain tasks with the goal of preparing net value and constructing a competitive framework. Our presentation designers have used an appealing graphics of table, pie charts, bar graphs, circles, and icons to make this presentation professional and attention-grabbing. Grab this complete presentation on supply chain management and improve the relationship with customers. Throw a line with our Supply Chain Management Powerpoint Presentation Slides. Reel them in slowly to your point of view.
Download our content ready supply chain management PowerPoint presentation to showcase the flow of goods and services to the management and client. This predesigned supply chain analysis PPT presentation comprises 77 slides. The Supply Chain Management presentation covers slide on various relevant subjects such as supply chain management process, SCM decision phases, strategic sourcing process, logistics, and it, planning and forecasting, inventory management, inventory management models, performance measures, and common problems with supply chain management. A team of the researcher has researched the content of the presentation, and top professional graphics designers have converted it into a stunning presentation. Use this SCM PowerPoint PPT to represent the process of design, planning, implementation, control, and monitoring of supply-chain tasks with the goal of preparing net value and constructing a competitive framework. Our presentation designers have used an appealing graphics of table, pie charts, bar graphs, circles, and icons to make this presentation professional and attention-grabbing. Grab this complete presentation on supply chain management and improve the relationship with customers. Throw a line with our Supply Chain Management Powerpoint Presentation Slides. Reel them in slowly to your point of view. https://bit.ly/3j9ezBG
This lecture slide was prepared for my guest lecture session in Bina Nusantara University's undergraduate program of International Business Management. It discussed the role of procurement function in an organisation, and how the function has been continuously evolved to meet market expectation by engaging business partners, as well as intra-company stakeholders. It shares top tips of how buyer can create value-add to the business from the book “Value-Added Purchasing” written by Eberhard E. Schening, PhD. Enjoy this as a part of your learning journey!
Chapter 3 - Markets and Competitive SpaceEyya Ahmed
This chapter discusses analyzing markets and competitive spaces. It covers defining market and product boundaries, describing end users and their buying behaviors, evaluating competitors, and developing a strategic vision of future market changes. Key points include the importance of monitoring markets continuously for opportunities and threats, understanding how customer needs and industry structures can shift, and anticipating competitors' actions and how market sizes may evolve over time.
Our Capabilities_Market and Consumer Insights_CPG_V1.pptxssuser9f21ef
This document provides an overview of Netscribes' market research and analytics capabilities for CPG/FMCG clients. It outlines their solutions including tailored research, sales intelligence, competitive intelligence, sector reports, quantitative and qualitative research. It also describes their digital analytics solutions like social media insights, business intelligence dashboards, customer analytics and marketing analytics. The document shares profiles of some of Netscribes' global CPG clients and examples of projects conducted for them. It closes with contact information for Netscribes offices.
Chap 2 purchasing decisions and business strategyMichael Alonzo
This document discusses purchasing decisions and business strategy. It covers four areas of purchasing strategy: supplier development, supply management, scope of manufacturing activities, and buying criteria. It also discusses components of purchasing strategy, competitive strategy options of cost and differentiation, and how purchasing criteria and decisions differ based on those strategies. Environmental factors, supplier partnerships, buyer-seller relationships, supply chain relationship quality, and the strategic sourcing plan are also summarized.
Amidst growing pressure to streamline business processes and enhance operational performance, complete or incremental optimization across the sourcing life-cycle has become the need of the hour.
Strategic customer analytics (SCA) is a global team of experts that uses advanced analytics techniques to provide strategic recommendations to clients. SCA has expertise in areas like predictive modeling, text mining, and conjoint analysis. The team is located across 6 hubs and leverages the analytics capabilities of the PwC Analytics Hub. SCA helps clients upgrade their capabilities in areas like pricing, marketing, and sales analytics. Recent projects include price and pack optimization, on-premise activation strategies, and building an insights capability.
B2B marketing involves managing products and new product development for business customers. Core competencies are key skills that create value for customers. New products go through a development process involving market assessment, product definition, development, and launch. Companies develop new product strategies to set goals and commit resources to innovation. The technology adoption life cycle shows how different customer segments adopt innovations over time. Early adopters help drive mainstream adoption among the early majority, where most revenue is generated.
The document discusses strategic sourcing and ADMA-OPCO's plans to implement it. The goals of strategic sourcing are to increase customer satisfaction, improve internal service levels and product quality, and significantly reduce total costs through coordinated purchasing across the organization. ADMA-OPCO aims to leverage its buying power to obtain goods and services efficiently for end users. The document outlines the strategic sourcing process and opportunities for ADMA-OPCO to analyze spending, the supplier base, and develop a sourcing strategy to better meet its goals.
The Competitive Intelligence Continuum - Taking Wisconsin to the WorldArik Johnson
The document discusses competitive intelligence and provides an overview of key concepts and processes. It defines competitive intelligence as a disciplined process of information collection and analysis to support better decision-making. It discusses trends like organizational acculturation and disruptive innovation. The document also outlines traditional competitive intelligence processes like identifying key intelligence topics, primary and secondary research, analysis techniques like SWOT and benchmarking, and how competitive intelligence supports strategic planning.
Competitive Intelligence for Market Researchers: an Exercise-Driven, Interact...Arik Johnson
Introduction to Competitive Intelligence Principles Workshop, Designed for a Market Research Audience and Delivered at the 2006 Institute for International Research (IIR) Market Research Event in Los Angeles, California October 22
21st centuary dynamics of supply chain managementUday Joshi
The document discusses supply chain dynamics and management. It begins by explaining that every product and service is supplied through a chain of multiple independent organizations, and that these supply chains experience considerable volatility over time due to changing capabilities, technologies, and customer preferences. It then discusses using system dynamics modeling to measure supply chain performance across four echelons in terms of metrics like inventory levels and customer satisfaction. Finally, it highlights some of the key challenges in managing supply chains, such as achieving global optimization while balancing conflicting objectives across a complex network of facilities that experience system variations.
This document provides an overview of business-to-business (B2B) marketing. It discusses key topics such as organizational buying behavior, relationship management, segmenting the B2B market, and managing products, services, price, channels, and communications for B2B. It also covers case studies and the differences between industrial and consumer marketing. The document is intended as an introduction and outline for the subject of B2B marketing.
2. 2
Fact: Vertical & Horizontal Disconnection of SCM
Organizations
Customer
Supplier
SCM Organization Marketing & SalesManufacturing
Disconnection of
Internal Business
Intelligence
Disconnection of
External Market
Intelligence
Loss of Innovation and Efficiency Improvement Possibilities
-> Connection of Market Intelligence has to be a Supply Chain Management
Driven Approach: CUSTOMER AND SUPPLIER FACING
3. 3
CustomersSuppliers
Suppliers’ Environment Customers’ Environment
PBUs
Company’s Environment
Customer and
Market Intelligence
Supplier and
Market Intelligence
Business Intelligence
Supply Chain Intelligence is the convergence of four activities (information gathering,
analysis, dissemination and response) both upstream and downstream in the supply chain.
A GUESSING GAME
Traditional Focus is Here
6. Strategic Sourcing Process
Phase I Phase II Phase III Phase IV Phase V Phase VI Phase VII
Business
Plan
Process
Plan
Data
Acquisition
Evaluation
Supplier
Selection &
Development
Implement
Performance
Measurement
& Continuous
Improvement
• Business Case
• Spend / Gap
• Team
• Charter
• Key stakeholder
• Communication
• Baseline
• Segmentation
• Work Plan
• Update Charter
• Communication
• Current state
• Hypothesis
• Vision
• Industry
• Competition
• Potential supplier
• Benchmark
• Narrow supplier
• Begin strategy
formulation
• Benefits
• Cost model
• Barriers
• RFP
• Negotiation
strategy
• Selection
• Corrective
action/
development
• Update strategy
• Implementation
• Identify team
• Coordination
• Integrate
suppliers
• Performance
measurement
• Corrective
actions
• Manage
relationship
& performance
• Communicate
• Cont.
Improvement
• Follow-up
• Approved Charter
• Project Progress Report
• Timeline
• Hypothesis
• Strategy Profile
• Updated Profile
• TAC Benefits/Cost models
• Supplier(s) Selected
• Development /
Implementation Plans
• Implementation status
• Progress Report
• Manage supplier
relationship
• Communicate
performance to supplier
Improvement plans
7. Strategic Sourcing follows a rigorous 7-step process;
activities in each step are tailored to the nature of the
commodity and the supply market
Profile
Sourcing
Group
Develop
Sourcing
Strategy
Generate
Supplier
Portfolio
Select
Implementation
Path
Select
Competitive
Suppliers
Operationally
Integrate
Suppliers
Continuous
Benchmark
Supply Market
1 2 3 4 5 6 7
Understand
internal spend and
external market
Create ‘Go to
Market’ approach
Identify potential
suppliers
Determine
execution strategy
Conduct
negotiations &
select suppliers
Operationalize
supplier
agreements
Operationalize
supplier
agreements
Activities
Example
Deliverables
• Identify &
understand current
spend/buy
• Conduct industry
analysis
• Assess current
sourcing practices
• Analyze potential
sourcing strategies
• Review savings
estimates
• Finalize project plan
• Identify new
suppliers
• Generate potential
supplier list
• Create and issue
RFI
• Develop
qualification
criteria
• Screen suppliers
• Select competitive
selection or supplier
development
• Determine
negotiation
approaches
• Develop RFP
execution strategy
• Develop RFP
evaluation criteria
• Issue RFP
• Analyze RPF
responses
• Develop
negotiation
strategy
• Conduct
negotiations
• Recommend
suppliers
• Finalize contracts
• Determine
implementation
implications
• Create
implementation plan
• Executive
implementation plan
• Develop process to
benchmark supply base
• Develop process to
monitor Industry
conditions
• Internal spend
analysis
• Industry overview
& market
dynamics
• Category
positioning matrix
• Sourcing strategy
summary
• RFI template
• Qualification
criteria
• List of suppliers
• Short list of RFP
• RFP Template
• RFP plan
• Auction plan
• RFP analysis
model
• Negotiation
strategy template
• Auction strategy
• Sourcing
recommendation
• Implementation
plan
• Ongoing category
review process
• Supplier report card
8. Operating Model
Centrally-Led
Product Led
Provide governance, lead developing of
people, drive category planning, manage the
supply base and ensure link and leverage
Mission
Execute category plans, conduct
sourcing transactions, work closely with
suppliers to ensure progress against
development plan, drive supplier quality,
and coordinate / ensure delivery of
purchased materials on-time, at the right
cost and quality
Business and Product Line Support (TDP, ADP,
PDP)
Production Support
Supplier Quality (Execution)
Category Planning (Product-led)
Key Activities
Category Planning
Cost Management
Supplier Quality and Development (Strategy)
Process and Support
Indirect Material and M&E Purchasing
Logistics
People Development
Operating Model is being changed to strike the right balance between
Centrally led and Product led
9. Global Enterprise Category Team Operational
Concept
The Commercial and Engineering
team is responsible for finding
Innovation in the supply base that
the Company can leverage:
Competitive advantage on current
business
Fill technology gaps in current
technology portfolio
Provide Innovative Solutions for
future customer needs
Concise Commercial and Technical
Strategy for each Category
10. Strategy and Execution are Related
• Corporate
financial
targets and
• President’s
directives
Goals Strategies Plans TacticsObjectives
Company
strategies
Category plans
Sub-Category
plans
Supplier plans
PBU-Level
Category plans
Supplier
classification
Sourcing
decisions
Category team
and PBU-level
agreed upon
actions and
timing
Supplier
management
Targeted
achievement
plans
(Example: 60%
best cost in
region; 70%
reduction in
number of
suppliers, etc.)
Sourcing
strategies
“Strategy without tactics is the slowest route to victory.
Tactics without strategy is the noise before defeat.”
- Sun Tzu
11. 11
2.1/2.2 Create / Refine
/ Document Product
Line/PBU Strategies /
Material Group Code /
Sub-category
2.1/2.2 Create / Refine
/ Document Product
Line/PBU Strategies /
Material Group Code /
Sub-category
2.3 Create /
Refine /
Document
Supplier
Strategies
2.3 Create /
Refine /
Document
Supplier
Strategies
Category Plan Development Future State Map
1.1 Compile
Industry /
Market Info
1.0 Compile/ Document Data 2.0 Develop Strategies 3.0 Approve Strategies
1.5 Compile
Current
Company APV
Data
1.4 Compile
Supplier Data
1.7Create /
Refine /
Publish
Company
Category
Overview
1.8 Gather
Key Product
Line Business
& Technical
Information
via meeting or
discussion
3.1 PBU /ECT
Documented
Approval of
Sourcing
Strategies
2.4 Create /
Refine/
Correlate
Specific
Sourcing
Strategies
Q
2.3 Create /
Refine /
Document
Supplier
Strategies
Reports/shows
journals/internet
/interviews/
consultants / etc
APV data from
Portfolios
Business info / FTS / quality /
technology / Category, MCA &
Commercial Assessments /
Customer Specific
Requirements
1.6 Create /
Refine /
Publish
Industry
Category
Overview
Priority matrix
determines
ECT/PBU/PL
engagement level
Strategic leverage
Company Stakeholders
PBUs (buyer)
Q
1. Leverage considered?
2. All inputs (ECT & PL),
including action
items, available?
1.3 Compile the
Total Cost &
Cost
Management
Information
1.2 Compile
Category
Technical
Information (Eye
Of the Needle
Process)
Formalize input
SharePoint Document Library
(documents & Action Items)
Category Strategies
Home Repository
Pipeline
How to
document
approval in
system?
New
Information
Scheduled
Review
Changing
Conditions
Action items / PL info
2.1/2.2 Create / Refine
/ Document Product
Line/PBU / Material
Group Code / Sub-
category Strategies
Assess (1) strategy
alignment across PL
& Categories; (2)
total cost impact;
and (3) leverage
opportunities
2.1-2..3 are completed based on specific need or request
QVC gates
needed?
Metrics – How to measure
leverage to ensure the
behavior occurs?
12. 12
Each Process is Integral to the Next
Inputs Outputs
• Suppliers Capability
• Demand and Supply
trends
• Mapping of Supply Chain
• Raw Material/conversion
costs
• Market Prices
• Internal Costs
• Market Trends
Process
Category Market Analysis
Strategic Cost Modeling
Commodity Price Analysis
Market Index Planning and
Reports
• Individual Supplier Analysis
• Market Analysis
• Priorities for Strategic Costing
• Commodity “Should Cost”
• Relevant Price benchmarks
• Performance Analysis
• Benchmarks for Planning
• Risk Analysis for category
• Cost Escalations for category
• Executive Summary
13. 13
The main outputs drive category strategies …
Cost Models Market Analysis
• Market Analysis can include:
• External Market Conditions/Trends
• Supplier Deep Dives
• Supplier Financial Health Analysis
• Market Prices/Trends
• Recommendations on suppliers based on our
analyses
• Labor Cost Models:
• Industry cost models-any occupation &
location
• Supplier specific cost models
• Product Cost Models
• High level product cost models
• Deep dive product cost models
14. 14
Michigan State U. Benchmarking Study: Impact of
Strategic Category Management
• Cost savings
5 to 15% price/cost savings
More uniform prices between regions
– One company reported 20% to 30% price
differences between locations
– Another company reported a reduction in the gap of
10%
15. 15
Michigan State U. Benchmarking Study: Impact of
Strategic Category Management
• Other savings
Reduction of logistics cost from 3% to 2% of cost of sales.
Lower operating costs of up to 15%
Improved quality – typically from 10 to 20% of yield
Inventory reduction from 15% to 30%
Improved on time delivery to 20%
Reduced lead times by 20%
Improved productivity – 4 to 20%
Improved communication between functions
Enhanced strategic role of procurement
Development of a learning organization
18. 18
1.0 Compile/Document Data
• Typical Data
Industry Category Overview
Description of the Category
Total Market Value
Major Applications
Product Segmentation
Cost Management Practices
Industry Efforts and Initiatives
Breakdown by Major Supplier/Product
Industry Structure and Global Reach
21. 21
Test Hypothesis
Best Practices Approach
Gather
Data
Conduct Analysis
Develop and
Refine Strategy
Develop
Hypotheses
Engage Resources
Test Hypothesis
22. Sample Hypotheses
• Resin costs should drop as the cost of oil
drops.
• Our business case for harness providers is
not sustainable.
23. 23
Market Analysis Tools
• Converting Data into Insight
– Supplier Analysis
– SWOT (Strength, Weakness, Opportunity, Threat)
– Value Chain
– Risk Analysis
– Porter’s Five Forces
24. 24
Supplier Analysis
• Data needed to make the tool work
Company APV
Current relationships
Knowledge of industry players
Supplier customer base
Annual revenue of suppliers
Competitors and competitive position
• Where do you get the data
Suppliers
Internal Company
PBU partners
Internet
Industry associations
Trade publications
Consultants & research providers
25. 25
Supplier Analysis
• What the tool provides
Cost structure
Financial status
Customer satisfaction levels
Support Capabilities
Relative strengths and weakness
How Company fits in their business
How Company is viewed
Core capabilities
Strategy/future direction
Culture
…The list goes on as the journey proceeds
• When do you use it
Continuous, on-going process
26. 26
SWOT Analysis
• Data needed to make the tool work
Can provide insight even with limited data (Often a good way to figure out what data
you have and where there are gaps.)
• Where do you get the data from
Any of the sources mentioned so far
Often a good tool for a dialogue
• What the tool provides
A quick sketch of where you stand
A preliminary call to action
Quick picture of circumstances
• When to apply
Analysis of individual divisions
Analysis of individual suppliers
Market situation
27. 27
SWOT Analysis
Opportunities Threats
Strengths Weaknesses
• Broad customer base
• Established product
range
• Established
distribution
channels
• Emergence of other
uses and markets
for products
• Emerging overseas
markets
• High barriers to
entry
• Low product
innovation
• Traditional, unionised
business processes
• Low patent protection
• Emerging overseas
suppliers
• New product
development
costs are high
• Environmental
regulations
Internal
Factors
External
Factors
28. 28
Value Chain Analysis
• Data needed to make the tool work
Steps in the process of creating a product
Steps in product sales and/or distribution
Technology involved
“Dirt to the suppliers door”
• Where do you get the data
Associations
Internet
Industry research
Engineering books
• What the tool provides
Understanding of supplier cost structure
Understanding of how suppliers add value
Idea of where you want to participate
Benchmarks for value
Ability to better predict pricing
Bottle-necks that can constrain availability
• When to apply
When you think there are steps that can be cut
Generally works best when everyone in your supply base has a similar value chain (e.g.
commodities)
29. 29
Sample Value Chain Analysis
Source: The Society of the Plastics Industry, Inc. and Management Horizons, A Consulting Division of PricewaterhouseCoopers LLP.
Polymerization
Small molecules
linked together
Raw
Materials
Natural Gas
Petroleum
Coal
Refining
Basic
compounds
extracted and
converted to
feed stocks
Polymers
Resins
(giant
molecules)
Manufacturing
(film production)
Feed-
stocks
Monomers
(small
molecules)
Material
Sourcing
Resin
Production
Film
Extrusion Conversion
End-User
Distributor
Finished
Product
30. 30
• Looking further into the value chain and analyzing the market, we can
understand the high level cost structure and cost drivers
• Typical cost drivers are:
Raw material availability and costs
Degree of product customization
Research and Development
Yield
Supplier high profit margins
Complex distribution network
Scale
Supplier
sources
components
Assembly
Storage &
distribution
Sales
Raw
materials
Suppliers
manufacture
components
100%
10% 20% 15% 10% 15% 30%
COST
Suppliers’ Cost Elements
31. 31
Our Challenge – Defining Categories
• Categories Definitions Drive
Priorities
Availability of data
Supplier communications
PBU expectations
Validity of analyses
View of current state
View of future possibilities
32. 32
Inputs
• Supplier analyses
• Value chain analysis
• Industry definitions
• Material group codes
• Stakeholder expectations/standards
PBU
Eye of the Needle
Cost
33. 33
Characteristics of Suppliers that
“Fit” within a Market Segment
• Similar
production
process
• Similar supplier
sources
• Similar material
content/
complexity
• Similar product
specifications
• Similar
Technology
• Similar
Supply chain
• Similar
Internal
value chain
• Similar
Customers
and markets
Copy
Paper
Copy
Paper PensPens
Office
Supplies
Office
Supplies
Key Question:
At what level do we define
the market?
Where does
the team have
maximum
bargaining
power?
Increasing
Bargaining
Power
Look for Patterns
Writing
Utensils
Writing
UtensilsPaperPaper
Legal
Pads
Legal
Pads PencilsPencils
34. 34
Risk Analysis
• Data needed to make the tool work
The impact of certain products on Company
Major suppliers in the industry
Typical failure points
• Where do you get the data
PBU
Cost
Eye of the needle team
Buyers
• What the tool provides
Cost/benefit of risk mitigation strategies
Call to action to change the status quo
• When to apply
You suspect there are hidden risks
Stakeholders do not recognize risk
35. 35
Common Areas of Risk
• Product quality/service
• Supply continuity
• Technology dependency
• Supplier dependency
• Currency exchange fluctuation
• Business cycle
• Political
• Geographic
• Intellectual Property
• Plant downtime
• Yield
• Regulatory compliance
• Health & safety
• Environmental
Business Risks Operational Risks
37. 37
Supplier Risk Example
RevenueImpact
Risk Probability Index (RPI)
The following slides will show
how the mitigation process
works. Specifically:
• Supplier Identification
• Effects of Mitigation
• Reduction in Risk
In the example case, there
are several suppliers in the
yellow and red zones.
The example will follow
“Alcoa” – currently in the
yellow zone, with medium
RPI and medium revenue
impact.
Risk Distribution Matrix – by Supplier
38. 38
The Bar Chart report
shows the supplier risk
index rankings within
the group. The color
coded zones help
direct the priorities for
mitigation activities..
Alcoa is in the yellow
zone indicating
medium or long term
mitigation action.
Supplier Risk Example
39. 40
Risk Reduction by Shifting Supply
from High to Lower Risk Suppliers
Result:
Significantly reducing the disruption risk of
$170 million in revenue impact from an RPI
of 20.3 to 18.9 (-1.4%).
Action:
Shift supply from Alcoa to Alga, Tek, and
AIP Thermoform
40. 41
Prev Cur Change Prev Cur Change Prev Cur Change Prev Cur Prev Change
Prent
2382.01 85
1) Low BSC business/Prent
revenue 2) High SRIM%
1) Allocate more resources such
as inventory
2) Contigency plan for backup
367.71 367.71 0 14.32 14.32 0.00 1.9 1.9 0 100.02 100.02 16.77% 0.00%
Alcoa
1156.22 36
1) Low BSC business/Alcoa
revenue 2) Slow response to
technical problem 3) High
employee and senior staff
turnover rate 4) Low market
bargain power 5) Sole sourced
material 6) Poor quality
Move to Prent, Alga, and
Computer Design.
170.29 0 -170.29 20.31 0 -20.31 3.0 0.0 -3 103.75 0.00 17.39% 100.00%
Perfecseal
460.34 6
No survey response Get survey response 109.13 109.13 0 38.00 38.00 0.00 4.3 4.3 0 178.32 178.32 29.90% 0.00%
Alga
200.61 9
1) Low BSC business & profit
margin/Alga revenue 2) No
regular information sharing with
tier II suppliers 3) High MRR
1) Consolidate other thermoform
business to Alga 2) Help
develop regular information
sharing system with tier II
suppliers 3) Quality audit
44.98 130.00 85.02 17.76 17.76 0.00 2.5 2.5 0 19.98 57.73 3.35% -189.02%
TEK
165.47 9
1) Low BSC busines/TEK
revenue 2) Cost structure is not
shared
1) Consolidate other thermoform
business to Alga 2) Negotiate
for cost structure
18.59 77.10 58.51 16.89 16.89 0.00 2.4 2.4 0 7.54 31.25 1.26% -314.74%
AIP
78.99 1
1) Overall interest alignment is
low 2) Slow response to
technical problem 3) Low
engineer support 4) Small
employee size 5) No regular
information sharing with tier II
suppliers 6) Low market
bargain power
Consolidated to other vendors 23.25 50.00 26.75 22.07 22.07 0.00 3.0 3.0 0 15.40 33.11 2.58% -115.05%
Risk Factor Change
SRIM SRIM% Change
Rev Impact (MM) Risk Probability Index RPI Risk Index RI
Risk
Zone
Vendors Risk Reason MitigationSpend (K) Part#
Risk Report
(Supplier View)
The Risk Report - by Supplier provides a view of the risk indices and progress for each
supplier in a category . The current status and mitigation actions are input by the
commodity managers to provide detailed metrics and a mitigation report for each
supplier.
1029.72 1029.71 23.48 21.79 3.0 2.8 -0.25
596.48 571.92 4.12%
Supplier Risk Example
41. 42
Porter’s Five Forces Model
• Data needed to make the tool work
Major players in the industry
Financial conditions of the players
Threats to the industry
• Where do you get the data
Publicly available financial data
iSupply iAlert
Industry overviews
Investor industry analysis reports
• What the tool provides
long-term picture of the industry
Broad perspective
Competition for demand
Where do we have leverage
• When do you use it
Stakeholders are overly focused on short-term
Stakeholders have unrealistic expectations about supplier behavior
Predict degree of supplier flexibility
Understand competitive threats they face and where you can add value
42. 43
As a variation of the Porter’s framework, additional forces are sometimes examined.
These are “globalization,” “digitization,” and “de-regulation.”
Source: Competitive Strategy, Michael E.
Porter, 1980
Market
Internal
Competition
Pressure from
Substitutes
Buyer Bargaining
Power
Threat of New
Entrants
Supplier
Bargaining
Power
Porter’s Five Forces Analysis
43. 44
Implications: Suppliers may not offer better pricing if they
are captive to their suppliers or are squeezed by their
position in the value chain and there may be an
opportunity to buy at a different point in the value chain.
Porter’s Five Forces –
Supplier Bargaining Power
Factors Influencing Suppliers’
Bargaining Power
• Prices of major inputs
• Ability to pass on price increases
• Availability of key technologies or other resources
• Threat of forward or backward integration
• Industry capacity utilization
• Supplier concentration
• Importance of volume to supplier
44. 45
Criticality to Buyers
• The concentration of purchase volumes in a
market defines the relative strength and
negotiating power of the buyers.
• The buyers’ ability to influence the market demand
is directly proportional to their ability to influence
suppliers behaviors.
• The more critical the item being purchased, the
lower the buyer’s negotiating power
45. 46
Criticality to Buyers
Characteristics of Critical Items Characteristics of Non-Critical Items
Product is in short supply Product is purchased in large volume
compared to other customers
Client’s purchasing volume is small
relative to most other customers
Product is undifferentiated
Product is a large portion of the
overall cost
Backward integration is possible
Strong
$
Strong
$
Weak
$
Weak
$
A few buyers purchase
most of suppliers’ output.
Suppliers have many
buyers to choose from.
Factors Influencing the Buyers’
Bargaining Power
Buyer concentration
Buyer volume
Buyer switching costs
Price sensitivity
Product differences
Brand identity
Impact on quality or performance
Buyer profits
Availability of substitutes
46. 47
• Capital markets
• Availability of skilled workers
• Access to critical technologies, inputs or distribution
• Product life cycles
• Brand equity/customer loyalty
• Government deregulation
• Risk of switching
• Economies of scale
Factors Influencing the Threat
of New Entrants
Porter’s Five Forces –
Threat of New Entrants
Implications: Suppliers may be eager to offer improved terms
to keep new companies from entering the market and new
market entrants may offer improved terms to gain a foothold.
47. 48
Porter’s Five Forces –
Threat of Substitutes
• The threat or availability of alternate products in a
market also affects the relative strength and
influence the buyer can exert.
• Possibility of a switch to a substitute increases
options and leverage
48. 49
Porter’s Five Forces –
Threat of Substitutes
Original
Product/Service
Substitute
Product/Service
Paper grocery sacks
Airline travel
Printed forms
Steel pipe
Electricity
Grocery stores
Plastic grocery sacks
Video conferencing
Electronic forms
PVC pipe
Co-generated power
Internet
EXAMPLE
relative performance of substitutes
relative price of substitutes
switching costs
buyer propensity to substitute
Factors Influencing the Threat
of Substitutes
49. 50
Internal Competition
• Higher levels of internal competition increase
buyer options and supplier flexibility.
Speed of industry growth
Capacity utilization
Exit barriers
Product differences
Switching costs
Diversity of competitors
Factors Influencing the Market
Internal Competition
51. 52
L H
H L
L H
H L
H L
Market Competition
Entry Barriers
Threat of Substitutes
Impact of Inputs
Criticality to Customers
Suppliers Hold the
Balance of Power
Buyers Hold the
Balance of Power
Sourcing Implication
Balance of Power as Input to Supply Strategy
Source: Competitive Strategy, Michael E. Porter, 1980
54. 55
Company Templates
• Value of documentation
Establish base lines
Easy reference
Basis for dialogues
• Value of standardization
Ease of interpretation
Ease of consolidation and trend spotting
• Dangers of standardization
Becomes rote
May not tell the story you need told
55. 56
Industry BackgroundIndustry Background Industry BreakdownIndustry Breakdown
Category Description:
Describe this category and the important characteristics.
Total Market Value:
Estimate what is the total market value of this category globally.
Major Applications:
Identify the major applications in/of this category.
Product Segmentation:
What is the product segmenting within this category ? (i.e. Commodity,
Niche, Near Core, Core)
Cost management practices:
Indicate if there is a common cost management practice or methodology
used in the industry.
Category Name Overview
Owner: Global Enterprise Category Team Manager Name
Category Name Overview
Owner: Global Enterprise Category Team Manager Name
Seg 2,
$118 ,
22%
Others,
$20 , 4%Seg 5,
$70 , 13%
Seg 4,
$43 , 8%
Seg 3,
$26 , 5%
Seg 1,
$254 ,
48%
Breakdown by Market SegmentBreakdown by Market Segment
For graphs above: Identify and size the major market segments in this category (e.g., Automotive,
Medical, Consumer, Electrical, Industrial etc.). Identify and describe the major suppliers in this category
and their share of the market.
Additional Comments Relative To Major Market Segments / Suppliers
Supplier
B, $118 ,
22%
Others,
$20 , 4%
Supplier
E, $70 ,
13%
Supplier
D, $43 ,
8%
Supplier
C, $26 ,
5%
Supplier
A, $254 ,
48%
CD
Approved and
Agreed By
Next review:
08/2006
08/2007
Approval:
Date of...
56. 57
Barriers to EntryBarriers to Entry
Industry Structure and Global ReachIndustry Structure and Global Reach
• How easy it is for suppliers
to drive up prices?
• How many supplier choices
do you have? The fewer the
supplier
Supplier PowerSupplier Power
• How easy it is for buyers to
drive prices down?
• How important is each
individual buyer to your
business? How expensive is it
for them to switch from your
products and services to
those of someone else?
• Are buyers often able to
dictate terms to you?
Buyer PowerBuyer Power
• What is important here is the
number and capability of your
competitors ?
• Will your suppliers and
buyers go elsewhere if they
don’t get a good deal from
you?
Competitive
Rivalry / Intensity
of Competition
Competitive
Rivalry / Intensity
of Competition
• How easy is it to substitute
what you provide?
Threat of
Substitution
Threat of
Substitution
• Are there economies of
scale?
• Are the costs high or
low of entry?
• What is the ease of
access to distribution
channels?
• Are there cost
advantages not related
to the size of the
company
• Will competitors
retaliate?
• What can be the
impact of government
action (effect of
legislation)?
• How important is
differentiation?
57. 58
Manufacturing
List the manufacturing trends – in terms of global
sourcing and BCC sourcing
Globalization/Footprint
Note the global trends and how they may affect
BCC sourcing
Legislation
Provide details around any specific legislation in
any part of the world impacting the buy and how
does it impact the category in general.
Cost Drivers
Ascertain how costs of related commodities (input)
affect the category. What are the cost drivers?
Other
Market Trends (consumer,
supplier, regulatory)
Market Trends (consumer,
supplier, regulatory)
Market, Technology, and Competitive TrendsMarket, Technology, and Competitive Trends
New Technologies
List any new technologies that are impacting this
category.
Substitutions
List the technologies that will be phased out in the
near term and what are the new technologies that
will replace these existing products.
Technology Trends and Road
Map
Technology Trends and Road
Map Global FactorsGlobal Factors
Significant Global Factors:
Identify and list the major global factors (for
example political, geographical, technological,
meteorological and any other factors) that affect
the category and note how they impact this
category.
58. 59
Provide comments / suggestions.
List major issues or directions
Category Team Leader CommentsCategory Team Leader Comments