background and perspective making the business case for supplier relationship management 1 annual...

Background and Perspective

Making the Business Case for Supplier Relationship Management

1Annual MeetingApril 7 - 10, 2013Orlando, Florida

The Importance of Being Strategic

Annual MeetingApril 7 - 10, 2013Orlando, Florida

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Personal Skills

Str

ate

gic

Defining Supplier Relationship Management


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• The practice and process for interacting with suppliers

• The discipline of strategically planning for, and managing, all interactions with third party organizations that supply goods and/or services to an organization in order to maximize the value of those interactions

• The discipline of driving strategic supplier performance to achieve goals established to promote value creation beyond price and to maintain / improve the overall quality of delivered goods / services

Spend Management


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Strategic Sourcing

Supplier Relationship Management

Supplier Plan

Category Plan

Spend Analytics

University Spend

MRO Supplies Grainger

Contract Execution

Manage Relationship

Lessons from Outside Higher Education


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Jointly Developed Scorecard Executive Sponsorship

Relationship ManagerExecutive Assigned to Each

Relationship

Escalation Procedures Well Defined

Cross-functional ownership across departments

Activity Based on Criteria Engage Supply Partners Beyond Price

StrategicTactical

Goals

Wh

o is

Accou

nta

bl

e?

Issu

e

Resolu

tio

n

Valu

e

Cre

ati

on

Why Focus on Supplier Relationship Management?


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UP

DO

WN

Revenue Value

RiskCost

• Signing Bonus• Rebates• Other Incentives

• Price• Efficiency• Standardization

• Service Level• Quality• Innovation

• Supply Availability• Adverse Events

7 Core Elements of SRM


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SRM at the University of Colorado



The Procurement Service Center


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Program History


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• Began in 2009 to drive price compliance and support procurement objectives

• Managed suppliers in two categories (Tier A & Tier B)

• The PSC drives SRM goals and activities

• Business review process well-established

• Increasing executive awareness

• Dedicated Resources

• Started with 1 FTE

• Now have 2 FTE’s

Program Objectives


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• Value Delivery- Increase value creation

- Sustain value achieved through strategic sourcing

• Process Management- Increase electronic processes

- Reduce systemic issues

- Drive supplier accountability

• Support Stakeholders - Increase spend under management

- Improve stakeholder service levels

- Communicate value delivered to organization

How the Program Works


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Price / Rebates

Contract Compliance

Standardization / Consolidation

Utilization / Demand Management

Process / Technology

Communication Strategies

Supplier Targets

Departmental Ownership

Integration Complexity

Sourced Value

Ownership Assignment

Segmentation Strategy

Procurement Managed

Procurement Supported

Department Owned

Implementation Activity Focus

Leads Implementation Activities, Owns

Relationship, Manages Account / Business

Reviews

Program Coverage


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5%

Potential Targets for Expansion


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Program Success


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Great Contracts Top Customer Service Improved

Process Efficiency Spend Consolidation Executive Attention

Executive Sponsorship


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SUPPLIER BREAKFAST WITH PRESIDENT

BENSON AS THE GUEST SPEAKER

What is Next?


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Price / Rebate Negotiation

Price / Rebate Compliance

Consumption Management

Process Management

Joint Strategic Alignment

Developmental Timeframe

Valu

e

Supplier

Segmentation

ROI Discussion - Is the effort worth the return, or should we shift focus to other vendors where these impact categories can drive top results?

Impact Categories

Current Focus - Supplier relationships owned and managed by procurement

Potential Focus - Supplier relationships owned outside of procurement

1 IMPROVE STRATEGIC FOCUS OF CURRENT PROGRAM

2 MORE INFLUENCE ON UNIVERSITY STRATEGIC SUPPLIERS

Improvement Opportunities



Supply Base Segmentation


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TBD

Opportunity: Develop Criteria for Strategic Suppliers

Executive Sponsorship


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Opportunity: Develop an Executive Steering Committee

Supplier Relationship Governance


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CASCADE IMPACT ON GOAL SETTING

Organizational Objectives

Category Strategies

Departmental Objectives

Procurement Objectives

• Sub-Strategies- Sourcing- Supplier (SRM)- Process Improvement- Consumption Mgmt- Compliance / Technology

Influence

Support

Legend

Opportunity: Increase cross-functional leadership

Supplier Engagement Process


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Opportunity: Focus activity on strategic value

Value Analysis & Metrics


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Opportunity: Develop a two-way performance scorecard

People Skills


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1 Emphasize the Importance of Relationship Skills

2 Add Data Analysis Skills

3 Develop a Repeatable Methodology

4 Develop a Training Curriculum

Opportunity: Build cross-functional skills

Technology


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Opportunity: Integrate spend analysis software

5 Things To Do Now


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1

REFLECT ON THE DIFFERENCES BETWEEN THE 5 MOST IMPORTANT PROCUREMENT RELATIONSHIPS V. THE 5 MOST IMPORTANT STRATEGIC UNIVERSITY RELATIONSHIPS

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ESTABLISH GOALS FOR THE 5 MOST IMPORTANT PROCUREMENT RELATIONSHIPS

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ASK YOUR KEY SUPPLIERS HOW YOU CAN BECOME A BETTER CUSTOMER?

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BUILD CAPACITY FOR SRM ACTIVITY BY STUDYING YOUR WORKLOAD AND STREAMLINING TACTICAL ACTIVITY

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LEARN MORE ABOUT SRM – SIGN UP FOR THE STRATEGIC PROCUREMENT INSTITUTE

Questions


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background and perspective making the business case for supplier relationship management 1 annual...

Documents

florida slide

strategic annual meeting

program history annual

organization slide

ftes slide

strategic supplier performance

price compliance

price strategictactical