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Building Business Requirements ISM Florida Gulf Coast March 19, 2105

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What are business requirements? What business requirements should be based on process Example of SMART business requirements How to use business requirements in your RFx Case Study practical application How to use business requirements in your supplier scorecards Meri M. Stockwell, LLC 2015 WHAT YOU WILL LEARN

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They add value to your sourcing strategy Ensure that category strategies are linked to the needs of the business Enable the development and objective assessment of appropriate strategies Provide objective criteria against which potential suppliers can be assessed Setting the stage for effective, meaningful measurement of supplier performance Meri M. Stockwell, LLC 2015 Benefits of Building Business Requirements

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Extensive evaluation of current and future needs for a particular category or categories - SMART Can be used to shape current and future management of procurement and the supply base A simple focused way to tie all the elements of Strategic Sourcing together Links sourcing strategy execution and delivery to the needs of the business to create VALUE Meri M. Stockwell, LLC 2015 What are Business Requirements? A/R Q S C - I

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Assurance of Supply Quality Service Cost Innovation Regulatory Compliance Innovation Needs are stated as a Supplier supported need for innovation of product line extensions, new products, manufacturing techniques, or other support that drives BD competitive advantage Service Needs are stated as a Suppliers ability to communicate, in a timely manner, answers and meet expectations in many areas, including lead times, delivery, technical questions, billing issues, EDI capabilities, inventory management and account management Assurance of Supply Needs are stated in terms of - available capacity / resource requirements / Ability to meet quantities required / Capacity / Resource Flexibility / Contingency Cost Needs are stated as total cost of a product or service as defined by the other business requirements, and they also maybe stated to include current and future cost reduction and continuous improvement objectives Quality Needs are stated as business specifications and demonstrate documented process to control the end product or service, on a repeatable basis Regulatory Compliance Needs are considered a gatekeeper for a supplier prior to consideration against the other business requirements and are stated in legal, safety, regulatory, environmental and ethical compliance terms. Business Requirements Hierarchy MUST HAVE DIFFERENTIATORS Go / No Go Meri M. Stockwell, LLC 2015

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Collaboration with stakeholders Active Listening - VOC Meaningful questioning Assimilation Fine tuning Validation Meri M. Stockwell, LLC 2015 Process of Building SMART Business Requirements

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AttributesQuestions to Ask S Specific To the point; behavioral in nature What will be visible when the business requirement is achieved? What are you expecting to receive? M Measurable Observable characteristics that will define success What characteristics will indicate that needs have been fully met? Do you clearly understand what the consequences are? A Attainable Possible to obtain, but likely a stretch Just out of reach, but not out of sight May relate to CI Aer the necessary specs, supplier processes and other resources in position to meet the goal? Can skills / knowledge be acquired to attain stretch R Results - Oriented Truly worth taking on something of value Provides outcomes that positively impacts processes What value does it provide? Has support of impacted functions & processes been engaged/ How does this help you and the supplier continue to improve? T Timebound A clearly defined time element that can be mutually agreed upon (with Stakeholders and Suppliers) Will the due dates be clear to everyone involved? Does the time element allow / facilitate measurement of ongoing progress? Meri M. Stockwell, LLC 2015 Business Requirements Attributes

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1 st Pass Business Requirements Not SMART SMART S Specific (Quality) Meets specs Meets quality spec #xx-xxx, dated 3/19/15 M Measurable (Service) High level of customer service Response time within 2-hours, 24/7, 365 days per year A Attainable (Attainable) 100% server uptime Theoretically possiblebut feasible? At what cost premium? Why? Server uptime 99.99% R Results - Oriented (Cost) Committed to continuous improvement Tangible plans in place and committed to taking costs down 4% per year for 3 years and passing through 100% T Timebound (Innovation) Need access to innovation for new materials Host quarterly Innovation Roundtables at least three best practice examples for new material usage Meri M. Stockwell, LLC 2015 SMART EXAMPLES

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Weight the Business Requirements by level of importance to this case study by % A / R Q S C I Develop 2 SMART questions for each hierarchy Meri M. Stockwell, LLC 2015 Case Study Practical Application Assurance of Supply Quality Service Cost Innovation Regulatory Compliance MUST HAVE DIFFERENTIATORS Go / No Go

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Meri M. Stockwell, LLC 2015

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Scorecard Example Meri M. Stockwell, LLC 2015

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Business Requirements Get them right! Involve Stakeholders early & often Weight them by level of importance RFP Develop SMART questions and Criteria Measure Performance Use supplier scorecards Create Competitive Advantage DELIVER VALUE Meri M. Stockwell, LLC 2015 Tying it all together

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How to Connect with Me Meri M. Stockwell, LLC 2015