clarity management consulting - how to select innovative suppliers using a 5-step project management...

©2009 Clarity Management Consulting Inc.

HOW TO SELECT INNOVATIVE SUPPLIER PARTNERS USING A 5-STEP PROJECT

MANAGEMENT APPROACH

Monica D. JohnsPresident and CEO

Clarity Management Consulting


ContentsIntroduction

The need for innovative suppliersThe need for a project management approach

The 5-Step Project Management Approach to Selecting Innovative Suppliers, including:

Tools for identifying forward-thinking supplier partnersAn approach for capturing the requirements of a diverse group of stakeholdersTools for evaluating potential partners

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Introduction

The need for innovative suppliersNeed to reduce cost and advance innovationNeed strategic partnerships with innovative suppliers who can accelerate desired improvements

Step change improvements versus incremental change

3


Desired State (your goal)

Current State

Innovative Suppliers Dramatically Influence Progress Toward Strategic Goals

Incremental change

Step change

4


Introduction

The need for innovative suppliersStrategic partners are truly innovativeThey provide systems needed to compete on quality and customer satisfactionThey have industry-leading capabilities and can achieve greater efficiencies

Technology is a key driverPartners typically have a progressive business model

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Introduction

The need for a project management approach

Organizations have business activities that span functional/organizational lines

Multiple end-user groups with different needsGoals and objectives vary

Scarce resources spread across a number of activitiesMinimal documentation of business requirements in many cases

6


Introduction

The need for a project management approach

Pressure to find a supplier means choices are driven by current state, not future stateSelection decisions affect the organization for years

Decisions either facilitate progress or impede itSo what is a project management approach to finding innovative suppliers?

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Use PMI® Process Groups as a Framework for Structuring the Selection Process

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Identify Team and Stakeholders, Gain Approval

Initiating Planning Executing

Closing

ScopeTimelineRequirementsDesired StateMetrics

RisksCriteriaExpectationsProspects

RFPEvaluation ToolsSolicit ProposalsEvaluateNegotiate

Controlling (ongoing)SelectionCommunicationDocumentation

ScopeScheduleRequirementsCost

FeedbackDocumentationCommunication


Initiating


Initiating

Identify core team, sponsor, and champion

Sponsor is executive-level stakeholderChampion is mid-level manager with authority over resourcesCore team is a subset of those affected by change

Can commit time to selection processCan ensure buy-in, influence othersIncludes key subject matter experts like IT

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Initiating

Identify and engage stakeholdersReview contracts with existing supplierIdentify all business units that use the contractsRank by volume of business under contractDefine high, medium, and low volume levels

Group business units accordinglyIdentify communication protocol and determine level of engagement for each

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Initiating

Identify and engage stakeholdersEngage business units using the protocol

Adjust approach as needed for unique situationsConduct kick-off meeting with stakeholders

Find out how they want things to look in the future Communicate regularly with all groups

Essential to successful sourcing activity“Pay me now or pay me later”

Gain approval to go forward

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Planning


PlanningDefine scope

Business units, customers, other affected groupsPhased approach might be more cost-effective, easier to get buy-in

Define timelineStart with contract expiration and work backwardsIdentify major milestones affected by new contractDefine selection activities and timing of resourcesInclude areas of schedule risk, such as sourcing approvals, availability of technology, system changes

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PlanningCommunicate scope and timeline to stakeholders

Create opportunities to get feedbackUse engagement protocols to your advantage

Incorporate stakeholder feedback as appropriate and finalize

People will be concerned about changeRegroup or reboot if necessary to get them onboardCreate revised scope and/or timeline as needed

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Planning

Brainstorm about desired state and goals for new supplier

Get a picture of where you want to be in 2-3 yearsDecide how new supplier must create valueDetermine which features and benefits are missing with current supplier/solutionWant to move from having suppliers who just sit on the sidelinesWant real value partners who support the vision

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PlanningDefine business goals and requirements

Gather informationConduct ‘desired state’ brainstorming sessionsOrganization’s vision and strategic plan documentsExisting contracts and metricsStakeholders and functional groupsCustomers, partners, and other suppliers if applicableResearch the industry to identify standards, trendsCompare current supplier’s performance and capabilities to industry trends

17


Planning

Define cost parametersCurrent costPotential efficienciesTargets for new contract

Incorporate targets set by senior managementInclude improvements over the life of the contractUse information from industry research

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Planning

Use requirements to create templates for identifying potential partners/bidders

Define characteristics of ideal supplier partner including capabilities, vision, expertise, technologyDefine and weight appropriatelyUse templates to rank

Invite prospects to give a presentationUse templates to create interview questions

Evaluate, rate, and rank presenters to create bid list

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Sample Interview Template

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Planning

Define risk management strategiesIdentify risks

Changes to scheduleModifications to requirements or business modelChanges in cost targetsAvailability of resourcesTechnology upgradesChanges in other suppliersNew requirements from customers, government

Develop mitigation plans and contingencies

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Planning

CautionAllow adequate time for planningDon’t underestimate time needed for implementation, especially with multiple stakeholdersChange is not always welcomeLong-term supplier relationships hard to breakCritical to have stakeholders on boardCommunicate benefits of change on a regular basisTreat current supplier as you would any prospect

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Executing


ExecutingConstruct RFP based on stakeholder requirements

Goals and objectivesTimeline for bid process and implementationBusiness description and scopeRequirements for key elements of the businessPricing matrixHistorical data, Service level requirements

Create response template for bidders to useProvides a standard formatFacilitates evaluation of responsesFollows structure of RFP

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Executing

Review, finalize, distribute RFPProvide additional information and clarifications at bidders’ conference

Review program basics, expectations, visionReview RFP, contract implementation timelineSolicit feedback concerning requirements or information providedExplain response template, pricing matrixEstablish ground rules for communication (e.g. questions to be submitted in writing)Address general questions

25


Executing

Create tool for evaluating RFP responsesDevelop weighting and rating templateShould follow RFP response template

Evaluate and rate responses, pricingCompile questions to clarify responsesDiscuss questions in person with individual bidders

Responses to questions should also be rated using similar evaluation tool

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Sam

ple

RFP

Res

pons

e Ev

alua

tion

Tem

plat

e

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Executing

Identify top contenders for next roundUtilize other evaluation tools to get additional insights

Site visits and reference checkingResults should corroborate quality of RFP responses

Select final set of bidders for negotiationsIncorporate any new information and review impactReview with championEliminate non-contendersFinal recommendations and approvals

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Controlling


Controlling

Controlling is ongoingAllows for incorporation of new informationForces the team to reevaluate as needed

Evaluate potential changes to scope, etc.Ensure involvement of key team members

Regular core team discussionsUtilize communications protocolEngage leadership when new information surfaces

Ensure consistency of RFP documentationAll documents must reflect the latest information

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Closing


Closing

Select supplier partnerNotify bidders of decisionSchedule contract award

Finalize communications on contract awardDevelop plan for transition from current supplierDevelop contract documents

Statement of Work (SOW)Project PlanService Level Agreements

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SummaryThis 5-step project management approach provides:

Tools for identifying strategic supplier partnersAn approach for capturing the requirements of a diverse group of stakeholdersTools for evaluating potential partners

This approach will enable you to:Find innovative partners with world-class capabilitiesMove toward a sustainable, scalable solutionAccelerate achievement of strategic goalsGain a competitive advantage with your customers

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clarity management consulting - how to select innovative suppliers using a 5-step project management...

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