driving value from a supplier relationship management program · quality and operations commitment...

Quality and Operations commitment to excellence

Driving Value from a Supplier Relationship Management Program

Presented by Kelly Carey, CPM

Wednesday, December 11, 2013


Integrity, Honesty, Safety and Quality

We will conduct business with integrity and honesty in compliance with all laws

and Company policy.

We are committed to produce products that are safe and of the

highest quality for our customers.



Agenda

• Covidien Overview• Welcome• Women in Supply Chain

• Driving Value from Supplier Relationship Management (SRM)



Covidien is …

• A global healthcare products manufacturing company with nearly $10 Billion in annual revenue

• Well positioned with a diverse portfolio of products and technologies in attractive franchises

• A company with a history of quality and innovation

• Highly efficient and productive, producing strong margins and cash flow

• A leading player across our portfolio



Medical Supplies$1.8B

2012 Net Sales by Business Segment$9.9 Billion

Medical Devices$8.1B82%

18%



Medical Devices Overview2012 Sales by Product Group

2012 Net Sales: $8.1B

Strong franchises, market leadership positions and a highly diversified product portfolio

Focus on growth through innovation, product leadership with superior clinical evidence, acquisitions and further geographic expansion

Ramp up R&D, globalize footprint and accelerate new product launches

5%20%9%

11% 16%11%

29%

Chart TitleVascular

Energy

Endomechanical

Soft TissueRepair

Airway & Ventilation

Oximetry &Monitoring

Other



Medical Supplies Overview2012 Sales by Product Group

2012 Net Sales: $1.8B Leading provider of a broad

range of high quality products used to improve patient care, including wound care, incontinence, needles & syringes, enteral feeding, operating room kits and accessories

#1 or #2 market positions across core product categories

Nursing Care

MedicalSurgical

OriginalEquipmentManufacturer

12%17%

25%

46%

Chart Title

SharpSafety



Members of COV Global Sourcing Teampresent tonight

• Carl Resteghini• Kelly Carey• Keith Lapointe• Ann McCaffrey• Kim Hardy• Lisa Taylor• Courtney Sullivan• Abhinav Singh• Jane Comeau

• Vanessa Linke• John Richardson• Brian Budzinski• Lauren Bell• Jeff Wright• Marlon Lapp• Bruce Graham• Robert Simonelli• Kevin Brennan (HR)



Welcome Northeastern Supply Chain MBA Students



Women in Supply Chain

Christine Bynarowitz, Sr. Manager, Covidien



Women in Supply Chain Network

ObjectiveAttract and retain talented women in the Supply Chain function by providing leadership development and networking opportunities for women

Areas of Focus• Opportunities to network with other women in the Supply

Chain function• Visibility to career path options in Supply Chain• Access to guest speakers and philanthropy events• Leadership development and training opportunities



Upcoming Events

Month Activity

August Official Kickoff Luncheon

September Workshop: “How to Prepare for a Performance Review & Discussion”

October Workshop: “How to Write a Robust IDP”

November Panelist Discussion: “Supply Chain Career Paths at Covidien”

December Local Philanthropy/Networking Event

January Guest Speaker: Jessica Hameline – “Market Forces Shaping Covidien”

The best way to stay informed about upcoming events is to join our PulseConnect site!

Complete

Complete

Complete



Healthcare Businesswomen’s Association (HBA)Covidien is a Corporate Sponsor of the HBA which offers educational, networking and leadership development opportunities to men and women to develop themselves as leaders in the healthcare industry.

Covidien HBA Ambassadors MaryJo Griffin [email protected] Kristin Watson [email protected]

Interested in joining the HBA? Covidien employees receive a discounted rate – learn more at: http://www.hbanet.org/join-hba


mailto:[email protected]




http://www.hbanet.org/join-hba





Driving Value from Supplier Relationship Management

David Wohler, VP Global



Increase business value derived from collaboration Innovative/flexible

Reduce demand activity,complexity and variability Aligned/loyal

Shift from lowest price to TCO Operationallyexcellent

Right goods/services at the right price Priced competitively

Right goods/services at the right time and place Reliable/solvent

Value Mgmt.

DemandManagement

Total Cost of Ownership

Purchased Cost Reductions

Protecting the Revenue Stream(Supply Assurance)

Valu

e

Supply Value Proposition Role of Supply Base

Source: 2011 The Hacket Group, Inc. ; All Rights Reserved

Supplier Relationships Must Evolve to Deliver Value



Increase business value derived from collaboration Innovative/flexible

Reduce demand activity,complexity and variability Aligned/loyal

Shift from lowest price to TCO Operationallyexcellent

Right goods/services at the right price Priced competitively

Right goods/services at the right time and place Reliable/solvent

Value Mgmt.

DemandManagement

Total Cost of Ownership

Purchased Cost Reductions

Protecting the Revenue Stream(Supply Assurance)

Valu

e

Supply Value Proposition Role of Supply Base

Source: 2011 The Hacket Group, Inc. ; All Rights Reserved

Supplier Relationships Must Evolve to Deliver Value

Collaboratively Focused

Transactionally Focused



Definition of SRMSupplier Relationship Management (SRM) is a model and supporting processes for maximizing the value of supplier relationships to the organization over the full relationship lifecycle. SRM defines approaches for on-going enterprise-wide interaction with suppliers as well as with other internal company personnel to plan and manage the relationships. SRM also defines formal mechanisms for targeting and driving proactive value generation and managing challenges and gapsSRM at Covidien Is SRM at Covidien Is Not• A cross functional program that aligns supply chain activities with business needs

• A model for managing on-going interactions with suppliers in a way that maximizes long-term value

• A different view or mindset of the elements of joint Covidien and supplier success

• Just a procurement initiative• The same thing as Strategic Sourcing or Category Management

• A technology initiative• Executed as a one-time project• Managed the same way across all suppliers

• A quick fix• A new way to get margin concessions from the supply base



Elements of Supplier Relationship Management

Supplier Stratification

Supplier Enabled Excellence

SRM GovernancePerformance Management



Elements of Supplier Relationship Management

Supplier Stratification

Supplier Enabled Excellence

SRM GovernancePerformance Management

Supplier relationships will be stratified based on

strategic importance to prioritize

resources and tailor management

processes

Capabilities of existing suppliers

will be developed to deliver continuous improvement and proactive value

generation

Structured cross-functional model

organized to maximize

collaboration and effectively manage

relationships

Supplier performance will be managed across different

supplier types and strata to maximize

performance



Stratification Tiers and Logic

Exit

Strategic

Core

Value

Covidien’s most strategic Suppliers with whom the organization will develop long-term strategic relationships to drive joint value

Medium to long-term relationships that deliver significant value with active management and opportunistic investment

Short-term transactional relationships with Suppliers that meet basic performance needs

Value Creation&ROI

0-4 per GBU

# Varies by Category

Bottom 60-80% of Supply Base

Supplier Criteria Definition



Stratification Tiers and Logic – Internal Use Only Showcase Suppliers Identified for Growth

Exit

Strategic

Value

Covidien’s most strategic Suppliers with whom the organization will develop long-term strategic relationships to drive joint value

Medium to long-term relationships that deliver significant value with active management and opportunistic investment

Short-term transactional relationships with Suppliers that meet basic performance needs

Value Creation&ROI

0-4 per GBU

# Varies by Category

Bottom 60-80% of Supply Base

Supplier Criteria Definition

Core Business

Medium to long-term relationships that deliver significant value. Will not require investment

Core Investing



Supplier Perspective

Cash Cow

Develop

Maintain Monitor

SPEND

GROWTH HL

H

M

M



SRM Phase II

Stratification• Exit Suppliers as Identified • Reassess Stratification as needed to ensure Alignment with Organization

Governance• Manage Suppliers to Stratification Ratings• Relationship Charters Solidified for Strategic/Core Investing Suppliers

Supplier Enabled Excellence• Engage in Agreed Development Activities • Develop the Strategic/Core Investing Suppliers with Specific Plans of

Supplier Performance• Monthly Supplier Collaboration Meeting • Track # Suppliers Added/Deleted to GASL• Limited Status Rating Change Agreement



Final Thoughts Reduce Supply Base per Stratification

Engage Deeper with Strategic /Core Investing Supply Base• Early Supplier Engagement with R&D• Suppliers On Site working with COV Development Teams • Engagement with Supplier Development Teams

Continue One Covidien Supplier Collaboration Meeting

Track and Monitor Progress

Link Improvement to Overall Business


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