the 7 keys to better sourcing and supplier relationships · the 7 keys to better sourcing ......

The 7 Keys to Better Sourcing

and Supplier Relationships

Today’s Presenters

DJ, Regional Vice President, Zycus; Highly experienced sales professional working

in APAC/Europe regions in the area of Procurement Performance, Procure 2 Pay and

Master Data Management Solutions with in depth knowledge of sourcing,

procurement systems. Dushyant also Leads strategic initiatives, market development,

thought leadership programs which helps to assess external market trends and

conditions to identify opportunities and risks in managed spend categories.

Craig Clark, Group Manager, Supply Category Management, MMG Limited;

Craig comes with a solid blend of consulting and industry experience in Mining.

Over eight years of tier one & in house consulting experience specializing in

corporate strategy, procurement and strategic sourcing. Over twelve years of blue

chip strategy, operations, procurement and business development experience in the

metals, mining, and energy and FMCG industries.

Comprehensive Solution Suite

Agenda

Introduction

CPO’s Agenda 2015

The Seven Keys

Summary

Q&A

Procurement Technology Investment Trends

eSourcing witnessed the highest increase from

2011, both in terms of percentage already using

the technology or planning to invest, gaining 11

points

A deeper analysis revealed that companies

falling onto the top performance tiers for cost

saving are 2.5 times more likely to be using

eSourcing solution that the ones falling in low

saving tiers

Source:

Investments planned to help achieve

procurement’s objectives

“DO BETTER WITH SAME”

Top Three CPO Strategies

The Seven Keys

#1 - KNOW YOUR SPEND

Copyright © 2014 - Ardent Partners Ltd.

Know where to look for savings

Poll Question - 1

How often is the Procurement function engaged

in the Sourcing process up-front before a

supplier has been selected:

A. Almost Always

B. Often

C. Sometimes

D. Never

#2 – ENGAGE SOONER

Bristol Myers Squibb analysis of 100 Sales and Marketing Projects

“High-hanging fruit” By Anne Millen Porter, Purchasing Magazine


#3 – TIGHTER SPECIFICATIONS


Category Sourcing Case Study –

Global Pharmaceutical

Step 1 -Spend

Analysis

Step 2 -Specification

Definition

Step 3 -Multi-Stage Sourcing

Event

Step 4 -Supplier

Consolidation Award

Steps to Success

THE RESULTS

Historic Low Bid Annual Savings

35%

Savings

$12.3

M

$35 M$12.3M

$22.7M

Category Example: IT Staff Augmentation

1. Spend Analysis shows $35M IT Staff

Augmentation spend fragmented across 40

suppliers

2. Standardized jobs classes and established

consistency

3. Conducted multi-stage RFI/RFP/Auction

4. Consolidated Supplier Base (from 40 to 8)

Category Results

Generated 35% cost savings, expect >

$500K rebates

Implemented single point of control in

supplier management

Current compliance is 90+%

#4 – BETTER UPFRONT COMMUNICATION


Better Upfront Communication

Building Consensus on Event Strategy How will we conduct - multi-round or single event?

What event type is most appropriate?

Who will participate – internal stakeholders and suppliers?

Why are we doing – have we identified tangible goals for the event?

When will the event be scheduled? For how long?

Where will the event take place?

65%

23%

12%

eSouring Event Type Distribution

RFQ/RFP RFI Auction Average Savings 12%

Average Cycle Time

Reduced 17%

Source: Zycus eSourcing Usage Statistics

#5 – EFFICIENT EVALUATIONS


Poll Question - 2

How Often Do You Conduct Face-to-Face or Phone

Negotiations at the Conclusion of an On-Line Sourcing

Event?

A. Almost Always

B. Often

C. Sometimes

D. Almost Never

E. All Negotiations Happen This Way – None of the

Sourcing Process is On-Line Today

Effective Evaluation –

Capture On-Line and Off-Line Negotiations

Buyers Often Conduct Face-to-Face or Telephone Final Negotiations with

One or More Shortlist Suppliers

On-Line Tool Must Enable Audit Trail of Off-Line Discussions and

Document Supplier Confirmation of Final Negotiated Pricing/Terms

#6 – WARM WELCOME

What is the On boarding Process?

Suppliers

Commodity Manager

Finance / Legal Expert

Compliance Officer

Prospective/New Supplier Registration

Request

Submit

Receive Packet Review

Approve

Add Profile Information

Request Information

Submit

Review

Approve

Credit/Risk Evaluation

(Resubmit)

Return/Reject

Review

Approve

Prospect Party Site Evaluation

Return/Reject

ApprovalProcess

Add Credit/RiskEvaluation

Add Prospect Party Site Evaluation

Notification

Qualified and Approved

Relationship Contract

Sync Supplier Profile

#7 – PROACTIVE AND ONGOING SUPPLIER OUTREACH


Poll Question - 3

For your organization, what is the frequency of Supplier

Performance Measurement (score carding) for key

suppliers?

A. Less frequent than annual

B. Annual

C. Quarterly

D. Monthly

E. More frequent than monthly

Ongoing Supplier Management

• Analyze supplier trends and

surveys

• Track trends on individual KPIs

• Determine operational risk

Analyze and Report

Ongoing Supplier Management

• Implement corrective action or

development plans

• Assign resources, tasks and

milestones

• Track program status

Develop and Track

Summary

Engaging with and managing suppliers is a key component

of any Chief Procurement Officer’s priorities and focus.

The procurement function’s relationships with its suppliers are

typically the foundation of how sourcing and supply

management programs perform.

Utilizing the mentioned seven keys can serve as a catalyst to a

series of processes that have a risk of becoming stagnant and

repetitive over time.

Questions

?

Thank you

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