Strategic Sourcing: The Seven Critical Success Factors NAPM Denver April 15, 2010

Transcription

1 Strategic Sourcing: The Seven Critical Success Factors NAPM Denver April 15, 2010 Presented By: Diane Brown, C.P.M. Diane Brown Consulting

2 1: Know what Strategic Sourcing is Strategic sourcing is a proactive, iterative, collaborative process that consistently reduces the total cost of externally purchased materials and services over time 4/16/2010 2

3 What is Strategic Sourcing? Characteristics Numbers-driven Collaborative Internally and Externally Focused Milestone and Metric Based 4/16/2010 3

4 1: 1: Opportunity Assessment (2-6Weeks) (2-6Weeks) Analyze Spend Segment Spend Analyze Suppliers Review Contracts Analyze Inventory Review Org. & Dept. Goals Identify & Analyze Stakeholders Mobilize Team Develop Communication Plan The Strategic Sourcing Process Internal External 2: 2: Internal Supply Chain Chain Analysis (2-6 (2-6 Weeks) Weeks) Identify Demand Drivers Review Specifications Analyze Policies/Procedures Map & Analyze Processes Identify & Quantify Cost Drivers Implement Communication Plan Current 4: 4: Gap Analysis Sourcing Strategy Documentation Sourcing Strategy Documentation (2-4 Weeks) (2-4 Weeks) Confirm Scope Prioritize Improvement Opportunities Develop Implementation Plan Develop Communications Plan 3: 3: External Supply Market Analysis (2-6 (2-6 Weeks) Weeks) Analyze Industry Identify Viable Sources of Supply Research Leading Practices Identify External Cost Drivers Desired 5: 5: Strategy Implementation (4-6 (4-6 Weeks) Weeks) Complete RFI Process Complete Complete RFP RFI Process Process Establish Complete Performance RFP Process Establish Metrics Performance Negotiate Metrics Contract Develop Negotiate Supplier Contract Relationship Plan Develop Develop Transition Supplier Plan Relationship Plan Develop Transition Plan Quick Quick Hits Hits 6: 6: Transition & Integration (4-6Weeks/Ongoing) Implement new processes Implement Implement new new systems processes Implement Implement Supplier new systems Implement Relationship Supplier Plan Measure Relationship Performance Plan Monitor Measure Compliance Performance Conduct Monitor Relationship Compliance Reviews Conduct Relationship Determine Reviews Objectives for Next Determine Iteration Objectives for Next Iteration 4/16/2010 4

5 2: Know your numbers.. Spend Analysis True spend Directionally correct Identification of the largest manageable scope for each sourcing opportunity Validation of current plan 4/16/2010 5

6 2: Know your numbers.. Direct Materials and Services Indirect Materials and Services 4/16/2010 6

7 Relative Annual Spend Low High 3: Know what your numbers Competitive mean Comparable market advantage Can have longer lead-times High unit cost /High volume Multiple sources of supply Common No marketing advantage due to design differentiation Off-the-shelf, commercially available Readily substituted Low unit cost/high volume Many sources of supply Strategic Competitive market advantage Long-lead time Technically complex High unit cost /High volume Few sources of supply Unleveraged Competitive market advantage Long-lead time Technically complex High unit cost/low volume Few sources of supply Low Supplier Interchangeability High 4/16/2010 7

8 3: Know what your numbers mean Relative Annual Spend Low High Competitive Minimize total cost throughout product life cycle Common Minimize cost of acquisition Strategic Product differentiation Unleveraged Minimize number of items in category Low Supplier Interchangeability High 4/16/2010 8

9 3: Know what your numbers mean.and where the real opportunities exist 4/16/2010 9

10 4: Understand where you are and where you want/need to go. Internal and External Focus Strategic Direction Processes Supplier Analysis Market Intelligence Supply Market Intelligence 4/16/

11 4: Understand where you are and where you want/need to go. Value Creation Purchase Demand Management Supply Base Management Acquisition Cost Management Reduce Consumption Consolidate Demand Change Specification Low Cost Supplier Increased Competition Relationship Restructure Logistics/ Transportation Acquisition/ Transaction Eliminate need Leverage spend Common Specification Co-operative purchasing Common spec for volume benefit Lower cost spec DFM Global sourcing World Class Operations Process Fit Bid-based renegotiation Benchmarking Make/buy Supplier development Leverage supplier capabilities Inventory Transportation cost Packing Transaction Costs purchase to pay expediting Design/ Development Scale/ Utilization Long Term Contract Rationalization - part count - supplier Tooling 4/16/

12 5: Build collaborative relationships.. Sourcing Team Sponsors Stakeholders Suppliers 4/16/

13 5: Build collaborative Influential Neutral Not Influential Unsure relationships.. Informed/Need to Know Involved/Impacted Approves Commodity Team Supportive Neutral Not Supportive Unsure 4/16/

14 6: Actively Manage The Process Create a plan Manage the plan 4/16/

15 7: Track your progress Milestones Metrics Focused Strategic Meaningful Measurable Time-based Communicate 4/16/

16 Summary 4/16/

17 Strategic Sourcing: The Seven Critical Success Factors 1. Know what strategic sourcing is 2. Know your numbers 3. Know what your numbers mean 4. Understand where you are and where you want/need to go 5. Build collaborative relationships 6. Actively manage the process 7. Track where you are 4/16/