Strategic Supplier Management

Transcription

1 Strategic Supplier Management David DUFOUR The European Institute of Purchasing Management French Geneva Campus - Site d Archamps - F Archamps (0)

2 About Strategic Supplier Management a definition? A deep relationship in which parties co-operate for Mutual benefit to create added value Strategic Supplier Management brings: Competitive Advantage Core Competence Value creation to the company EIPM 2013 Attributes: Mutual need Common objectives Joint flexibility Elements: Cross-functional multilevel commitment and co-operation Mutual high trust Synchronized processes Open communication

3 Objectives Strategic Supplier Management objectives will generally focus on the opportunities to provide, enhance, and/or improve the following: 1. Business Growth 2. Supply Chain / Logistical / Operational Efficiencies 3. Supply security / flexibility 4. Cost competitiveness 5. Innovation 6. Sustainability Strategic Supplier Management relationship will focus to Maximize Value Creation

4 What is expected then? Define the needs to satisfaction Access to right resources Innovate Reliability and performance Flexibility and customization V = Cost Savings Risks Synergies between the regions Global teams to optimize TCO

5 Benefits of Strategic Supplier Management Being the preferred customer of a supplier results in better value creation: speed up new product development time to market lead times and quality allocation of resources and capacity response time and proactivity commercial conditions, service and after sales know-how and innovation sharing risk sharing security of supply less stress

6 Material Group Purchasing Strategy The Kraljic approach Low High Importance of purchasing (needs) Criteria: Annual spend Risk factor II Leverage segments I Non critical segments IV Strategic segments III Bottleneck segments From ABC - Criticality & Spend analysis From PORTER s analysis Low Criteria: High Market structure (monopoly, etc ), size of suppliers, available market capacity, entry barriers, Difficulty of the supply market switching costs and complexity, buyer s relative size

7 Change your Company Culture How do you treat your suppliers? «There are customers we have to work with And few ones we like to work with! Guess who gets the best value from us?» from a Sales Director How do your suppliers see YOU?

8 An example for measuring «customer attractiveness» Buyer-Supplier Working Relations Index (WRI) Planning Perspectives Inc. Adversarial Relationship Partnership Limited & Questionable Communication Open & Honest Less Help Much A lot Obstacle/Hindrance Little Smaller Profit Opportunity Greater

9 Attractiveness counter-examples The following are scores came from a survey of tier one suppliers conducted by Planning Perspectives of Birmingham, Mich. General Motors Ford Motor Co. DaimlerChrysler AG Nissan Honda Toyota (Scale 1 - to 5 (5 the highest) Trust Leve Trust Level «This 2005 study shows that suppliers are continuing to shift capital investment and R&D funds to their Japanese customers and decreasing investments in the US Big Three» J.W Henke, Jr. PhD Planning Perspective, Inc.

10 Quality of the Relationship BAD TO VERY BAD AVERAGE GOOD TO VERY GOOD Attractiveness the evolution of automotive industry WRI Index North America

11 Comments from Suppliers In my opinion [Ford] seems to send its people to hate school so that they learn how to hate suppliers. The company is extremely confrontational. After dealing with Ford, I decided not to buy its cars. Senior Executive, supplier to Ford, October 2002 Toyota helped us dramatically improve our production system. We started by making one component, and as we improved, Toyota rewarded us with orders with more components. Toyota is our best customer. Senior executive, supplier to Ford, GM, Chrysler, and Toyota, July Source: Liker & Choi, "Building a deep supplier relationships," Harvard Business Review, 2004

12 another example of missleading relationships Mother Nature strikes Phillips Semiconductor plant Fire stroke and water used in fire exhaustion destroyed or contaminated almost all the silicon stock in factory Phillips semicondictor plant went down for months Ericsson Phillips What would you do? Nokia

13 Nokia Nokia detected unexpected delays within 3 days and contacted Phillips Phillips told Nokia production expected to stop for one week but audit revealed severe damages Nokia increased monitoring from weekly to daily Nokia changed product design to use chips from other suppliers and ask them to commit on volumes (one out of 5 components impossible to get from Nokia pressured Phillips to get full allocation from Phillips for this component from other plants OVERALL NO DISRUPTION AT NOKIA

14 ERICSSON Phillips informed Ericsson within 3 days but Ericsson didn t follow the incident 5 weeks after the fire, Ericsson realized the criticality of the situation Too late to grab capacity from Phillips or other suppliers and no backup solutions (no stock) OVERALL 400 M$ direct losses (partly covered by insurances) and 1,7 B$ indirect losses Ericsson decides to exit Cell Phone business

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