How to Implement Supplier Relationship Management

Transcription

1 THE EUROPEAN INSTITUTE O F P U R C H A S I N G M A N A G E M E N T How to Implement Supplier Relationship Management The 10th EIPM Purchasing Conference Archamps, December 1st, 2005 Page 1

2 Today s Programme Definition SRM vs. Traditional supplier management Organisation capabilities Organisation Tasks & Roles Conclusion Page 2

3 Today s Programme Definition SRM vs. Traditional supplier management Organisation capabilities Organisation Tasks & Roles Conclusion Page 3

4 SRM is not an IT solutions! With mysap SRM you can simplify and automate procurement Page 4

5 SRM is not an IT solutions! Oracle's PeopleSoft SRM is an integrated family of applications that dramatically cuts all supply management costs. It enables organizations to reduce spend on all categories of goods and services, streamline procurement processes, and enforce policy compliance. Page 5

6 Definitions CRM Customer Relationship Management is about how companies manage their relationships with customers in order to maximise value creation to the company and to the customers. The objective of CRM is to identify, satisfy and retain company s best customers. SRM Supplier Relationship Management is about how companies manage their relationships with suppliers in order to maximise value creation to the company, to its customers and to its key suppliers. The objective of SRM is to identify, attract and manage the company s key suppliers. It is about becoming the preferred customer to suppliers. Page 6

7 SRM: is it a survival issue? Company competition vs. Supply Chain competition Lean supply chain efficiency: reducing lead times, costs, flexibility, responsiveness Strong integration of the suppliers in the value chain concentration on core business: high dependency on suppliers Need for growth differentiation, innovation and competitive advantage Page 7

8 Today s Programme Definition SRM vs. Traditional supplier management Organisation capabilities Organisation Tasks & Roles Conclusion Page 8

9 Differences SRM Targeted to few Traditional supplier management Broad supplier base 1% to 5 % of suppliers from the supplier base Page 9

10 Differences SRM Targeted to few Institutional (down and up ) Traditional supplier management Broad supplier base Departmental Key Supplier list validated by other departments: 54% Page 10

11 Differences SRM Targeted to few Institutional (down and up ) Part of a long term strategic plan Traditional supplier management Broad supplier base Departmental Ad hoc Formalised and structured «part of the job» Value creation Trouble shouting Page 11

12 Today s Programme Definition SRM vs. Traditional supplier management Organisation capabilities Organisation Tasks & Roles Conclusion Page 12

13 Pre-requisites: the building blocks for SRM SRM Organisation Resources Process Tools Company Culture Company Structure Business Context and Strategy Supplier Market Attitude Purchasing Maturity Page 13

14 Purchasing Maturity: image, legitimacy, expertise and credibility? Effectiveness FUNCTIONAL FOCUS CROSS FUNCTIONAL FOCUS Focus Transactional orientation Commercial orientation Purchasing coordination Internal integration External integration Value chain integration Time Serve the factory Reduce cost Savings thru synergy Total cost of Ownership Supply Chain Optimisation Total Customer Satisfaction 42% of the companies consider themselves as a mature function SRM Adapted : Van Weele 2002 Page 14

15 Today s Programme Definition SRM vs. Traditional supplier management Organisation capabilities Organisation Tasks & Roles Conclusion Page 15

16 Selling Company Buying Company Selling com pany Buying com pany Directors Directors Managers Supervisors Clerks Operators Key Account Manager Exploratory Purchasing Manager Managers Supervisors Clerks Operators Board Admin Ops Ops Key KA Acct Mgr Basic Key Customer Contact Key Customer Contact Ops Admin Board Selling company Buying company Directors Directors Co-operative Production Accounts Purchasing Manager & Key Account Manager Inbound logistics & Order processing/ Custom er service? Production Accounts Marketing Marketing Service Service Selling Company Mgrs Mgrs Buying Company Selling Com pany Operations Focus team Buying Company Key Key Acct Mgr Acct Mgr Interdependent Operations Administration Board Operations Administration Board Main contact contact Key Acct Mgr Acct Mgr Integrated R&D Focus team Environment Focus team Joint Board Meetings Finance Focus team Main contact Market research Focus team contact From Prof. McDonald s presentation Page 16

17 The main contact: the Key Supplier Manager Formalised? Companies with a Key Supplier Manager function: 68% Formalised: ~ 50% Page 17

18 The main contact: the Key Supplier Manager Formalised? Full or Part-Time? It is a full-time job: 16% Page 18

19 The main contact: the Key Supplier Manager Formalised? Full or Part-Time? Reporting? Key Supplier Manager is part of the Purchasing Function: 94% Page 19

20 The main contact: the Key Supplier Manager Formalised? Full or Part-Time? Reporting? Empowerment? Page 20

21 The main contact: the Key Supplier Manager Formalised? Full or Part-Time? Reporting? Empowerment? Measurement system Page 21

22 Today s Programme Definition SRM vs. Traditional supplier management Organisation capabilities Organisation Tasks & Roles Conclusion Page 22

23 The Key Supplier Manager: tasks and roles from the EIPM research Manage relationship: Consolidate and share supplier information: 64 % Coordinate, internally and externally, projects in which the supplier is involved: 61 % Facilitate cross functional teamwork with vendor(s): 58 % Being a preferred contact for Key Account Manager is quoted in only 49% of the cases. Purchasing Optimization: Provide a feedback on vendor performance and manage progress plans: 62 % Consolidate companies needs towards the Key Supplier: 61 % Negotiate global agreements: 58 % Improve the implementation of defined strategies on the commodity involving the Key Supplier: 57 % Page 23

24 Looking at the Key Supplier Manager differently Business Developer!!! Page 24

25 Today s Programme Definition SRM vs. Traditional supplier management Organisation capabilities Organisation Tasks & Roles Conclusion Page 25

26 Conclusion SRM is «We together» rather than «We against them» a Company Value and not just a Purchasing Activity Page 26

27 THE EUROPEAN INSTITUTE O F P U R C H A S I N G M A N A G E M E N T Thank you! Page 27