background and perspective making the business case for supplier relationship management 1 annual...
TRANSCRIPT
Background and Perspective
Making the Business Case for Supplier Relationship Management
1Annual MeetingApril 7 - 10, 2013Orlando, Florida
The Importance of Being Strategic
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Personal Skills
Str
ate
gic
Defining Supplier Relationship Management
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• The practice and process for interacting with suppliers
• The discipline of strategically planning for, and managing, all interactions with third party organizations that supply goods and/or services to an organization in order to maximize the value of those interactions
• The discipline of driving strategic supplier performance to achieve goals established to promote value creation beyond price and to maintain / improve the overall quality of delivered goods / services
Spend Management
Annual MeetingApril 7 - 10, 2013Orlando, Florida
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Strategic Sourcing
Supplier Relationship Management
Supplier Plan
Category Plan
Spend Analytics
University Spend
MRO Supplies Grainger
Contract Execution
Manage Relationship
Lessons from Outside Higher Education
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Jointly Developed Scorecard Executive Sponsorship
Relationship ManagerExecutive Assigned to Each
Relationship
Escalation Procedures Well Defined
Cross-functional ownership across departments
Activity Based on Criteria Engage Supply Partners Beyond Price
StrategicTactical
Goals
Wh
o is
Accou
nta
bl
e?
Issu
e
Resolu
tio
n
Valu
e
Cre
ati
on
Why Focus on Supplier Relationship Management?
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UP
DO
WN
Revenue Value
RiskCost
• Signing Bonus• Rebates• Other Incentives
• Price• Efficiency• Standardization
• Service Level• Quality• Innovation
• Supply Availability• Adverse Events
SRM at the University of Colorado
Making the Business Case for Supplier Relationship Management
8Annual MeetingApril 7 - 10, 2013Orlando, Florida
Program History
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• Began in 2009 to drive price compliance and support procurement objectives
• Managed suppliers in two categories (Tier A & Tier B)
• The PSC drives SRM goals and activities
• Business review process well-established
• Increasing executive awareness
• Dedicated Resources
• Started with 1 FTE
• Now have 2 FTE’s
Program Objectives
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• Value Delivery- Increase value creation
- Sustain value achieved through strategic sourcing
• Process Management- Increase electronic processes
- Reduce systemic issues
- Drive supplier accountability
• Support Stakeholders - Increase spend under management
- Improve stakeholder service levels
- Communicate value delivered to organization
How the Program Works
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Price / Rebates
Contract Compliance
Standardization / Consolidation
Utilization / Demand Management
Process / Technology
Communication Strategies
Supplier Targets
Departmental Ownership
Integration Complexity
Sourced Value
Ownership Assignment
Segmentation Strategy
Procurement Managed
Procurement Supported
Department Owned
Implementation Activity Focus
Leads Implementation Activities, Owns
Relationship, Manages Account / Business
Reviews
Program Success
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Great Contracts Top Customer Service Improved
Process Efficiency Spend Consolidation Executive Attention
Executive Sponsorship
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SUPPLIER BREAKFAST WITH PRESIDENT
BENSON AS THE GUEST SPEAKER
What is Next?
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Price / Rebate Negotiation
Price / Rebate Compliance
Consumption Management
Process Management
Joint Strategic Alignment
Developmental Timeframe
Valu
e
Supplier
Segmentation
ROI Discussion - Is the effort worth the return, or should we shift focus to other vendors where these impact categories can drive top results?
Impact Categories
Current Focus - Supplier relationships owned and managed by procurement
Potential Focus - Supplier relationships owned outside of procurement
1 IMPROVE STRATEGIC FOCUS OF CURRENT PROGRAM
2 MORE INFLUENCE ON UNIVERSITY STRATEGIC SUPPLIERS
Improvement Opportunities
Making the Business Case for Supplier Relationship Management
18Annual MeetingApril 7 - 10, 2013Orlando, Florida
Supply Base Segmentation
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TBD
Opportunity: Develop Criteria for Strategic Suppliers
Executive Sponsorship
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Opportunity: Develop an Executive Steering Committee
Supplier Relationship Governance
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CASCADE IMPACT ON GOAL SETTING
Organizational Objectives
Category Strategies
Departmental Objectives
Procurement Objectives
• Sub-Strategies- Sourcing- Supplier (SRM)- Process Improvement- Consumption Mgmt- Compliance / Technology
Influence
Support
Legend
Opportunity: Increase cross-functional leadership
Supplier Engagement Process
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Opportunity: Focus activity on strategic value
Value Analysis & Metrics
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Opportunity: Develop a two-way performance scorecard
People Skills
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1 Emphasize the Importance of Relationship Skills
2 Add Data Analysis Skills
3 Develop a Repeatable Methodology
4 Develop a Training Curriculum
Opportunity: Build cross-functional skills
Technology
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Opportunity: Integrate spend analysis software
5 Things To Do Now
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1
REFLECT ON THE DIFFERENCES BETWEEN THE 5 MOST IMPORTANT PROCUREMENT RELATIONSHIPS V. THE 5 MOST IMPORTANT STRATEGIC UNIVERSITY RELATIONSHIPS
2
ESTABLISH GOALS FOR THE 5 MOST IMPORTANT PROCUREMENT RELATIONSHIPS
3
ASK YOUR KEY SUPPLIERS HOW YOU CAN BECOME A BETTER CUSTOMER?
4
BUILD CAPACITY FOR SRM ACTIVITY BY STUDYING YOUR WORKLOAD AND STREAMLINING TACTICAL ACTIVITY
5
LEARN MORE ABOUT SRM – SIGN UP FOR THE STRATEGIC PROCUREMENT INSTITUTE