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Charlie Villaseñor, CPSM, CSSP
President & CEO
Procurement & Supply Institute of Asia (PASIA)
Confidential Information. Not for Distribution
Date: October 7, 2014www.pasia.org / [email protected]
Certified Strategic Sourcing Professional
for World Class Procurement
President and CEO, TransProcure Corporation
Chairman, Procurement & Supply Institute of Asia (PASIA)
Managing Director, ADR ASEAN
He has lead supply chain organizations of Chevron (Asia, Middle East and Africa), Coca-Cola,
3M, Regional ASEAN Head of Ariba and pioneered the largest Procurement eMarketplace in
Asia
Board Member, UN/WTO International Trade Center
(ITC-MLS Program on Supply Chain)
Board of Director, International Federation of Purchasing & Supply Chain Management
(IFPSM)
Chairman, Procurement & SCM Committee, Management Association of the Philippines
( CEO Association)
Board of Advisor, Unibersidad Los Andes School of Management, Bogota, Colombia
Education: PhD in Public Administration, MBA, Business Administration
(University of Sto Thomas)
Charlie Villaseñor, CPSM, CSSPeMail: [email protected]
Mobile Phone: +639178909371
Agenda
Procurement and Supply Institute of Asia (PASIA)Overview
Getting to World-Class Procurement6 Key Enablers to a World-Class Procurement
Strategic Sourcing
Certified Strategic Sourcing Professional™ (CSSP)
The Power of 3
Development Needs
Analysis (DNA)
Learning
Consulting
Strategic Sourcing
Group Buying
eProcurement
Strategic Procurement
And Supply Management
Procurement and
Supply Chain Review
Supplier Discovery
Procurement
Augmentation
Certified Strategic Sourcing
Professional (CSSP)
Globally Recognize Certifications
Public Trainings and Conferences
eLearning and eBooks
Individual and Corporate
Membership
Assessment & Certifications
We have Procurement and Supply Chain Management CoveredLearning Doing Certifying
Procurement and Supply Institute of Asia (PASIA)Advancing the Procurement and Supply Management Profession in Asia Pacific
and the Middle East through Ethics, Excellence and eService
PASIA is at the heart of the huge shift that will see Asia Pacific and the Middle East become two thirds of the world economy by 2030.
It is at the heart because PASIA is the leading procurement and supply association in the region and is at the forefront of advancing the profession to be ready for this shift through advancing
ethics, excellence and eServices.
PASIA is a unique network that leverages across countries in Asia-Pacific and the Middle East and tackles strategic procurement and supply management issues. It provides opportunities for
the promotion of the profession and the expansion of professional skills and knowledge.
PASIA’s Global Reach
Europe
Middle East
ASIA
ASEANAustralia
North and South America
South Africa
Global Standards in Procurement & Supply Chain Management
Agenda
Procurement and Supply Institute of Asia (PASIA)Overview
Getting to World-Class Procurement6 Key Enablers to a World-Class Procurement
Strategic Sourcing
Certified Strategic Sourcing Professional™ (CSSP)
6 Key Enablers To A World-Class Strategic Sourcing
Organisation & Structure
• Focused teams organised effectively with clearly defined responsibility, authority & accountability and clear alignment and engagement with key stakeholders
Procurement Processes
• Strategic sourcing and SRM with supporting processes to enable effective outcomes
People and Skills
• Effective application of appropriate tools & behaviours, competency profiling driving development, incorporating procurement and stakeholders with succession planning in place
Strategy and Vision
• Clearly defined strategy and policy for procurement reflecting the Board’s expectations and aligned with the strategic aims of the business
Cost and Value Management
• Proactive management of spend and targeted programmes of improvement across the organisation incorporating stakeholders and budget and management reporting
Technology
• Use of world class spend analysis, e-sourcing, e-procurement (P2P) and eSRM tools
1. Strategy & Vision
Sourcing strategy is
driven by top-level
strategy, interacts with
functional strategy and
sets the context for
specific sourcing
category strategies.
2. Organization & Structure
1. Create focus - Strategic Sourcing (SS) &
Transactional Purchasing (TP)
2. Establish the Reporting Line
3. Determine Responsibility, Authority &
Accountability (RAA) for SS & TP
4. Build Category Management Structure
5. Allocate categories using Portfolio
Analysis
6. Ensure all spend covered by “Strategic
Sourcing”
7. Issue Sourcing and Ethics Policy
(Business Mandate)
8. Branding (Instant recognition of program
and associated values)
3. Procurement Processes
1. Category Management
2. Strategic Sourcing
3. Cost Management
4. Cost Change Measurement
5. Stakeholder Engagement
6. Approval Levels / Levels of Authority
7. Supplier Conditioning & Information Control
8. Negotiation
9. Management of Indirect Spend
10.Supplier Relationship Management
11.Category Strategy Plans
4. People and Skills Place the right people in charge of the right category using portfolio analysis
Clarify Responsibility, Authority & Accountability
Develop the appropriate skill sets
Recognize importance of cross-functional team capability
AnalyticalInnovatorTenacious
Committed
CreativeOptions generator
Relationship builderStrategic negotiator
CompetitiveCombative
Tough mindedTactical negotiator
Well organizedConscientiousEnthusiastic
Steady worker
Expenditure
High
Low
HighLow
CRITICAL STRATEGIC
ACQUISITION LEVERAGE
MarketDifficulty
Skills
Thinking
BehavioursPractices
5. Cost and Value ManagementThere are many different types of strategic sourcing process.
Typically a strategic sourcing process as a number of clearly defined steps:
STEP 1 = Business Needs Analysis
STEP 2 = Category Profiling
STEP 3 = Sourcing Strategy Development
STEP 4 = Market Test
STEP 5 = Quotation Analysis
STEP 6 = Sourcing Recommendation
STEP 7 = Sourcing Strategy Implementation
STEP 8 = Supplier Management
Stakeholder involvement is key to the success of the process. In this example stakeholders are involved in the Steps marked
6. Technology
The following solutions that are required to
support strategic sourcing and transactional
purchasing activity:
1. Spend Analysis
2. e-Sourcing (eRFi / eRFx / e-Auction
capability)
3. e-Procurement (P2P -Purchase-to-pay).
Each of the solutions will be SAAS (cloud),
out-of-the-box, low cost, easy to use
THE FUTURE DEVELOPMENT OFSTRATEGIC SOURCING
The Future of Strategic Sourcing External Forces of Change
Globalization
Changing demographics
Shifts in consumer demand
Resource scarcity
Environmental pressures
Technology advances
Government regulation
Financial crisis
Politics
Forex / Cost Movements
Revolution
How will these forces
affect Strategic
Sourcing?
The Future of Strategic Sourcing Seven strategies for success
Responding to the external forces of change, businesses globally will require SS to develop and employ new business models aimed at improving shareholder value
1. Developing innovative category strategies
2. Developing and Managing Suppliers
3. Designing and reducing risk in multiple supply networks
4. Leveraging technology enablers
5. Collaborating internally and externally
6. Attracting and retaining supply management talent
7. Managing and enabling the future supply management organization
Required Competencies Of Sourcing Professionals
Highly developed business skills
Ability to manage in a global market place
Deep understanding of macro-and micro-economics
Deep understanding of commodity management
Highly developed influencing skills
Relationship management skills for internal and external relationships
Highly developed analytical skills
Refined collaboration skills
Understanding of organizational political dynamics
Deep understanding of finance and financial management
Persuasion skills
Ability to think strategically & create a vision
Ability to lead and motivate
Outstanding communication and networking skills
Ability to take responsibility, authority and accountability
Ability to lead and manage change
WORLD
CLASS
Strategic
Sourcing
FRAMEWORKSO MANY ACTIVITIES –
YOU NEED A MAP!
Strategic Sourcing - Change in perception from
"Necessary Evil” to Strategic Imperative
YESTERDAY
Jack Welch (GE) once said
“Engineers who can’t engineer things, operators who can’t run their equipment, and accountants
who can’t add become Strategic Sourcing professionals”
TODAY
“organizations that employ leading-edge strategic sourcing techniques achieve almost double the
margins of companies with below-average sourcing capability - 20.2% versus 10.9 %” McKinsey
Strategic Sourcing
Strategic Sourcing is a rigorous process to develop and implement highly advantageous supplier agreements for all externally purchased goods and services. It requires continually managing supplier relationships to achieve corporate strategic goals.
The Journey to World Class Strategic Sourcing
6. Give some insight into the essential tools that ACHIEVE RESULTS
2. Provide a DEFINITION of BEST PRACTICE
1. Show you why Strategic Sourcing is so IMPORTANT
3. Identify where you NEED TO BE
4. Provide a FRAMEWORK for change
5. Show the potential FINANCIAL IMPACT
Why is Strategic Sourcing so important to YOU?
Purchased Material, Goods & Services is a very significant cost for any
organization
Typically an organization will buy externally >50% of it’s sales value
Spend is made up of:
direct materials (conversion)
indirect materials (consumption)
capital (investment)
product for resale (branded)
The Value Gap (or Margin Squeeze)Why Strategic Sourcing is Important to your business
Impact of Globalization Increased competition
Price pressures from best cost countries
Suppliers consolidating and increasing their
power
Commodity price increases driving up costs
Margins squeezed
P&L and balance sheet impacted
Your Customers
YOUR BUSINESS
Your Suppliers
“Companies today are being driven to deliver more services, more functionality
and more value for less money … It’s all part of a broad and pretty dramatic
improvement in productivity that’s going on in multiple industries”. Champy,
James: Business Author and Chairman of Perot Systems
Evolution of Strategic Sourcing
Theme“Serve the
Factory”“Lowest Unit Cost”
“Co-ordinated
Procurement”
“Category
Management”
“World-class
supplier
management”
“Entrepreneurial
procurement”
Organization
al Form• Everybody buys• Reports to ??
• “Buying” at SBU level
• Reports to Operations.
• Direct spend only• Transactional still priority
• Centralised procurement
• Cross-unit coordination.
• Recognisable buyers• Reports to senior manager
• Split between Strategic &
Transactional Purchasing
• Center-led with execution in
SBU.
• Extensive use of cross-
functional teams.• Lead Buying
• Cross-functional
supplier development teams.
• Cost/profit center.
• Network with strong communities of practice.
Key skills• Logistics focus• Transactional
• Price focused
• 3-bids.• Negotiation.
• Price Focused
• Sourcing strategy.
• Company-wide
coordination (e.g., building procurement database).
• Supplier cost focus
• Supplier development.
• Cross-functional problem solving.
• Should cost focus
• Relationships mapped.
• Supplier capability
improvement and measurement.
• Internal customer
orientation.
• Linking sourcing strategy
to company strategy and
shareholder value.• Learning organisation.
Sourcing working aloneSourcing working with internal
stakeholders
Sourcing working with internal
stakeholders and suppliers
Where are YOU today?
Where do your suppliers think you are?
Where do you competitors think you are ?
At the Category LevelCategory Segmentation
Strategic SourcingCategory Management
Strategic Sourcing as a Driver of Shareholder Value
Shareholder Value
Revenue Growth
Operating Cost
Reduction
Fixed Capital Efficiency
Working capital
efficiency
Tax minimization
Each of these drivers
are affected by strategic
sourcing strategy:
Revenue Growth
Operating Cost
Reduction
Fixed Capital
Efficiency
Working Capital
Efficiency
Tax minimization
Strategic Sourcing Process ExampleThere are many different types of strategic sourcing process.
Typically a strategic sourcing process as a number of clearly defined steps:
STEP 1 = Business Needs Analysis
STEP 2 = Category Profiling
STEP 3 = Sourcing Strategy Development
STEP 4 = Market Test
STEP 5 = Quotation Analysis
STEP 6 = Sourcing Recommendation
STEP 7 = Sourcing Strategy Implementation
STEP 8 = Supplier Management
Stakeholder involvement is key to the success of the process. In this example stakeholders are involved in the Steps marked
Certified Strategic Sourcing Professional™ (CSSP)Strong Backbone for Sustainable Procurement
Protect your Company
ADD VALUE. MANAGE RISK.
IMPROVE COST
Certified Strategic Sourcing Professional™ (CSSP)An Overview
• Focus on
Strategic
Sourcing as Key
Value Generator
• Focus designed
to drive
application
• Suitable for Non-
Procurement
Professionals
Benefits of CSSP Education
This program benefits professionals and employers
by:Aligning sourcing strategies with business objectives to achieve cost
reductions while maintaining or improving quality
Demonstrating mastery of the concepts that create consistency and
promotes collaboration in the organization
Proving credibility throughout the industry
Process of Certification
Certified Strategic Sourcing Professional™ (CSSP)An Overview
Face to Face Training
Module 1: Essentials of Strategic
Sourcing
Strategic Sourcing Process
Stakeholder Analysis • Spend Analysis
Portfolio Analysis • Supply Market Analysis
Sourcing Event • E-Sourcing
Negotiation • Supplier Management
Business Needs Analysis • Category Profiling
Opportunity Analysis • Supplier Preferencing
Sourcing Strategy • Deconstructing Price
Supplier Conditioning
Key Performance Indicators
Module 2: Advanced
Strategic Sourcing
Price and Cost Differences
Price Models
Deconstructing Price (continued)
Minute Rate Analysis
Supplier Financial Analysis
The Value of Growth
Negotiating Long Term Benefits
Category Segmentation
Advanced Purchased Price Cost
Analysis
Should Cost Analysis
Total Cost of Ownership
The Cost of Credit
Conditioning
Module 3: Implementing
Strategic Sourcing
Managing Strategic Sourcing Supplier
Relationship Management
Risk Management
Using Strategic Sourcing Templates
CSSP PROGRAM MODULES
This is the pinnacle of competency in procurement. The strategic
sourcing professional is capable of delivering enormous value to the
organization for which they work. Value delivered as a result of
strategic sourcing covers cost, quality, risk, sustainability, continuity
and capital preservation among others. Thus delivering significant
bottom line results to your company.
Asia’s Annual Procurement and Supply Management
Conference
November 19-20, 2014 Manila, Philippines
Join this Annual ASEAN conference and learn from some of the World’s best speakers and trainers as they share
insights, cases, practices and trends in procurement and supply chain management during ASEAN’s largest
conference of its kind – in Manila.