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Dairygold WorkshopDairygold WorkshopSupplier Relationship Management
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Supplier TypesSupplier Types
No trust between supplier and buyer
Closely guarded information on both sides
• Buyer dictates price and service parameters• Threat of pulling business
• Buyer views suppliers sales representative as friend• Rarely any professional negotiation
• Long rewarding relationship• Genuine commitment, but not tied to any specifics
• Small supplier gets paid what he needs to remain profitable
• Supplier is viewed as integral part of buyer’s business• Relationship includes technical, operational and sales
people• Supplier is viewed as resource to gain competitive
advantage• Long term commitment
Enemy Enemy
ExploitableExploitable
InformalInformal
Approved Approved
Nuisance - ParasiteNuisance - Parasite
Preferred SupplierPreferred Supplier
Strategic PartnerStrategic Partner
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Supply & Procurement MeasuresSupply & Procurement Measures
Performance MeasurePerformance Measure Sales Profit Sales Profit and Growthand Growth
Cost of Cost of SalesSales
People People CostsCosts AssetsAssets InventoryInventory CreditorsCreditors
Perfect Customer Orders
Lead Time Reduction
RFTQ100%OTIF
Supplier Schedule Achievement
On Time New Products
Total Net Value Delivered
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Role of a Supplier Manager Role of a Supplier Manager
The supplier manager has overall responsibility for a supplier relationship• “Owns” the relationship on behalf of the customer organisation• Is a catalyst which enables the two organisations to work together• Regularly monitors the contact between the two organisations• Reports to Senior Management
He or she ensures that communications are effective and efficient• Manages initial discussions and assists in drawing up contracts• Is kept fully aware of communications & can be involved in negotiations & deals• Is the conduit and prime contact • Arranges and facilitates meetings and events
Can be dedicated to one strategic partner and/or Product Category • High involvement: one supplier manager for one supplier• Low involvement: One supplier manager for several suppliers
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Identifies new value
opportunities
Defines the project and measures improvement
potential
Confirms resource requirements and
organisation Create project
with stage- gates and
milestones
Removes Roadblocks
for the project team
Measures the value delivered and communicates
progress
Implementation
Builds the relationship
Supplier Manager StagesSupplier Manager Stages
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Positioning Supplier ManagersPositioning Supplier Managers
Supplier Importance
Current relationship
Negotiation & Deal Status
Current Communication
Involvement levels
Performance Measures
Key Considerations
© The Delos Partnership 2005The Delos Partnership Procurement Masterclass
CR
ITIC
AL
ITY
TOTAL ANNUAL COST
HIGH
LOW
CRITICAL / HIGH COST
NON CRITICAL / LOW COST
CRITICAL / LOW COST
LOW HIGH
STRATEGICSTRATEGICCRITICAL CRITICAL
NUISANCENUISANCE LEVERAGELEVERAGE
NON CRITICAL / HIGH COST
Positioning MatrixPositioning Matrix
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Risk
© The Delos Partnership 2005The Delos Partnership Procurement Masterclass
CR
ITIC
AL
ITY
TOTAL ANNUAL COST
HIGH
LOW
CRITICAL / HIGH COST
NON CRITICAL / LOW COST
CRITICAL / LOW COST
LOW HIGH
STRATEGICSTRATEGICCRITICAL CRITICAL
NUISANCENUISANCE LEVERAGELEVERAGE
NON CRITICAL / HIGH COST
Positioning MatrixPositioning Matrix
EnsureSupplyEnsureSupply
Partner Value
Partner Value
MinimiseAttentionMinimiseAttention
DriveSavings
DriveSavings
Strategy PositioningStrategy Positioning
© The Delos Partnership 2005
WorkshopWorkshop
What are the current Supplier Assessment tools What are the current Supplier Assessment tools for the Top Customers and what needs to be for the Top Customers and what needs to be done to ensure customers receive improved done to ensure customers receive improved Total Value?Total Value?
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Supplier Performance AssessmentSupplier Performance Assessment
Supplier Performance Assessment is a formal supply side management programme that continuously and quantitatively assesses the performance of suppliers against seven performance elements
1) Risk Management2) Quality, Regulatory and H.S.E.3) Cost (Price)4) Delivery 5) Process and Service6) Innovation7) Business Value and Net Total Value (€).
Its purpose is to provide a channel through which suppliers performance is professionally assessed and their best ideas are captured.
Its purpose is to provide a channel through which suppliers performance is professionally assessed and their best ideas are captured.
© The Delos Partnership 2005
Supplier Ranking & PerformanceSupplier Ranking & PerformanceThere are five levels of Supplier
Performance is assessed against seven elements for all five levels
The level or ranking is based on the net total value delivered
Suppliers might be eliminated from any level
BRONZEBRONZE(New)(New)
SILVER SILVER (Development)(Development)
SILVER GILTSILVER GILT(Approved)(Approved)
GOLDGOLD(Preferred)(Preferred)
PLATINUM PLATINUM (Strategic)(Strategic)
SUPPLIERELIMINATION
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SUPPLIER PERFORMANCE & VALUE GAP ASSESSMENT
Assessment Measure Assessment Measure BronzeBronze SilverSilver Silver GiltSilver Gilt Gold Gold PlatinumPlatinum ScoreScore
Risk Management Assessment
Quality & HSE Performance
Cost Performance
Delivery Performance
Process & Service Performance
Innovation Performance
Business Value & Net Total Value Delivered
Bronze = New SupplierSilver = Development SupplierSilver Gilt = Approved SupplierGold = Preferred Supplier Platinum = Strategic Supplier
Assessment MeasuresAssessment Measures
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Supplier Relationship Management Supplier Relationship Management Strategic Critical Suppliers – Workshop Strategic Critical Suppliers – Workshop AgendaAgenda
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Workshop Scope Workshop Scope
Used for Strategic / Critical Suppliers to;• Reduce & Manage Risk
• Assure Supply
• Increase Joint Value
• Improve Relationships Current Performance Assessment
Supply Assurance
Joint Total Value Improvement
SRM Workshop
Relationship Improvement
© The Delos Partnership 2005
• Review Supplier’s and current joint Supply Chain and map out the new process with the clear focus to achieve efficiency improvements.
• To gain full confidence in each others ability to deliver on new established process by defining and agreeing joint KPIs and reporting.
• Review of Supplier’s internal Supply Chain risk analysis and agree on strategy to minimise exposure of supply
Supplier Workshop PurposeSupplier Workshop Purpose
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Focus is to get Focus is to get specific supplier specific supplier
to deliver all to deliver all orders orders
100% OTIF100% OTIF
Focus is to get Focus is to get specific supplier specific supplier
to deliver all to deliver all orders orders
100% OTIF100% OTIF
PeopleProcesses
Poor communication& unreliable promises
Supplier lack of goals
Manufacturing Material
Order Placement
Supplier Projected Requirements
Machine Availability(Make our orders a top priority) Obsolete, Spoiled, Out of date, Non availability
Not to spec
Stoppages & Breakdownsdue to people, power and equipment
No carrots & sticks(rewards& penalties)
Materials Free Issue
Ordermanagement
Stores and Goods Receiving
Upstream materials long / variable lead time
Untrained, low capability, low commitment to value
Sub Contracted
Focus using Fishbone ToolFocus using Fishbone Tool
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Key Improvement GoalsKey Improvement Goals
GoalGoal Supplier Supplier Value Value HowHow WhenWhen
Improved Supply Assurance & RFTQ 100%OTIF
Cost & Cash Planning and Cost Avoidance
Supply Chain Improvement & Lead Time Reduction
Net Value Improvement & innovation
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Define &
Measure
Educate
Improve
Control Define &
Measure
SRM – DMAIC TimelineSRM – DMAIC Timeline
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Business PrioritiesBusiness Priorities
The Board, Executive The Board, Executive Committee, Shareholders, Committee, Shareholders, Employees, Customers, Employees, Customers, Suppliers & Competitors are Suppliers & Competitors are focused on business focused on business financial performance and financial performance and outlookoutlook
© The Delos Partnership 2005
Supply PrioritiesSupply Priorities
Stakeholders, Management, Stakeholders, Management, Supply Chain, Supply Chain, Procurement and Suppliers Procurement and Suppliers are normally focussed on are normally focussed on AQCSI (Supply Assurance, AQCSI (Supply Assurance, Quality, Costs, Service and Quality, Costs, Service and Innovation), Cash (Assets, Innovation), Cash (Assets, Payment, Inventory) & Payment, Inventory) & Response TimesResponse Times