Joani Scott

What to Expect Introduction

Group Discussion

SRM to Obtaining Superior Value

Wrap Up / ?’s / Evaluation

Group Discussion What Does Superior Value Mean To You

and Your Organization? What are You Doing to Achieve Superior

Value from your Suppliers?

How Do You Measure Superior Value?

How Would You Rate (overall) Your Suppliers’ Superior Value Creation?

Research – Survey Discussion

ROI & Viable Partnership

Research – Survey Discussion

Research – Survey Discussion

Research – Graph of Survey

Why are We Here?Value Creation

Few Contracts Encourage Suppliers to Identify Opportunities to Add Value

Lack of Process to ID new Value Creation Ideas

Lack of Incentives for Suppliers to Identify New Opportunities

Why are We Here?Value Creation

75% of suppliers say they regularly put most-preferred customers at the top of allocation lists for materials or services in short supply on a regular basis

82% say that these customers consistently get first access to new product or service ideas and technologies

87% of suppliers offer unique cost reduction opportunities to their most-preferred customers first Seizing the Opportunity

Value Creation Customer of Choice

Are you a Customer of Choice?

• Suppliers Consistently/Proactively addressing your organization’s needs ahead of other companies?

• Are you receiving “Preferential Treatment” from all Suppliers (not only the Strategic Partners) providing support for a wide range of business needs?

OR• Do your Suppliers have limited services,

resources available for your needs?

Value Creation “Customer of Choice”

Preferred Customer / Customer of Choice

• Consistently receive competitive preference for scarce resources (Product Availability)

• Consistently receive most competitive pricing and cost reduction ideas for products and or services

• Reliable Pro-Active Communication from Supplier (Account Rep and Technical Team)

• Additional Value Adds

Value CreationCustomer of Choice

Becoming a Customer of Choice?

• View yourself as suppliers do

• Use communications with suppliers as an opportunity to uncover “hidden” decision criteria

• Being a customer of choice is as much about selling as it is about buying

• Low “maintenance” / cost-to-serve customers are as attractive to suppliers as low- cost suppliers are to buyers

SRM To Obtain Superior Value SRM - A MUST!

• Evaluate Baseline for Relationship ID Business / Product & Services Requirements

• Select ID Baseline for Agreements and Performance Set Tactical & Strategic Shared Goals Define Incentive Sharing Opportunities

• Manage Classify: Commodity, Value, Strategic Quarterly Business / Operational Reviews Monitor / Address Gaps in Relationship & Performance

SRM To Obtain Superior Value Balance of Power – A Must!• Power drives the dynamics of Relationships

Temporary Trust• Equality (Equivalence) Balance• One party drives partnership and requires consent

Contracted Choice - Commitment• Mutual, Duration, Exclusivity• Duration

SRM To Obtain Superior Value Balance of Power – A Must!• Power drives the dynamics of Relationships

Coordinated • Shared Direction• Shared Values• Shared Risk and Reward

Creative Collaboration• Synergies• Creativity• Consequence

SRM To Obtain Superior Value

Supp

lier

Procurement

SRM To Obtain Superior Value

Day-to-Day Objectives• Place/Coordinate Orders• Manage product/service flow • Collect performance data • Escalate issues

SRM To Obtain Superior Value

Operational Review Objectives• Monitor performance vs. scorecard • Manage cost/value improvement efforts• Resolve issues escalated from day to day• Benchmark supplier to market• Lead supplier development efforts • Track benefits received from agreement

SRM To Obtain Superior Value Top-to-Top Review Objectives• Conduct high level business and performance reviews • Reinforce/support relationship objectives• Discuss escalated issues from management team • Monitor key new product development

Wrap UpMetrics: Value Add

Establish metrics that are linked directly to business performance and to customer’s expectations.

• Cash-to-Cash cycle

• On-time performance to contract.

• How do you collectively improve your overall cycle time within your business?

Wrap UpObtaining Superior Value

Consider suppliers as an extension (arm) of your Procurement and Technology Team

Utilize Collective Intelligence – Early Involvement

Foster a netted integrated supply chain

Wrap UpObtaining Superior Value

Take the suppliers who are experts in certain domains and weave them together to enable you to collectively create solutions to satisfy your customers’ needs and support your business vision.

Wrap UPObtaining Superior Value

The Future requires Strategic Positioning, Collaboration, and Value Extraction

Without Effective Relationship Management, most of potential value available can/will be lost!

“Our Suppliers are only as good as we let them be” (David W Johnson, President of Entenmanns Bakeries (1966)

Questions?

Credits• ICN: International Computer Negotiations• ICN - Do Better Deals• ISM: Institute for Supply Management• SIG: Sourcing Interest Group• Next Level Purchasing Association• William L. Michels, President, ADR NA

Thank You!