L4M6 Supplier Relationships

Supplier Relationships

Supplier Relationship Management (SRM)

Process for identifying all interactions with key suppliers and then managing them in a way that increases value from the relationship for both parties.

Advantages for a business to use an internal supplier

Greater control and continuity of supply, as there are less dependence on parties that are external to the business

The relationship between customer & supplier is likely to be stable & long term.As a result they should share the same values & culture, which supports relationship building.

Improved quality control, due to a higher degree of control in the manufacturing process

Potential lower costs as no external supplier margin is added, to the cost of the product or service plus limited transaction cost

Intellectual properties (IP) is protected from passing to competitors. This is often key in food and Technology.

Dis-advantages for a business to use an internal supplier

Unless price is bench marked against external supplier offerings then there is no guarantee that the internal supplier is providing value for money.

When the product or service is created in-house the internal supplier will have both fixed & variable costs. However when using an external supplier as the buyer is only paying for the product or service when required there are effectively only variable costs.

As no money is changing hands the internal supplier may be less motivated to meet the required performance standards.

In order to ensure that the product & services provided by the internal supplier are up to standards that could be sources from external providers the procurement organisation must continually invest in the internal supplier. Example = investing in a new machinery.

Economy of Scale

The trend of cost per unit being reduced as output increases due to factors such as increased bargaining power & cost of tooling being shared between a larger number of units.,

Dis-advantages for a business to use an external supplier

Depending on the nature of the product or service there will be a degree of dependency on the supplier, which increases risk.

Potential damage to the buyers reputations if the external supplier engages in unethical behaviour such as child labour.

Cost & risk of transportation

Risk of relationship issues - an organisation may view external suppliers as critical, but the supplier may not have the same opinion of the relationship, or wrong supplier selected.

Supplier Relationship spectrum

Competitive Tactical (short, low, closed, Do own) to Collaborative Strategic (Long, high, Open, joint)

Adversarial

Arms Length

Transactional

Closer Tactical

Single sourced

Outsourced

Strategic alliance

Partnership

Co-Destiny

Factors to consider Duration, trust, Communication, problem solving

Pareto Principle

Called the 80/20 rule, this states the 80% of the outputs come from 20% of the inputs

Adversarial Relationships

The outcomes of the deal, for example, in terms of price, is more important than maintaining the relationship over a long-term period. Both parties are trying to extract the maximum value out of the deal themselves. The gain of the buyer, for example will be at the expenses of the suppliers profit margin.

Typically these suppliers will be providing non-core products & services, or the buyer may procure a one off item.

These relationships are characterised by poor communication, a lack of trust, & short term or one off contracts.

Arms-length relationships

This type of supplier would be used infrequently, & contracts tend to be short term. As such, the time & effort taken to develop a more collaborative relationship is not justifiable.

Both parties act independently each other, avoiding dependency can enable supplier to leverage the market to achieve the best possible price.

An example of this type of supplier is low level construction trades on a building site.

Transactional relationships

This type of relationship is similar to the arms-length relationship. However the frequency or volume of the purchase is higher but the services or product are still low value & low risk

This type of relationship is characterised by markets that have a number of competing suppliers. This allows buyers to undertake regular competitive tender processes in order to secure the best price.

Closer Tactical Relationships

The time & resources required to develop a collaborative relationship are not justifiable, but the buyer needs to ensure it is dealing with a competent supplier.

In some tiered supply chains this type of supplier may co-ordinate the activities of other suppliers.

Single Source Relationships

This relationship is one where an organisation purchases a product or service exclusively from a supplier. The aim is to obtain commercial benefits such as volume discounts or greater level of quality.

Decisions are usually made at a strategic, top management level. Procurement & supply managers need to determine whether & how much value single-source relationships would add.

Offering a supplier exclusivity requires a high level of trust. This type of relationship creates risk for the buying organisation due to the level of dependence on the supplier.

This type of relationship must not be confused with a sole source supplier. With sole source there is only one supplier able to fill the requirement.

Outsourced Relationships

Describes a situation where a service previously carried out in-house by internal staff is transferred to a supplier.

The main aim is to reduce costs, particularly staffing overheads. Often a supplier is able to provide a service or manufacture a product at a cheaper cost than the buying organisation could make itself.

In many cases contracts are given to a supplier operating at a lower cost economies where labour costs are much lower.

Businesses tend to choose non-core activities when choosing this relationship, this allows the buying organisation to focus on its core activities.

TUPE

Transfer Undertakings Protection of Employment

Strategic Alliance Relationships

This type of relationship describes a situation where two or more suppliers join together to deliver a joint offering, such as a new product. Each company will maintain its own autonomy.

The aim is that working together will be mutually beneficial & will bring its own benefits quicker than if the organisation worked alone. The relationships may involve sharing resource.

Partnership Relationships

Working with a supplier is beneficial when procuring high-risk , high-value product or service or in a market where there are few viable suppliers.

Working in this way will enable the supplier to have a much greater understanding of the buyer's needs. This is likely to benefit buyers in innovative developments, improvements in quality and reduction in waste.

Both parties will keep the other informed of future plans & the relationship is long-term. There is commitment from top management from both sides.

The relationship is equal in terms of the balance of power. Both parties understand the need to work together. Maintaining the relationship is more important than individual gain.

Co-destiny Relationships

The buying organisation & supplier organisation will be very closely linked. They make decisions about their future together & choose to share a common destiny.

This results in a high level of interdependence between the two parties.

Joint ventures are an example of this type of relationship.

Supplier 360

On-boarding


1. Qualification
2. Segmentation and Risk Management

Phase Out


1. Performance management
2. Development & innovations

Carters 10c’s in relation to supplier managment

Competency - The buyer will check the supplier has delivered similar products or services & is competent to perform the tasks.The supplier may be asked to share references to prove competency.

Capacity - Alongside the supplier proving they have capacity the buyer will explore the ability of the supplier to flex up or down.

Commitment to quality - The supplier must show it adheres to quality through internal systems or 3rd party accredited (ISO 9001)

Control of process - Internal processes & procedures will need to be assessed, and some industries will be governed by legislation such as food production.

Cash - A buyer will ensure the supplier if financially stable, they will complete credit check analysis, and perform a Liquidity ratio analysis.

Cost - Refers to prices submitted or in some cases whole life-cycle costs.

Consistency - The buyer will look for the supplier to provide product at the same quality consistency.

Culture - Suppliers should have the same values as the buyers, this will help the relationship.

Clean - This is key to ensure no environmental breaches occur

Communication - How will you communicate with your supplier, is there a specific format? What IT software is used is this compatible?

Liquidity Ratio Analysis

Referred to as ‘financial ratios’ using information from a supplier published financial statements

Risk Management

A process involving risk identification, assessment & management.

Key Performance Indicators (KPI’s) may include the following

Safety - Lost time injury frequency, Total injury frequency, near miss incidents/accidents.

Quality - Stock & pick accuracy, Stock loss /damage, obsolescence, shrinkage.

Delivery - percentage of product delivered in full/on-time & product with a defect, goods receipt discrepancies, compliance paperwork, conformance certificates.

Cost - Cots to budget, output, continuous improvement, waste/recycle revenue stream.

Morale - Attendance/absence, Employee/supplier survey/ opinion results.

Environment - Waste to landfill, CO2 emissions

Supplier Development

The process of working with a supplier to improve its processes & or the products & services it delivers. The aim of supplier development is commercial benefits from the buying organisation, however there will be benefits for the supplier.

Reasons for a buyer to undertake supplier development activities -

Previous performance issues with a key supplier resulting in quality issues that need to be addressed.

The buying organisation needs to improve performance, for example by reducing waste in order to become more competitive in the market place.

The buyer wants the supplier to adopt some of its own technologies such as ordering systems, & the supplier will require support to do this.

The buyer wants to develop new products & services.

A supplier development program should result in measurable benefits.

Material Breach

A material breach of contract is a failure of performance. This can be part of either the buyer or the supplier. This failure is considered so great that it give the right to the other party to terminate the contract &/or sure for damages depending on the situation.

The end of a supplier relationship can happen for several reasons -

The contract comes to a natural end, there is no longer the need to purchase the product or service.

The contract is re-tendered & another supplier is able to provide a more competitive offer.

The contract with the supplier is terminated due to a material breach such as poor performance.

The supplier becomes insolvent - this can also be classed as a material breach of contract & would enable the buyer to formally end the relationship.

Advantages for a business to use an external supplier

An external supplier is often an expert in the field. This could potentially lead to innovation that an internal supplier would have been unable to achieve.

As a result of the point above an external supplier may be more cost effective, & they may be able to benefit from economies of scale if they are producing the same product or services for multiple customers.

Using external supplier free up internal resources that could be used on core activities & creates better value to the business.

The external supplier may be more flexible to meet changes in demand.

An external supplier is useful for items where small volume is required & the cost for internal production are prohibited.

Portfolio Analysis Techniques

Supply positioning - (Kraljic matix)

Supplier preferencing model

Market management matrix

Undertaking a positioning exercise has a number of benefits for the buyer, procurement dept and the wider business, they are -

Allowing the buyer to focus on leveraging the available resources by identifying both sourcing & relationship opportunities that maybe able to add value.

Identifying opportunities to develop competitive advantages

Providing framework for decision making & action planning for the buyer

Improving risk management by helping the business to identify which product and supplier pose a vulnerability.

(These processes can be time consuming and not always viable)

3 examples of procurement objectives & how these could be supported by using portfolio analysis

Identifying opportunities to move non-contract spend on to a contract& as a result reduce costs. This could be achieved by undertaking a Pareto analysis (also known as ABC analysis) of the top non-contract suppliers.

Identifying an organisation's key products and suppliers. This could be achieved by using the Kraljic model to identify which items are strategic.

Developing value-adding relationships with strategic suppliers. This could be done by reviewing where the strategic suppliers are on the supplier preferencing model to assess whether more collaborative relationship are possible,

ABC Analysis

A: Items account for 80% of cost but 20% of volume

B: Items in the middle

C: Items represent low cost & high volume items

Risk Score can be calculated using the following formula

Total Risk = Likelihood \* Impact

Category Managment

The spend is an organisation broken down in to groups (categories) of related products & services e.g. constructions, IT, facilities management. For example IT category would include contracts for software & hardware such as laptops, printers, servers, telecoms, & IT consultancy.

Kralijic Matrix Four supplier Types

Leverage suppliers

* Vast competition
* Low cost to switch suppliers
* Often utility suppliers, electricity

Routine suppliers

* Low-value items
* Lots of work associated with these suppliers
* Lots of variety available e.g stationary suppliers

Bottleneck suppliers

* Holds a monopoly in the marketplace
* Little or no other option
* Low-value items

Strategic Suppliers

* Critical supplier to an organisation
* Responsible for core products or services

Practical steps in order to carry out segmentation analysis

Make a list of all purchases in descending order value, i.e highest-value products & service first.

Evaluate the supply risk & market complexity for each item or service on the list

Evaluate each item on the model based on the above analysis. Which segment of the model fits a product or service best.

Regularly review the position of each product.service in the model to assess risks & identify any new opportunities.

Advantages/ benefits to the Kraljic Matrix

The model is simple to use

It can be applied across all industries & company types

It can result in a buyer/ procurement department having a better understanding of the importance of each of the products or services to the business. This is especially true in terms of the cost of the item & the risk in the supply chain. A buyer may uncover risks that is was previously unaware of.

It can assist in deciding what is the optimum relationship strategy for each purchase/supplier e.g. the model will illustrate the likely bargaining position that the buyer will have.

It can provide an additional insight into strategic issues.

Dis-advantages/ limitations of the Kraljic matrix

Supply markets are complex. As a result it is not always easy to classify products or services into one of the four quadrants.

There is an element of subjectivity regarding where products & services are located within the model.

Overtime there are likely to be changes in the market place there for the analyses is a snapshot in time.

The analysis applies to the product or services being purchased and not the supplier.

Not all risks arise within the buyer-supplier relationship, there are also risks that are external to this. In addition to this not all risks can be mitigated by developing relationships.

It has limited academic foundation

Supplier preferencing matrix

Development

* Nurture client
* Expand business
* Seek new opportunities

Core

* Cosset client
* Defend vigorously
* High service and response

Nuisance

* Give Low attention
* Lose without pain

Exploitable

* Drive premium price
* Seek short term advantage
* Risk losing customer

A buyer needs to ensure its business is seen in the market place as a positive by suppliers. Elements linked to this are -

Profitability- the more profitable the buyers buyers business is the more attractive is as a customer.

Further opportunity for growth & development wit the buyer.

Stability of future contracts - predictable requirements with good forward planning will be attractive to suppliers.

The general reputation of the buyer in the market.

Ethical trading practices. For example, a supplier is often keen to do business with public sector organisations as they offer better payment terms - 30 days instead of 60. A supplier may avoid a customer if they are known for long payment terms.

Willingness to collaborate on projects, including sharing risks & costs with the supplier.

Preferred customer

A buying organisation that a supplier treats better than other customers, for example, in terms of product quality & availability, delivery or/and prices.

Relationship Marketing

This looks at the long-term term customer engagement including customer loyalty.

Advantages of the supplier preferencing model

It provides a supplier view. Therefore, once both the Kraljic matrix and supplier preferencing have been under taken the buyer will have a fuller picture of the best strategy to help move to the desired relationship.

It may provide the buyer with information it was unaware of, for example it may not realise that its suppliers view it as exploitable. Once the buyer is aware of this it can take action to improve how it is reviewed in the marketplace.

Dis-advantages of the supplier preferencing model

As with the Kraljic model the supplier preferencing model is a snapshot in time.

Although some information about services provided can be quantified, such as KPI reports, this supplier preferencing model is subject to the judgement of the buyer.

The management matrix model provides practical advice by using the Kraljic model and the supplier preferencing model i.e buyer and suppliers view point. Benefits of this are

It offers a further chance to minimise risk & maximise opportunities by showing, for example which suppliers maybe open to partnership development, avoiding wasted resources.

It can indicate when action should be taken, for instance when a change of supplier might be required if the buyer is viewed as a nuisance or exploitable.

It can indicate where a change of relationship rather than a change of supplier might be required.

PDCA

Plan DO Check Act

Competitive advantage

Putting an organisations in a strong position against its competition.

Porter stated there are two elements to selecting competitive strategy -

The attractiveness of of industries for long term profits.

Factors that determine relative competitive position with in an industry.

Porter stated that there were three generic strategies for achieving above average performance in the market place

Cost Leadership

* A company sets out to be the lowest cost producer in the marketplace
* Improve economies of scale
* Look for opportunities to standardise/use substitute products
* Reduce waste
* Think Aldi, Ryanair, Primark

Differentiation

* A company will seek to be unique in a way that is values by buyers
* Due to the uniqueness of the product/service the company is able to charge a premium price
* Involve the supplier at the earliest in the process to add value to the buyer
* Think Waitrose, Emirates, Burberry

Focus

* A company selects a segment within the marketplace & focuses its strategy on that.
* In Cost focus a company seeks a cost advantage in the target segment.
* In differentiation focus a company seeks differentiation in its target segment.
* A company adopting this strategy should be careful not to compromise its plan for short term growth.
* Think Body Shop, Free From supermarket products,

ESI

Early Supplier Involvement

Tacit Knowledge

The vast amount of unwritten knowledge that is held in the minds of people This knowledge has not been taught, but based on previous experiences, observations, thoughts and feelings.

On top of the three generic strategies, outlined by Porter, there are other business elements that can give a business a competitive edge -

HR, staff & skills

Organisation structure & culture (shared mission)

Processes & practices

Products & intellectual properties

Capital

Natural resources

Technology

Porters Value Chain

Support Activities

* Firm Infrastructure
* Human Resource management
* Technology development
* Procurement

Primary Activities

* Inbound logistics
* Operations
* Outbound logistics
* Marketing and Sales
* After-Sales Service

Both activities aim to create margin

Five Rights to Procurement

Quality

Quantity

Price

Place

Time

Porters five forces model

Rivalry amongst existing competitors

Threat of new entrants

Bargaining power of suppliers

Threat of substitutes

Bargaining power of buyers

The extent of this competition depends on the type of market existence. There are several types on the market -

Monopoly

Oligopoly

Imperfect competition

Monopolistic competition

Perfect Competition

Monopoly

Pure Monopoly is rare in that market place

Buyers that are procuring in this market have to sole source the required product/services from this supplier

Example of a monopolistic is Utilities (Water )

In the UK the Competition Commission monitors proposed mergers & acquisitions within the economy closely to prevent such situations

In this type of market, the bargaining power of the supplier is strong & the buyers bargaining power is weak.

Oligopoly

In this case the market is dominant by a few large suppliers as the costs of entering the marketplace are so great.

Example is the oil industry

The actions of one company can significantly affect the others in the market

Supplier power is strong, however the presence of alternative sources of supply improves the buyers position.

Governments have responded to oligopoly companies with laws against price fixing and collusion

Imperfect competition

In this situation there are a number of suppliers in the marketplace, but they are not selling similar services or products. Therefore competition is strong.

Each seller could be following a differentiation strategy.

Monopoly & Oligopoly are types of imperfect competition.

Supplier power weakening / Buying power strengthening

Monopolistic competition

Companies in the market offer similar products/services, but they are not perfect substitutes.

Companies have the same low level of market power and all are price makers

Generally demand is highly price elastic

Supplier power strengthening / buying power weakening

Perfect Competition

The market is characterised by a large number of suppliers selling identical products or services. There is also a large number of buyers.

Perfect competition is a hypothetical market where competition is at the greatest possible level.

There is perfect knowledge of the market, all buyers & customers have perfect & instant information on price, usage and cost.

There are no barriers to entry or exit of the marketplace.

All companies are price takers, they cannot influence the price charged for the products.

There is a cost to companies of competing for example advertising & marketing campaigns.

Supplier power low / Buying power Very High

Price Elasticity

A measure of the change in demand for a product/service in relation to a change in price. If a product is price elastic the more the price is reduced the more demand will rise. Generally for a product to be price elastic there will be a number of substitute products. Price elasticity of demand (PED) is a measure of how responsive the demand for product is in relation to its price.

Rivalry between companies in a market can be affected by a number of factors

Industry growth or decline

Product differences / brand identity

Switching costs - if the costs of switching between products are low for buyers, then rivalry will be more intense.

Diversity of competitors

Exit barriers

Barriers to entry include but no limited to the following -

Economies of scales

Access to capital & high start up costs, for example cost of equipment

License and permits - cost of these & how difficult they are to obtain.

Strong brand identities already dominant in the market place

High switching costs for buyers to switch to alternative products or services.

Access to distribution networks

Government policy - imposing tariffs to protect home industries

Monopsony

A market with only one buyer

Backward Intergration

A situation where the buying organisation purchases one of its suppliers of raw materials. The raw materials supplier is further back in the supply chain. For example, a paper factory buying a forest plantation.

STEEPLE

Social

Technological

Economic

Environmental

Political

Legislative

Ethical

Disruptive Technologies

New or Enhanced technologies that replace or affect existing technology, making it obsolete. An example is cloud computing services, which are disruptive technology for in-house servers.

Business Cycle

The rise and fall overtime of output in an economy as measured by gross domestic product (GDP)

Corporate Social Responsibility (CSR)

A business approach that contributes to sustainable development by delivering social, environmental & economic benefits for all stakeholders. The CSR policy may cover fundraising for charity, ethical behaviour, social and environmental policies.

Ethical Sourcing

Ensuring that products are obtained in a responsible & sustainable way that demonstrates respect for the people who produce them for the environment.

Return on relationship investment (RORI)

The financial benefits for a buyer of establishing, developing, & maintaining buyer-supplier relationships

Procurement added value

Cashable savings &/or cost avoidance

Competitive advantage from the build of relationships where others do not invest

Through risk management

Improved business efficiency

Improved corporate social responsibility (CSR)

The value chain key points are -

An organisation will add value to its inputs in order to create value for the customer.

This will generate margin (profit) for the company

The activities in the value chain are interdependent, what affect one will affect the other.

Waste across the value chain should be eliminated.

Two main ways a supplier can price a product or service.

Cost based pricing - Total cost plus mark up calculated for profit.

Marked base/demand pricing - Pricing that stimulates demand for a product

Specification Development key points to consider -

Ensuring that the user department has not over-specified the requirement

Make sure the specification is clear & unambiguous, that prices are not being over inflated due to uncertainty

Ensuring that all the spend with a supplier is captured under the contract & in line with agreed rates.

Reviewing whether any products could be substituted for non-branded alternatives

Involving the supplier early on in the process

Price Cost Iceberg - Above water line is prices given by the supplier, below water line are cost that make up the price such as -

Logistics & handling costs

Customer Service

Re-work

Consumables

Stock Costs

Training & support

Inspection

Delay

A number of costs captured as part of whole life costing are those that are shown as being invisible on the price-cost iceberg, these costs are -

Pre-acquisition costs e.g surveys

Cost of procurement process

Transport/delivery/insurance during carriage

Actual cost of an item

Operating & maintenance costs over life of the item

Disposal costs/residual value end of the life cycle of the item

E-sourcing best used with the following suppliers -

Leverage

Routine

Two key elements when considering the quality of products & services

Whether they are fit for purpose

Whether the products or service meet specification

Conformance Specification

Description -

Details description of what the product or part must consist of ,

The supplier must conform to specification

Manly used for products - inputs based

Advantages

Easy for the supplier to understand & enables the buyer to detail technical information.

Dis-advantages

Limits the supplier’s freedom to innovate

Non-Conformance Specification

Description -

Describes what it expects a part, material or service to achieve.

Mainly used for service - output based

Advantages -

Easier to draft, which maybe relevant if the buyer has little knowledge of the product.

Encourages innovation from the supplier, which may add value & could widen the supplier base.

Dis-advantages -

The burden is placed on the supplier to ensure that the outcomes are achieved.

Supply chain management (SCM)

The ongoing development and monitoring of the supplier & the links between supply chain members to ensure that buyers & end customers needs are met.

Total quality management (TQM) - Buyer supplier relationships within organisations operating a successful TQM differ from those not operating TQM by -

These companies had more formal mechanisms for interacting with the supplier.

Integration was important, including formal reward & recognition programmes, level & quality of interaction between organisations, the degree of supplier training, degree of formal evaluation of procurement personnel.

Companies that attempted to exert influence over a supplier were less successful than those that used co-operative approaches.

Connected Stakerholder

This is a stakeholder that has a strong interest in a company's activities. This is due to its contractual or commercial relationship with the company. This definition includes suppliers

Internal Stakeholders include -

Internal End Users

Contract Managers

Legal

Employees

Connected Stakeholders include -

Suppliers

Customers & clients

External stakeholders include -

Competitors

Communities

Government & other public agencies

Value for Money (VFM)

The most advantageous combination of price & quality that makes a product or service fit for purpose & will achieve the buyers required outcomes. This needs to be reviewed in terms of whole life costs.

Value for money is described as either 3 or 4 e’s

Economy - minimising costs for business in terms of resources used or required inputs, spending less

Efficiency - the relationship between the output from the product or service & the resources to produce it , spending well

Effectiveness - the extent to which objectives are met: spending wisely

Equity - the extent to which services are available, & reach, all of the people they are intended to:spending fairly. This is more applicable in the public sector organisation such as government departments.

CIPs Value for Money additional factors

Fit for purpose

Quality

Total lifetime costs

Risk

Environmental & sustainability issues

Suppliers can add the following value add to their tender submissions -

Providing work experience opportunities for the long term unemployed.

Providing education & training opportunities

Apprenticeships

Supplier staff undertaking voluntary work on specific projects

Donations of products/materials for community projects

Sponsorship events

Procurement Cycle

Requirement Determination

Source determination

Vendor selection

Order processing

Order monitoring

Goods receipt

Invoice Verification

Payment

Make or buy

A decision about what products or services an organisation will manufacture or provide themselves in-house, & which are purchased from outside sources.

Procurement can add value in a number of ways when at the first stage

Consider the make & buy decision. Would manufacturing a product or offering the service using internal resources & staff be a viable option?

Support the foundation of a cross-departmental team to develop the specification. This is particularly relevant where the requirement will affect a large part of the organisation, or where it is strategic &/or of high value.

Ensure that the requirement is not over-specified. Does the organisation need all of the activities included in the service.

Review where branded products could be replaced by substitute non-branded products or materials to reduce costs .

Encourage standardisation of common products & services across a company to benefit for leverage possibilities .

Provide advice on whether a conformance or performance specification would be most suitable.

Involve suppliers at this stage if this would add value.

Value mapping

A process in which value is created by reducing or eliminating waste & operational inefficiencies.

7 wastes as defined by Taiichi Ohno (TIMWOOD)

(Excessive) Transportation

Inventory (unnecessary stock holding)

(unnecessary ) motion

Waiting

Over production

Over processing

Defects

Develop strategy - Procurement can take a strategic approach in this area and this can add value by leveraging expertise & knowledge in the following ways -

Spend reviews across areas to provide a fuller overview than reviewing spend on a contract by contract basis.

Following on from spent reviews procurement can aggregate demand & consolidate spend, which can result in reduced costs.

Supplier relationship management & improved risk management plans can be developed.

Specialist category & supplier knowledge regarding the market & potential sources of supply can be developed.

Contract Management - Supplier relationships can result in vale for money in a number of different ways.

Being able to identify & use an appropriate approach to deal with supplier issues.

Innovation developed as part of collaborative projects with strategic suppliers.

Reduction in waste.

Resilience & risk reduction

Procurement can add value at every stage of the procurement life-cycle the stages are -

Understand the need

Market review

Develop Strategy

Supplier selection

Tender evaluation

Contract award

Contract management

Supplier Identification - Private Sector - sources of information used to identify a suitable supplier -

Internal stakeholders/ user department knowledge

Preferred supplier lists

Internet searches

Trade-shows, exhibitions & trade press

Networking with other procurement specialists

Advertising the requirement on E-procurement platforms

Vendor engagement events

Agents - this is applicable when undertaking sourcing from low-cost countries i.e. China