Supply Chain Source

What happens if procurement goes wrong?

• Financial consequences

• Factories run out of parts

• Empty shelves for consumers

What are the benefits of automating the ordering process?

• Drives ease of use and compliance

• Free up bandwidth

Sourcing Process

Modern Procurement:

• Assess needs and spends

• Develop a strategy

Supplier Relationship management

Future Oriented Procurement:

• Align contact points

• Segment suppliers

• Exchange improvement planning

Ordering Process

Traditional Procurement:

• Requesting

• Ordering

• Receiving

• Paying

Steps of strategic sourcing process

1. Assess: Need and spend analysis, market analysis

2. Sourcing strategy

3. Implement - engage suppliers

4. Negotiate - develop strategy and plan

5. Execute

6. Manage

Where would you request more executive involvement?

Strategic Products

Procuremnt

Person or group responsible for obtaining goods and services

Contract Management

Processes where we administer, maintain and keep up to date the contracts that we have agreed upon with suppliers in the market

Specifications

What exactly are our needs

Weighted Score Decision Matrix

• Spending money wisely and procurement center around buying the right thing with the correct specifications

• For procurement to do its job correctly, it is also the question of whom will we buy it from

Supplier Selection

Buy from the right suppliers

What is Procurement’s role in delivering customer value?

• Keeps supply chain moving and improving

• Enables customer value delivery and creation

• Impact sustainability of the business and society

Strategic Sourcing

• Process where the needs are matched up with market suppliers

Ordering Cycle:

• Placing of purchase orders with suppliers

• Using Contracts

• Receiving and ultimately paying the invoice

Supplier Relationship Management

• Ongoing working relationships with:

  • Contracted suppliers with the sourcing process

  • Suppliers we place orders with in the order process

• Ensuring and continuously improving supplier performance

Assess needs and Spend

Define specification of what we need to buy and source

• Examine the sourcing process at a spend category level

  • Markets and business needs vary from one category to another

  • Results in different types of sourcing arrangement depending on these needs

Spend Cube

• What is bought?

• By Whom?

• From Whom?

Analyze the suppliers

• Do we want one or many suppliers?

• Is this a market with a lot of price competition?

• Is this a market where service levels set suppliers apart?

Cross-Functional team

A group of people with different expertise working toward a common goal to expand perspectives further

User Adoption of the Ordering Cycle Process

• Process needs to work well

• Preferably as easy as possible

The administrative process

Involves setting up suppliers in the system so that:

• We know them

• We recognize them

• We can process their invoices

Facilitates contract management

The process where we administer and maintain the contract that we have agreed upon with suppliers in the market

Helps with payment term management

Ensure that we pay on time, but not too early, and that we are driving adherence to the supplier code of conduct

Value Leak

Placing orders with suppliers that we didn’t contract

Risk non-compliance

Placing order with suppliers that may have issues

Setting up as a shared service department

• Fully within procurement

• Partially in the business and/or accounts payable

Shared service department

A team that can be off-shored to a lower-cost