Upload
willa-small
View
219
Download
1
Tags:
Embed Size (px)
Citation preview
Proc tools 1 © The Delos Partnership 2005
Procurement MasterclassProcurement Masterclass
The processes and tools to create a negotiating advantage..
Proc tools 2 © The Delos Partnership 2005
Processes and ToolsProcesses and Tools
3 Process & Tools – Awareness & Use
Proc tools 3 © The Delos Partnership 2005
Processes and ToolsProcesses and Tools
1. Marketing and Sales Awareness Tool
2. Leverage Tool
3. Product & Supplier Classification Tool
4. Global Market Evaluation
5. Process Negotiation Process
6. e Procurement / Auction Tool
Proc tools 4 © The Delos Partnership 2005
How do Sales and Marketing How do Sales and Marketing people operate ?people operate ?
THEMTHEM
USUS
Proc tools 5 © The Delos Partnership 2005
Sellers use Customer Sellers use Customer Relationship Management (CRM)Relationship Management (CRM)
• CRM covers the Marketing, Sales and Business strategy
• Customer and Market strategy and positioning is agreed
• Price, Volume and Growth targets are set by Customer & Market
Proc tools 6 © The Delos Partnership 2005
Opening and Closing SalesOpening and Closing Sales
• Sales promote products & services (brands)
• Contact is made with internal customers and influencers/approvers.
• Procurement involvement in the overall process varies...
Proc tools 7 © The Delos Partnership 2005
Account ManagementAccount Management
Technical “Buyer”
Budget Holder
Order Placer = Procurement
Let’s see if I can get the technical buyer to specify
it, and then the budget holder can sanction it,
and purchasing sign it off.
Proc tools 8 © The Delos Partnership 2005
Getting the most from the BrandGetting the most from the Brand
Real CostReal CostAnd ValueAnd Value
To YouTo You
PerceivedBrandValue
Brand “Premium”Brand “Premium”
Brand ManagementBrand Management
Marketing Spin
Proc tools 9 © The Delos Partnership 2005
Getting the most from the BrandGetting the most from the Brand
• Marketing champion the brand, and determine product and price strategy.– Innovation pricing– Market skimming pricing strategy– Price elasticity [revenue versus volume]
• Differentiated brands are premium priced – some of which is related to the innovation cost.– Marketing preserve “brand equity”– Create Market segments – same product: different price
"Price is a function of perceived value and emotion". "Price is a function of perceived value and emotion". The heart is 50x more electrical and 1000x more electromagneticThe heart is 50x more electrical and 1000x more electromagnetic
than the brain. than the brain. (e.g. Coca Cola, Virgin)(e.g. Coca Cola, Virgin)
"Price is a function of perceived value and emotion". "Price is a function of perceived value and emotion". The heart is 50x more electrical and 1000x more electromagneticThe heart is 50x more electrical and 1000x more electromagnetic
than the brain. than the brain. (e.g. Coca Cola, Virgin)(e.g. Coca Cola, Virgin)
Proc tools 10 © The Delos Partnership 2005
How Sales Penetrate & Exploit How Sales Penetrate & Exploit
• Look to exploit the lack of internal communication and integrated supplier strategies
• Gain knowledge through telesales and engaging the over-communicators.
• Penetrate poor security and easy site access• Use switchboard, networks, direct calls to locate
key influencers & decision makers• Try to avoid Procurement involvement until as
late as possible
Proc tools 11 © The Delos Partnership 2005
Supplier Penetration & AccessSupplier Penetration & Access
Board & CEO
R&D EngineeringSales
& MarketingBusiness
DevelopmentQuality Business Centre
I.T. Legal Finance
Direct in
to functio
nal
head or team m
embers
Top DownTop Down
Bottom UpBottom Up
How can Procure
ment maintain
How can Procure
ment maintain
leverage given w
idespread penetra
tion and access?
leverage given w
idespread penetra
tion and access?
Proc tools 12 © The Delos Partnership 2005
Workshop Workshop
1. What methods & channels do suppliers use to penetrate your business?
2. How can you stop them?
3. Should you even try to stop them?
4. How do you make sure that you get to the pay for the intrinsic value of the product?
Proc tools 13 © The Delos Partnership 2005
Creating Leverage in your favour
Processes and ToolsProcesses and Tools
Proc tools 14 © The Delos Partnership 2005
The Collaborative Supply Chain The Collaborative Supply Chain
InnovationInnovation
VisionVision
StrategyStrategy
PrioritisationPrioritisation
DemandDemand
SupportSupport
SupplySupply
InnovationInnovation
VisionVision
StrategyStrategy
PrioritisationPrioritisation
DemandDemand
SupportSupport
SupplySupply InnovationInnovation
VisionVision
StrategyStrategy
PrioritisationPrioritisation
DemandDemand
SupportSupport
SupplySupply
Understand and try to use the potential leverage from the collaborative supply chain
Your Suppliers Your Business Your Customers
Common Spends? – Common Suppliers?- Common Customers? Strategies, Opportunities, Threats across the complete supply chain?
Proc tools 15 © The Delos Partnership 2005
The Delos ModelThe Delos ModelFor Business Integration For Business Integration
InnovationInnovation
VisionVision
StrategyStrategy
PrioritisationPrioritisation
DemandDemand
SupportSupport
SupplySupply
Leverage
Proc tools 16 © The Delos Partnership 2005
DOGSDOGS PROBLEM CHILDRENPROBLEM CHILDREN
CASH COWS CASH COWS STARS STARS
PR
OD
UC
T V
OL
UM
E
PR
OD
UC
T V
OL
UM
E
PRODUCT PROFITPRODUCT PROFIT
Leveraging Product TypesLeveraging Product Types
KeyKeyLeverageLeverage
TypeType
KeyKeyLeverageLeverage
TypeType
Proc tools 17 © The Delos Partnership 2005
TIME (CAN BE MONTHS)TIME (CAN BE MONTHS)
0%
PR
OD
UC
T M
AR
KE
T S
HA
RE
PR
OD
UC
T M
AR
KE
T S
HA
RE
LAUNCHLAUNCH GROWTHGROWTH STAGNATIONSTAGNATION DECAYDECAY
1990’s1990’s
2000’s2000’s
50% INNOVATION INNOVATION
Leveraging Product Life Leveraging Product Life CyclesCycles
KeyKeyLeverageLeverage
TimeTime
KeyKeyLeverageLeverage
TimeTime
Proc tools 18 © The Delos Partnership 2005
Leveraging the Supply SideLeveraging the Supply Side
Bargaining Power & LeverageBargaining Power & Leverage
Su
pp
ly S
ide
Val
ue
del
iver
y (£
)S
up
ply
Sid
e V
alu
e d
eliv
ery
(£)
• Standard Costing • Pricing, Market Structures & Agreements• Managing Supplier Procurement Costs • Collaborative vs. Confrontational Leverage• Supplier Development – Value Stream &
Lean• Managing Supplier Development Plans• Supplier Performance Assessment
Proc tools 19 © The Delos Partnership 2005
Standard CostsStandard Costs
0
20
40
60
80
100
120
1st Qtr
AdminO/H
Mfg O/h
Labour
Raw Mat
Review basis of calculation• Admin o/head = 1.5 X Labour : why ?• Mfg O/h = 3 x Labour: why ?• What are standards based on ?•Is Raw material cost “standard” or current ?
Proc tools 20 © The Delos Partnership 2005
Lean CostingLean Costing
0
20
40
60
80
100
120
1st Qtr
AdminO/H
Mfg O/h
Labour
Raw Mat
•How much could Admin costs be reduced by lean approach ?•How much could setup costs etc. be reduced by Lean ?•Why allocate overheads, and why should you pay for them ?•What purchasing leverage have they got and do they use ?•Do they use ABC Costing; if not why not, and could they reduce the costs to you if you reduced transactional costs ?
Proc tools 21 © The Delos Partnership 2005
Intellectual Property Intellectual Property ManagementManagement• Adequate protection for Customer and Internal I.P. • Controlled supplier access to sensitive projects, parts of
the plant etc• CDA from the beginning• Joint Development Agreement with specifically named
project members• Joint Exploitation Agreement• Potential licence fees and royalty income from all joint
supplier inventions
Proc tools 22 © The Delos Partnership 2005
Intellectual Property ManagementIntellectual Property Management
This is the second customer who has talked to me about this great new product opportunity and shared their expert knowledge.I'll even try to get a photo of the product from them..,
This is the second customer who has talked to me about this great new product opportunity and shared their expert knowledge.I'll even try to get a photo of the product from them..,
I have a problem. Let me talk to you about it, and what I am doing with the internal experts & other suppliers.
I have a problem. Let me talk to you about it, and what I am doing with the internal experts & other suppliers.
Proc tools 23 © The Delos Partnership 2005
Intellectual Property ManagementIntellectual Property Management
" I think I've got something that could really help you. We've just invented it and filed for a patent...
" I think I've got something that could really help you. We've just invented it and filed for a patent...
Patentin the name of thesupplier
Patentin the name of thesupplier
That’s really good; it is just what we wanted. I did not realise that you had got a patent on it
though ! Could I have a sample and price?
Proc tools 24 © The Delos Partnership 2005
Intellectual Property ManagementIntellectual Property Management
They'll pay top prices but I'll give a discount which they will value. There are other development projects I want to exploit
They'll pay top prices but I'll give a discount which they will value. There are other development projects I want to exploit
Proc tools 25 © The Delos Partnership 2005
Standardisation and Standardisation and RationalisationRationalisationMany companies suffer from the "cost of
complexity" – historic specifications – obsolescent specifications.
This in turn can lead to expensive set-up costs
Proc tools 26 © The Delos Partnership 2005
StandardisationStandardisation
• 80 % of the cost is built into the product at the design stage
• If designers do not build in commonality and standard products/components then costs increase
Proc tools 27 © The Delos Partnership 2005
Specials vs. CommoditySpecials vs. Commodity
1. What you think is special may not be special
2. Suppliers will try and create “special” to extract value
3. Suppliers will try and sell to your people and force you to specify “special”
4. You try and create “commodities” but they will want “specials”
Proc tools 28 © The Delos Partnership 2005
Vertical Functional Vertical Functional OrganisationOrganisation
MD
SalesSales MarketingMarketing TechnicalTechnical OperationsOperations FinanceFinance HRHR
R& D
R& D
MKTG
MKTG
SALES
SALES
OPS
OPS
ACCTS
ACCTS
HR
HR
Directors
Managers
Supervisors/Team Leaders
Procurement
Proc tools 29 © The Delos Partnership 2005
WorkshopWorkshop
What is required to create maximum leverage within your organisation for the
• Demand Side
• Supply side
• Innovation and Support sides of the business?
Proc tools 30 © The Delos Partnership 2005
Procurement MasterclassProcurement Masterclass
Product & SupplierClassification Tool
Proc tools 31 © The Delos Partnership 2005
Process for classificationProcess for classificationComplete a Product & Supplier ClassificationComplete a Product & Supplier Classification
Measure your leverage and take global benchmarksMeasure your leverage and take global benchmarks
Identify constraintsIdentify constraints
Identify strategic optionsIdentify strategic options
Select best product strategySelect best product strategy
Select best supplier strategySelect best supplier strategy
Plan Strategy ImplementationPlan Strategy Implementation
ImplementImplement
Measure results against KPI’sMeasure results against KPI’s
Proc tools 32 © The Delos Partnership 2005
TO
TA
L V
AL
UE
DE
LIV
ER
Y
TO
TA
L V
AL
UE
DE
LIV
ER
Y
PROCUREMENT LOYALTYPROCUREMENT LOYALTY0%0% 100%100%
100%100%
0%0%
SUPPLIER DEVELOPMENTSUPPLIER DEVELOPMENT
(Capable of becoming strategic)(Capable of becoming strategic)
STRATEGIC SUPPLIERSSTRATEGIC SUPPLIERS
(Normally few – major competitive edge)(Normally few – major competitive edge)
APPROVED SUPPLIERS (Majority of Suppliers)APPROVED SUPPLIERS (Majority of Suppliers)
SUPPLIER ELIMINATIONSUPPLIER ELIMINATION
(Low / No value & service delivery)(Low / No value & service delivery)
Supplier ClassificationSupplier Classification
Proc tools 33 © The Delos Partnership 2005
CR
ITIC
AL
ITY
TOTAL ANNUAL COST
HIGH
LOW
LOW HIGH
STRATEGICSTRATEGICCRITICAL CRITICAL
NUISANCENUISANCE LEVERAGELEVERAGE
Positioning MatrixPositioning Matrix
Proc tools 34 © The Delos Partnership 2005
STRATEGICSTRATEGICCRITICALCRITICAL
NUISANCENUISANCE LEVERAGELEVERAGE
• Ensure Supply - Even pay a premium• Build close relationships.• Work to reduce the critical impact
• Purchasing Card / Blanket orders• Minimise attention.• Review annually
• Use dynamic strategies to drive profit• Global Market awareness.• Consider Indirect Leverage
• Top level relationships.• Key Account Management• Continuous joint total value creation
USE USE e e FOR ALL FOR ALL
Resulting ActionsResulting Actions
Proc tools 35 © The Delos Partnership 2005
Strategic
LeverageCritical
Nuisance
Strategic
Leverage
Critical
Nuisance
Strategy GoalStrategy Goal
PERCEPTION DESIRED REALITY
Proc tools 36 © The Delos Partnership 2005
CREATE STRATEGYOPTIONS
SELECT
YOUR
STRATEGY
SummarySummary
• The total value strategy must classify the major product and Service, so that everyone is clear on the resources and strategies required to develop and deliver product & service optimum value.
• For high spend products & services the classification should involve a team discussion
• Classifying products & services ensures coordination & support of actions.
• Taking a two - way (you & supplier) view is essential – If not, procurement has not recognised supplier actions and taken
appropriate (counter) measures. • Purchasing must manage suppliers & their value generation and not
allow supplier sales and marketing to manage you.• Strategic products & services require high resource levels to develop
and maintain internal & supplier relationships• Prior to starting the journey, make sure that the product & service is
strategic or critical.
Proc tools 37 © The Delos Partnership 2005
Workshop Workshop
• What products and services are strategic critical in your business?
• How can they be moved to leverage?
• Does leverage affect Supplier Partnering and Relationships?
Proc tools 38 © The Delos Partnership 2005
Procurement Master ClassProcurement Master Class
Global Market Evaluation Process
Proc tools 39 © The Delos Partnership 2005
Product Improvement GoalsProduct Improvement Goals
• Define the Product status in the company and global market
• Define future improvement opportunities
• Start to implement improvement priorities now
Proc tools 40 © The Delos Partnership 2005
How to define the product status How to define the product status
• Current year product or service deal summary & Strategic Actions
• Current year deals – Key Issues• Product volumes and market segments.• Supplier analysis.• Key customers• Market prices and selling strategy• Manufacturing and technologies • Supply and demand• Product Procurement summary
Proc tools 41 © The Delos Partnership 2005
Market Segment AnalysisMarket Segment Analysis
Segment A
Segment B
Segment C
Segment D
Segment E
Proc tools 42 © The Delos Partnership 2005
Expert Summary Expert Summary
1. Prices are...
2. The customers and countries with the lowest thf prices are...
3. Product & supplier profits are...
4. Key manufacturing process for the future is...
5. We are partnering with supplier x because...
Proc tools 43 © The Delos Partnership 2005
Procurement MasterclassProcurement Masterclass
E-Procurement
Proc tools 44 © The Delos Partnership 2005
The Internet Equation The Internet Equation - a word of warning- a word of warning
OO + NT = EOO
Old Organisation + New Technology
= Expensive Old Organisation
Proc tools 45 © The Delos Partnership 2005
Supplier Internet strategy Supplier Internet strategy Dell ValueChain.comDell ValueChain.com
Discussion Areas
Fast Tech
Fast TechFast Tech
Score
Cards
Forecasts
Proc tools 46 © The Delos Partnership 2005
Claimed Procurement Claimed Procurement BenefitsBenefits• Controlled spending and elimination of maverick buying• Restricted internal customer choices (Standardisation)• Global benchmarking• Consolidated Ordering• Increased Productivity (no salesman lunch & lingo)• Consortium Buying • Restricted bidding & tenders• Reverse Auctions• Transactional Process Cost Efficiency – People & Paper
elimination
Proc tools 47 © The Delos Partnership 2005
e Procurement Summary e Procurement Summary
• Many e-Procurement leaders remain unprofitable over many years.• Entry / Usage costs are high & R.O.I. will be challenging to write.• Continuing adoption by the marketplace but slower than predicted• Internal I.T. system complexities are significant.• Too many products + common B2B standards.• Vertical Sectors are not integrated.• e Procurement is not needed to achieve many of the claimed savings• Supplier resistance - Brand Values will not be surrendered.• Over dependency risks.• e Reverse Auction can deliver major savings with commodities.
Proc tools 48 © The Delos Partnership 2005
Masterclass Exercise Masterclass Exercise
• What is your e-procurement / e-auction experience?
• What are the key steps in implementing?
• How many auctions have you/will you run this year?