Succes in samenwerkingsrelaties: een juist sourcing business model

Jeroen van de Rijt

Director

Best Value Group

3

Nieuwe luchthaven

Spoedaanpak €800M

Complex IT project

Parkeergarage €55M

Catering

Routine producten

Stratenmakerij

Cataract operaties Sociale domein

9–jarig contract Asset management

4

Strategic Sourcing in the New Economy

5

Welk spel spelen we eigenlijk?

6

MakeBuy

Create

“Corporate

Hierarchy”

Use

“The Market”

Conventional “Buy” Approaches Use “The Market” and

Rely on Transaction Based Contracts and Economics

The Conventional Approach: Make vs Buy

Transactional “Buying” Has Inherent Weaknesses

Source :Scott Adams, creator of popular Dilbert cartoon. Please see dilbert.com site to purchase Dilbert books, office gadgets, and cartoons.

8

Sourcing Business Model Theory

“Market” “Hierarchy”“Hybrid”

BUY MAKE

TRANSACTIONAL RELATIONAL INVESTMENT

BasicProviderModel

ApprovedProviderModel

PreferredProviderModel

PerformanceBased/

ManagedServices Model

VestedBusinessModel

SharedServicesModel

EquityPartnerships

SOURCING CONTINUUM

Source: STRATEGIC SOURCING IN THE NEW ECONOMY: HARNESSING THE POTENTIAL OF SOURCING BUSINESS MODELS FOR MODERN PROCUREMENT, Keith, Vitasek Manrodt & Kling, Palgrave 2015

9

Sourcing Business Model and Innovation

SOURCING CONTINUUM

TRANSACTIONAL RELATIONAL INVESTMENT

Basic Provider Model

Approved Provider Model

Preferred Provider Model

Performance Based/

Managed Services Model

Vested Business Model

Shared ServicesModel

Equity Partnership

Productivity Driven Improvements

Innovation

Market Driven Core Improvements

Driven by a formal Innovation

Process and governance.

10

Systems Thinking is Key

A well designed

system creates

feedback loops

and creates

desired results

Slinky image by Clare Bell via Flickr CC

We need “Rules” for creating each system

Business

Model

Scope of Work

Performance

Management

Pricing

Approach

GovernancePURPOSE

OF

The Rules of the Game

Transactional (Market) Relational (Hybrid)Investment

(Hierarchy)

BUSINESS MODEL

Economic

Model

Relationship

Model

Vision

& Intent

SCOPE OF WORK

Statement of Work

& Objectives

PERFORMANCE MANAGEMENT

Performance

Focus

Performance

Measures

PRICING

Pricing Model &

Incentives

GOVERNANCE

Relationship Management

Improve, Transform

& Innovate

Exit

Management

Compliance &

Special Concerns

Basic

Provider

Approved

Provider

Transaction-based (per

transaction, hour or unit)

Transaction-based (per

transaction, hour or unit)

Transactional /

no relationship

Transactional / supplier

vetted on “Approved” list

Supply at

lowest cost

Recurring commodities at

fair or lowest cost

“Who” and / or “How” “Who” and / or “How”

Simple three-way

accounting match

PO

requirements

Right quantity, right price,

damage-free

Basic provider metrics +

increased quality emphasis

Fixed price / typically no

incentives / volume rebates

Fixed price / low-no

incentives / volume rebates

Delivery & pricing validation

(3-way PO match)

Some performance &

pricing oversight

None /

market-driven

Limited /

market-driven

One-way / limited

commitment to buy

One-way termination for

cause & convenience

Compliance-driven /

survey-based

Typically compliance-driven

/ survey-based

Preferred

Provider

Perf.-Based /

Managed Services

Vested

Relationship

Transaction-based (per

activity, hour or unit)Output-based Outcome-based

Relational contract /

emerging collaboration

Relational contract

(collaborative)

Relational contract

(highly collaborative)

Value-added capabilities

at best value

Performance to SLA /

process efficiencies

Shared Vision, Desired

Outcomes & Value Creation

“Who” and / or “How”

(jointly defined “How”)

“What” and limited

emphasis on “How”“What”

Activity-based

service level agreements

Output-based service

level agreements

Strategic

Desired Outcomes

Operational +

customer satisfaction

Operational + relational

(Values & Behaviors)

Ops + transformational +

relational system-wide KPIs

Fixed price / low incentives /

volume rebates

Price with incentives

and / or penalties

Pricing Model with value-

based incentives

Limited Supplier

Relationship Mgt

Beginning to focus on

incremental improvements

Supplier-driven to meet

SLAs / price glide path

Joint & proactive

Transformation Mgmt.

One-way termination for

cause & convenience

Perf.-based termination for

cause w/ safeguards

Joint Exit

Management Plan

Typically market-based /

minimum audit requirements

Corporate-based

audit requirements

Outcome-based

joint requirements

Investment (Equity

Partner / Shared Services)

Transactional, output-

based or outcome-based

Investment-based

Sustainable Value

“What If”, “What For”

and “When”

P&L-based

Measures

Joint Measures

of Success

P&L-based

Equity Sharing

Shared control and

management

Core innovation

capabilities

Divestiture

Investment-based

joint requirements

Oversight emphasis:

Supplier Relationship Mgt

Insight emphasis: Strategic

Relationship Mgt

Transactional (Market) Relational (Hybrid) Investment (Hierarchy)

BUSINESS MODEL

EconomicModel

RelationshipModel

Vision& Intent

SCOPE OF WORK

Statement of Work& Objectives

PERFORMANCE MANAGEMENT

PerformanceFocus

PerformanceMeasures

PRICING

Pricing Model & Incentives

GOVERNANCE

Relationship Management

Improve, Transform& Innovate

ExitManagement

Compliance &Special Concerns

Basic

Provider

Approved

Provider

Transaction-based (per

transaction, hour or unit)

Transaction-based (per

transaction, hour or unit)

Transactional /

no relationship

Transactional / supplier

vetted on “Approved” list

Supply at

lowest cost

Recurring commodities at

fair or lowest cost

“Who” and / or “How” “Who” and / or “How”

Simple three-way

accounting match

PO

requirements

Right quantity, right price,

damage-free

Basic provider metrics +

increased quality emphasis

Fixed price / typically no

incentives / volume rebates

Fixed price / low-no

incentives / volume rebates

Delivery & pricing validation

(3-way PO match)

Some performance &

pricing oversight

None /

market-driven

Limited /

market-driven

One-way / limited

commitment to buy

One-way / termination for

cause & convenience

Compliance-driven /

survey-based

Typically compliance-driven

/ survey-based

Preferred

Provider

Perf.-Based /

Managed Services

Vested

Relationship

Transaction-based (per

activity, hour or unit)Output-based Outcome-based

Relational contract /

emerging collaboration

Relational contract

(collaborative)

Relational contract

(highly collaborative)

Value-added capabilities

at best value

Performance to SLA /

process efficiencies

Shared Vision, Desired

Outcomes & Value Creation

“Who” and / or “How”

(jointly defined “How”)

“What” and limited

emphasis on “How”“What”

Activity-based

service level agreements

Output-based service

level agreements

Strategic

Desired Outcomes

Operational +

customer satisfaction

Operational + relational

(Values & Behaviors)

Ops + transformational +

relational system-wide KPIs

Fixed price / low incentives /

volume rebates

Price with incentives

and / or penalties

Pricing Model with value-

based incentives

Limited Supplier

Relationship Management

Oversight emphasis:

Supplier Relationship Mgmt.

Insight emphasis: Strategic

Relationship Mgmt.

Beginning to focus on

incremental improvements

Supplier-driven to meet

SLAs / price glide path

Joint & proactive

Transformation Mgmt.

One-way / termination for

cause & convenience

Perf.-based termination for

cause w/ safeguards

Joint Exit

Management Plan

Typically market-based /

minimum audit requirements

Corporate-based

audit requirements

Outcome-based

joint requirements

Investment (Equity

Partner / Shared Services)

Transactional, output-

based or outcome-based

Investment-based

Sustainable Value

“What If”, “What For”

and “When”

P&L-based

Measures

Joint Measures

of Success

P&L-based

Equity Sharing

Shared control and

management

Core innovation

capabilities

Divestiture

Investment-based

joint requirements

Outcome-based

Relational contract

(highly collaborative)

Shared Vision, Desired

Outcomes & Value Creation

“What”

Strategic

Desired Outcomes

Ops + transformational +

relational system-wide KPIs

Pricing Model with value-

based incentives

Insight emphasis: Strategic

Relationship Mgmt.

Joint & proactive

Transformation Mgmt.

Joint Exit

Management Plan

Outcome-based

joint requirements

Transactional / supplier

vetted on “Approved” list

Recurring commodities at

fair or lowest cost

“Who” and / or “How”

Basic provider metrics +

increased quality emphasis

Fixed price / low-no

incentives / volume rebates

Some performance &

pricing oversight

One-way / termination for

cause & convenience

Transaction-asked (per

activity, hour or unit)

Activity-based

service level agreements

Supplier driven to meet

SLAs/Savings Glidepath

Typically market-based /

minimum audit requirements

PastRelationship

CurrentRelationship

Source: Kate Vitasek and Bonnie Keith

Changing the Game

14

• Mix and matching “best practices” without understanding the system implications creates a Business Model mismatch

• Instead architect the “best fit” solution for your solution using a well structured agreement following the Sourcing Business Model rules

“Cherry Picking” the Rules creates chaos

Lessen

• Diverse vormen van onderhoud vereisen een `eigen` sourcing aanpak

• Er is geen “beste” sourcing model

• Er is een ontwikkeling naar relationele contracten

• Het mixen van modellen leidt tot onstabiliteit

17

KEEP YOUR SWIMMING LANE!

Best Value Group

Jeroen van de Rijt

nl.linkedin.com/in/jeroenvanderijt/

rijt@bestvalue-group.nl

+31 6 50272855