3.
7 Step Strategic Sourcing Framework is a very
popular & effective management tool
Developed by the strategy consulting firm
ATKearney, which is consistently ranked among top
10 consulting companies in the world
This Framework has been successfully implemented
by MNCs like P&G, HUL, IBM & DELL etc.
Resulting in cost savings in the range of 10-20%
Introduction
4.
Introduce sufficient levels of competition
Challenge the status quo
Explore creative supply strategies
Challenge suppliers
Ensure that stakeholders agree to participate and
really support change
Drive the process with heavy analysis and a solid fact
base
Key to successful
Implementation
7.
Spending Analysis
Supply Market Analysis
Needs Analysis- Interview key users & find out
Their needs for the product,
Their view of the supplier’s performance
Any enhancements that they would like to see in the
product
What content do you absolutely need to satisfy the
present and future requirements of your users?
1. Develop Category Profile
11.
2. Develop Sourcing Strategy
Leverage
Use competitive marketplace to
reduce cost
Consolidate Volume as a
negotiation tool
Strategic
Ensure availability of supply
Focus on relationship building
Process integration and innovation
Non- Critical
Simplify and streamline purchasing
process
Reduce No of suppliers and
simplify ordering
Bottleneck
Search for alternatives
Strengthen relationships
Category
Positioning
Matrix
12. Volume
Concentration
Best Price
Evaluation
•Compare ‘Total’ Cost
•Unbundle Pricing
•Model “Should Costs”
•Renegotiate Prices
•Consider Online Auction
Global
Sourcing
•Expand geographic supply
Base
•Develop New Suppliers
•Exploit global supply
imbalances
•Consolidate No of Suppliers
•Redistribute volume among
supplier
Product
Specification
Improvement
•Product Value Analysis
•Rationalize Specifications
•Substitute Materials
•Optimize Lifecycle cost
Joint Process
Improvement
•Reengineer joint
processes
•Support supplier
Operations improvement
•Integrate supply chains
Relationship
Restructuring
•Establish/develop key
suppliers
•Employ strategic
alliances/partnering
High Bargaining Power : Exercise Power Low Bargaining Power : Create Advantage
14.
Widening of supplier base
Look beyond incumbents & their competition
Develop criteria for supplier selection
3. Generate Supplier Portfolio
15.
Early Supplier Involvement
Request for Quotation – RFQ
Internet Negotiation – Reverse Auctioning
4. Select Implementation plan
16.
Negotiation Team
Senior person
Technical Expert
Observer
Negotiation Strategy
Least acceptable agreement (LAA)
Most desired outcome (MDO)
Best alternative to a negotiated agreement (BATNA)
5. Negotiate & Select Suppliers
17.
Preparing the contract
Raising the PO
Blanket
Blank Check PO
System Contracting
Purchase Credit Card
6. Implement Agreements
18.
Supplier Performance Management
Value analysis
Progressive accurate Budgeting
Target Costing
Benchmarking with competitors
7. Continuous Improvement