A selection of high-quality charts and diagrams to communicate tasks and objectives, as well as the individual process steps of strategic sourcing.
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Content:
- a definition of strategic sourcing
- an explanation of traditional procurement
- information on supplier selection and relationships
- the characteristics of strategic sourcing
- advantages
- tasks and goals
- information on the seven-step strategic sourcing process
- checklists
4. The essence of strategy is
choosing what not to do."
Michael E. Porter, Harvard Business School
5. INTRODUCTION
Spoilt for Choice
Choosing the right supplieris becoming
more and more difficult.
There is a large number of
potential suppliers on the market.
This decision impacts not only
Production, but other business
areas as well, such as Sales and
Marketing. This means, more and
more people are involved in the
selection process.
7. BASICS
Traditional Procurement
The core business of a company is
to offer either a product or service.
To do this, a company must identify
and procure the resources required
for individual business needs.
This can lead to a company using
multiple suppliers for the same
type of product or services at
varied prices, making it difficult to
obtain a uniform procurement
cost overview.
COREBUSINESS
MANPOWER
PREMISES
RESOURCES
SERVICES
8. BASICS
Classification in the Supply Chain
Strategic Sourcing
Procurement is the first step in supply chain management and has an
impact on all following activities. It is important to strategically structure
procurement.
RESOURCE CUSTOMER
PROCUREMENT PRODUCTION DISTRIBUTION COMMERCE
9. BASICS
Scope of Strategic Sourcing
PAYMENT TO SUPPLIERS
Purchase Price
TOTAL PROCUREMENTCOSTS
Inventory
Planning
10. Establish Partnerships
with Suppliers
Contact with
New Suppliers
Reduce Costs
Share Best Practices
Specifications
Improve
Operating Efficiency
Increase Quality
Standardize Prices
ADVANTAGESOF
STRATEGIC SOURCING
11. TASKS & GOALS
Three Main Tasks of Strategic Sourcing
COLLECT
DATA
DEVELOP
STRATEGY
PERFORM
ANALYSIS
12. TASKS & GOALS
Goals of Strategic Sourcing
Identify possibilities
for improvement
Develop and implement multi-
annual contracts with uniform
conditions across entire company
Promote best practices throughout
company
Leverage company expenditures
Review supplier relationships across
entire company
Improve price-performance ratio
Reduce costs while maintaining or
improving quality
13. PROCESS
7 Steps of Strategic Sourcing
Create profile
Develop
strategy
Implementation
Review & improvement
measures
Procurement
plan
Requirements &
evaluation criteria
Supplier selection
& negotiation
IMPLEMENTEVALUATE AND SELECT SUPPLIERSCOLLECT AND ANALYZE DATA
14. PROCESS
Step 1: Procurement Plan
PROCUREMENT PLAN
PROJECT KICKOFF
Hold meeting to identify and prioritize
possibilities
SELECT TEAM PROJECT PLAN
Create profile
Develop
strategy
Implementation
Procurement
plan
Requirements &
evaluation criteria
Supplier selection
& negotiation
IMPLEMENTEVALUATE AND SELECT SUPPLIERSCOLLECT AND ANALYZE DATA
Review & improvement
measures
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15. PROCESS
Step 2: Create Profile
Create profile
Develop
strategy
Implementation
Review & improvement
measures
Procurement
plan
Requirements &
evaluation criteria
Supplier selection
& negotiation
IMPLEMENTEVALUATE AND SELECT SUPPLIERSCOLLECT AND ANALYZE DATA
Create profile
INDUSTRY ANALYSISINTERNAL ANALYSIS CREATE TOTAL COST
OF OWNERSHIP MODEL
16. PROCESS
Step 3: Develop Strategy
DEVELOP AND SUMMARIZE STRATEGY
Create profile
Develop
strategy
Implementation
Review & improvement
measures
Procurement
plan
Requirements &
evaluation criteria
Supplier selection
& negotiation
IMPLEMENTEVALUATE AND SELECT SUPPLIERSCOLLECT AND ANALYZE DATA
Develop StrategyCOST FORECAST
Connect TCO costs with annual sales to create a yearly cost
forecast. This can later be compared with established savings.
Annual Equipment Costs €800,000
Example:
Annual Maintenance €150,000
Supplies €20,000
Divestiture €5,000
TCO €543
Sales Volume 2,500
Cost Forecast (= TCO * Sales Volume) €1,357500
17. PROCESS
Step 4: Minimal Requirements & Evaluation Criteria
IMPLEMENTEVALUATE AND SELECT SUPPLIERS
Create profile
Develop
strategy
Implementation
Review & improvement
measures
Procurement
plan
Supplier selection
& negotiation
COLLECT AND ANALYZE DATA
Requirements &
evaluation criteria
REQUIREMENTS & EVALUATION CRITERIA
DETERMINE CRITERIA FOR SUPPLIER SELECTION SUPPLIER SELECTION PROCESS
18. PROCESS
Step 5: Select Suppliers & Negotiate
SELECT SUPPLIERS AND NEGOTIATE
SELECT SUPPLIERS DEVELOP NEGOTIATION STRATEGY
& INITIATE NEGOTIATIONS
Create profile
Procurement
plan
Develop
strategy
Implementation
Review & improvement
measures
Supplier selection
& negotiation
IMPLEMENT
Requirements &
evaluation criteria
EVALUATE AND SELECT SUPPLIERSCOLLECT AND ANALYZE DATA
19. PROCESS
Step 6: Implement
Create profile
Develop
strategy
Implementation
Review & improvement
measures
Procurement
plan
Supplier selection
& negotiation
IMPLEMENT
Requirements &
evaluation criteria
EVALUATE AND SELECT SUPPLIERSCOLLECT AND ANALYZE DATA
Implement
IDENTIFY SAVINGS IMPLEMENTATION PLAN
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20. PROCESS
Step 7: Review & Improvement Measures
MAINTAIN SUPPLIER RELATIONSHIPS
Create profile
Develop
strategy
Implementation
Review & improvement
measures
Procurement
plan
Supplier selection
& negotiation
IMPLEMENT
Requirements &
evaluation criteria
EVALUATE AND SELECT SUPPLIERSCOLLECT AND ANALYZE DATA
REVIEW & IMPROVEMENT MEASURES
IMPROVEMENT APPROACHES
21. CHECKLIST
Strategic Sourcing
Determine selection criteria for potential
suppliers.
Identify savings by dividing projected and
actual costs.
Narrow down possible suppliers and select
the desired suppliers.
Prepare implementation plan.
Develop negotiation strategies and define
the goal, bottom line and alternatives.
Maintain supplier relationships over the
long term.
Initiate negotiations.
Continuously test and identify
improvement approaches.
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