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09/2013
Global / Local Collaborative Supplier Management (CSM)
Global Local
Sustaining Supplier Management Excellence in a World Where Local Differences Increasingly Matter
Marc EscandeGlobal Director, Hatch
SIG Nahsville, April 2014
2
09/2013
Agenda
• The Global / Local Supplier Management Challenge
• CSM Framework Overview
• CSM Case Study
• CSM Benefits
• CSM: Making It Happen
3
09/2013
1990 – 2010The Rise of Global Procurement
Global Procurement Organizations
Global Category
management
Global Spend analysis
Global supply base
rationalization
Global preferred suppliers
Global leverage and compliance
4
09/2013
2010 – 20?? The “Revenge” of Local Procurement
The Economist, October 2013
More material flow controls
More local competition
More financial flow controls
“Buy local” policies
More local standards
More information
flow controls
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09/2013
Global / Local Procurement Collision Course
How to secure the Global Procurement benefits while factoring the growing Local
Procurement specificities?
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09/2013
Popular Approaches Used to Address the Global / Local Procurement Challenge
“Survival of the fittest”
Local
Supplier A
Hybrid model
Local
Supplier A
Supplier A
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09/2013
Neither of These Popular Approaches Optimally Address The Global / Local Supplier Management Challenge
Price
Quality
Risks
Accountability
Global
LocalGlobal
Local
Resulting sub-optimal sourcing decisions can quickly translate in hundreds of millions of dollars wiped out from bottom lines
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09/2013
How to Assemble the Global / Local Supplier Management Puzzle?
Local 4Local 1 Local 2
Local 3Local 4
Global?
The Global / Local Collaborative Supplier Management (CSM) Framework Provides The Answer
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09/2013
Agenda
• The Global / Local Supplier Management Challenge
• CSM Framework Overview
• CSM Case Study
• CSM Benefits
• CSM: Making It Happen
10
09/2013
Supplier Owner
Category Owner
CSM Cornerstone: Collaborative Rating Of Suppliers Competitiveness by Geographical Location
Region Owners
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09/2013
Region Owners
Category Owner
CSM Cornerstone: Collaborative Rating Of Suppliers Competitiveness by Geographical Location
Supplier Owner
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09/2013
LV Transformers MV Transformers HV Transformers
South East Asia
Australia
Africa
Russia
Europe
South America
North America
Example: Chinese Electrical Equipment OEM
Categories
Geo
grap
hica
l loc
atio
ns
CSM - Rating Matrices
Lacks certifications & After sales support in these
regions
Major cost advantage + proven track record + adequate support
New offering
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09/2013
CSM: Global / Local Collaborations
Peru
Oceania
Chile + rest of South America
3. Both parties discuss differing
views. Divergences are arbitrated by the
CPO and ratings eventually entered in the CSM rating matrix
Africa
2. Africa and Oceania Regional owners argue that the supplier is not
competitive in the region
1. Global Category Manager recommends a new supplier to be used
worldwide
Brazil
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09/2013
CSM: Cross-Regional Collaborations
Brazil
Peru
Oceania
Chile + rest of South America
1. A supplier owner suggests to region owners that a Chinese supplier can be competitive in
South America, Africa and Oceania
Africa
2. Regional owners assess supplier
competitiveness ability to compete in their region
3. Global Category Manager reviews
proposed changes and misalignments and post
ratings
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09/2013
Agenda
• The Global / Local Supplier Management Challenge
• CSM Framework Overview
• CSM Case Study
• CSM Benefits
• CSM: Making It Happen
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09/2013
Supply Base By Headquarter Location
428
693
1,115
886
445
160
342
70%+ of suppliers competitive in more than one locationBut less that 2% of them competitive worldwide for all categories!
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09/2013
CSM-Enabled Supplier Management Platform
Supplier performance
Supplier information
Global / local Core Team
Operations
Suppliers
Supplier CSM Ratings
CSM
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09/2013
Supply Quality Offering
Supplier ABC Ratings
Geographical Competitiveness
CSM Ratings
Exchange Rates
Exchange Rates Variations Against USD; Ref=1 on March 2008
0.6
0.65
0.7
0.75
0.8
0.85
0.9
0.95
1
1.05
1.1
2008/03
2008/04
2008/05
2008/06
2008/07
2008/08
2008/09
2008/10
2008/11
2008/12
2009/01
2009/02
2009/03
2009/04
2009/05
2009/06
2009/07
2009/08
2009/09
2009/10
2009/11
2009/12
2010/01
2010/02
Labor Rates
Labor costs per hour in USD - Source Economist Intelligence Unit (January 2009)
0
5
10
15
20
25
30
35
40
Indon
esia
Egypt
Philipp
ines
India
Ukraine
China
Malays
ia
Turkey
Russia
Brazil
Roman
ia
Poland
South
Korea
Czech
Rep
.
Austra
liaJa
pan
USA
Canad
a
German
y
Countries
USD 2009
2010
Country Risks
China Vendor Risk
0
5
10
15
20
25
Qualitymanagement
Planning andcontrol
Employeesqualification
T&Cs compliance
Financial health
Safety, CSR andSD
mmunication
Engineering
BeforemitigationAftermitigation
Logistics Costs
Mac
ro-
econ
omic
in
telli
genc
e
CredentialsQualificationsFeedbacks Size and location
Supp
lier
ABC
in
telli
genc
e
Supplier Manager for Supplier ABC
Reviewed and approved by Category
owner(s)
Reviewed and approved by
Countryowner(s)
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09/2013
Local And Foreign Suppliers Rated Competitive In A Geographical Location by Sourcing Category
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09/2013
CSM-Enabled Supplier Management Platform Key Characteristics
• Global– Central repository for supplier intelligence, worldwide.
• Local– Ability to “parachute” in any part of the world to get a
local view of the competitive supply landscape• Collaborative
– Global and local procurement jointly manage CSM rating matrices through structured collaborative workflows
• Participative– Every employee can communicate with the CSM team
through the platform to help optimize the CSM rating matrices
• Controlled– Clear responsibilities assigned to manage the CSM
rating matrices• Best of breed
– Emptoris Award for Innovation in Supplier Performance Management
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09/2013
CSM Chronology• Before 2009
– No global supplier database– No standard list of sourcing categories– No standard process for supplier performance capture and storage
• 2009– CSM team created– CSM processes designed – Emptoris licensed to enable the CSM implementation– CSM implementation initiated
• 2010 – Inputs from 350 employees reconciled and translated into CSM rating matrices– CSM launched in June with matrices covering on 2,000 suppliers over 1,200
categories• 2011
– Supplier performance feedback process integrated with CSM• 2012
– Access to CSM intelligence redesigned to maximize usability and knowledge sharing
• 2013– Roles and processes fine tune to enhance CSM sustainability– New CSM portal application launched
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09/2013
Agenda
• The Global / Local Supplier Management Challenge
• CSM Framework Overview
• CSM Case Study
• CSM Benefits
• CSM: Making It Happen
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09/2013
CSM Benefits (1/2)
Optimized sourcing decisions / Reduced sourcing risks Prevent excessive enforcements from the center from suppliers with
uneven competitiveness footprint Prevent excessive allegiance to less-than-optimal local suppliers
Dramatic improvements in collaboration and alignmentthroughout the Procurement organization Anchored on a single, integrated, consensus view on supplier
competitiveness in each geographical location
Optimized Category Management
Maximized, documented local benefits
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09/2013
CSM Benefits (2/2)
Increased leverage of regional sourcing
Enhanced supplier collaboration and continuous performance improvement
Less “ethnocentric”, more knowledgeable, balanced, in summary better Procurement professionals
Increased ability to attract the best Procurement talents
Definitive argument to decommission local supplier databases
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09/2013
CSM Integrates, Reconciles And Optimally Balances Global And Local Procurement
• Price
• Quality
• Risks
• Sustainability
• Regional benefits
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09/2013
Agenda
• The Global / Local Supplier Management Challenge
• CSM Framework Overview
• CSM Case Study
• CSM Benefits
• CSM: Making It Happen
33
09/2013
CSM: Making It Happen
• CPO-led– An absolute prerequisite
• Spot the local differences– Create, publish and maintain sourcing risk “watchlists” for every geographical location.– Differentiate supplier qualification process accordingly
• Start the CSM journey with a “thin slice” pilot– Pick a combination of geographical locations, categories and/or suppliers for which both adoption
and benefits are expected to be high
• Align all stakeholders company-wide– Run a CSM Executive workshop, leveraging the results of the thin slice pilot
• Define the global deployment strategy – Choose CSM geographical locations and align existing tables (spend analysis, supplier performance
management, etc.) if necessary– Choose a CSM platform and plan its integration with existing supplier management systems– Assign responsibilities and deadlines to populate the CSM rating matrices – Discuss rating matrices with suppliers
• Actively communicate during and after the company-wide launch– Encourage everyone’s contribution
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