Digital disruption and procurement: Next Generation ... · impact on sourcing and portfolio decisions” •“Define targets with category/supplier managers and corresponding action

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Digital disruption and procurement:

Next Generation Supplier Management

https://cips.org/bravosolution


©ALL RIGHTS RESERVED - Confidential 22© All Rights Reserved - Confidential

BravoSolution | NZ Support Partner

Iain Livingstone

Procurement Manager

n3 Limited


Strategic Procurement Technology Platform

©ALL RIGHTS RESERVED - Confidential 4

What is Supplier Value Management?

Supplier relationship management (SRM or SVM) is the discipline of strategically planning for, and managing, all interactions

with third party organizations that supply goods and/or services to an organization in order to maximize the value of those

interactions. In practice, SVM entails creating closer, more collaborative relationships with key suppliers in order to uncover

and realize new value and reduce risk. http://en.wikipedia.org/wiki/Supplier_relationship_management

http://en.wikipedia.org/wiki/Supplier_relationship_management


“SRM is about reducing the total cost of

doing business with each of your key

suppliers.” – Boeing

SRM involves more that reducing the prices relative to the PPI, it is also about lowering

the total cost of ownership and increasing value to the buying organization – Feller,

Shunk & Callerman

Aspects, Goals, Drivers, Models, & Expectations


Demand Drivers & Areas of Benefit

SRM

SLM

SVM

SPM

Corporate

Social

Responsibility

(CSR / CR)

Resource &

Maturity

Management

Total Supplier

Cost

(TSC / TCO)



• Formal, legal, public constraints & requirements

• Shareholder and market value

• Environmental & ecological responsibility

• Responsibility for economic resources

• Responsibility for employees

• Health & safety

• Expectations of citizenship / population

• Supply chain, beyond Tier-1

Corporate Social Responsibility

SRM

SLM

SPM

CSR / CR

Resource

Maturity

TSC / TCO


SRM

SLM

SPM

CSR / CR

Resource

Maturity

TSC / TCO


• Performance management

• Sourcing Selection

• Total Cost of Ownership (TCO)

• Entire value chain consideration

• E-2-E optimization

• Assurance of Supply

• Quality\Improvement methods

• Root cause elimination

• Innovation

Total Supplier Cost (TSC)


SRM

SLM

SPM

CSR / CR

Resource

Maturity

TSC / TCO


own supplierorganization organization

interactions

Communication

Relationship

Activities

Technology / Tool

Strategic

Decisions

• Coverage number of suppliers

• Supplier segmentation & guidelines

• Categories under management

• Compliance reporting

• Process standards

• External resource management

• Industry 4.0, Value Network, Megatrends

Resource & Maturity Management


Organizational Goals?

• “Establish and implement a company-wide standardized

methodology”

• “Attain global transparency on spend, supplier

performance, supplier profiles”

• “Assure cross-functional and cross-organizational

alignment on supplier performance with

impact on sourcing and portfolio decisions”

• “Define targets with category/supplier managers and

corresponding action plans”

• “Improve supplier performance to drive cost reduction and

result”

• “Mitigate supplier and supply chain risks”

• “Build lasting and strategic relationships with

(important) suppliers”

• “Professionally manage the interface to the supplier –

consistent framework on

performance feedback and communication”

• “Ensure compliance and keep inline with contract,

negotiated price, bonus”

• “Fulfil regulatory constraints, auditing expectations

and certification needs”

• “Have continuity plans in place and handle supplier

replacements”

• “Ensure business principles, quality standards and

corporate responsibility”

• “Dramatically increase supply base performance and

compliance visibility”

• “Improve spend savings through improved performance”

• “Having a supplier dossier at hand and all

information centralized in one supplier database”

• “Retain and fully realize negotiated savings”

• “Improve the competitive edge in the field of procurement”

• …….


Strategic Suppliers• Strategic or Critical

• Preferred or Advanced

Core Suppliers• Medium spend

• Regional important

Base suppliers• Local suppliers

• Small spend

Generic segment Logic

Dedicated logic

considering e.g.

• Distinctiveness

• Collaboration

• Specification

H

L

L H

Su

pp

ly&

ma

rke

t

constr

ain

ts

Business Impact

Supplier SegmentsTypically 30-

100 suppliers

company-

wide

Where To Get Started?


• Supplier Segmentation / Portfolio / Classification

• Supplier Survey / Database / Dossier / 360 view

• Supplier Qualification

• Supplier Evaluation / Performance Management

• Supplier Development / Improvement

• Supplier Risk Management

• Sourcing and Optimization

• Contract Lifecycle Management

• Analytics

Common Technology Elements

Supplier

Qualification

Supplier

Evaluation

Supplier

Development

SVM

Relationship

Mgnt.

Risk Mgnt.

Segmentation

Classification


Calculation of Benefit (Value, Return)

Improvement Potential x Addressable Spend= Benefit

Perf

orm

an

ce C

ost

Qu

ali

ty

Su

sta

inab

ilit

y

To measure the quantitative return to

an organization we recommend that

our clients capture the expected

improvement in the following

dimensions and multiple it against the

amount of spend to be impacted by the

changes:

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Addressable spend

Current

statusTarget

Increased

by

Applicability

addressable

spend

Saving

PotentialTraditional savings

Optimized savings

with

BravoSolution

Real savings

(absolute)

Relative on

spend

Onboarding and Qualification 25% 85% 60% 85% 0.3% 237,788$ 808,478$ 570,690$ 0.15%

Performance Management 20% 65% 45% 80% 0.5% 298,400$ 969,800$ 671,400$ 0.18%

Supplier Development 25% 80% 55% 30% 1.0% 279,750$ 895,200$ 615,450$ 0.17%

Supplier Database / 360 20% 85% 65% 100% 0.1% 74,600$ 317,050$ 242,450$ 0.07%

Risk and Contingency Management 10% 65% 55% 85% 0.3% 95,115$ 618,248$ 523,133$ 0.14%

Corrective Action 45% 80% 35% 80% 1.5% 2,014,200$ 3,580,800$ 1,566,600$ 0.42%Working Processes, Reactions, Delighters etc. 30% 80% 50% included in above calculation

$2,999,853 $7,189,575

BravoSolution added return $4,189,723

% of total spend 0.80% 1.93% 1.12%

$373,000,000

Effective Supplier Value Management (SVM)

Customer

Provided

Bravo

Customer

Experience

Research:

State

of Flux


Plan & Manage Supplier Interactions

Maximizing Value through Strong Supplier Relationships enabled through

Digital Disruption & Innovative Technology

Value Chain and Shareholder Value Improvement

Determine Strategy Beyond Cost

Expand Procurement Contribution & Value


Announcing | BravoAdvantage 17

Questions?

http://www.businesswire.com/news/home/20170322005163/en/BravoSolution-Unlocks-Power-Procurement-Launch-BravoAdvantage-17

http://www.businesswire.com/news/home/20170322005163/en/BravoSolution-Unlocks-Power-Procurement-Launch-BravoAdvantage-17

BRAVOSOLUTION - Confidential 17

Thank Youhttp://bravosolution.com.au/contact/



http://bravosolution.com.au/contact/

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Digital disruption and procurement: Next Generation ... · impact on sourcing and portfolio decisions” •“Define targets with category/supplier managers and corresponding action