Strategic Business Solutions : Solutions, Strategies, Success

Strategic Business Solutions:

Solutions, Strategies, Success

The SourcingStrat Solution

SourcingStrat is a web based software program developed to provide companies with the means to document the total cost impact provided by their suppliers’ across their organization in order to achieve three objectives:

1. Help you to reduce your company’s overall operating costs and improve profitability.

2. To develop a competitive advantage through your supply chain by providing the means to measure, track and compare suppliers on a Total Cost basis.

3. Utilize a common format / language between you and your channel partners: suppliers, integrators, distributors and manufacturers, in order to improve the efficiency and effectiveness of the documentation process.



Help you to reduce your company’s overall operating costs

and improve profitability.

Most companies do not look to their supply chain for the means to improve revenues, but some suppliers can have a profound impact on your output by reducing downtime, increasing production rates and reducing rejected output.

If you could work with key suppliers and improve your output by just 2% (through a combination of solutions), what would the impact be on your profits?

Purpose: Improving Profitability

1. Revenue Enhancement:

The most obvious cost that suppliers impact is the price of their goods and services, but suppliers can impact many other expenditures:

Indirect: Usage rates, energy costs, and disposal costs are just a few of the costs suppliers can impact.

Direct Materials: 70% of a product’s cost is designed in, making it difficult to achieve cost savings. By involving suppliers early, you have the potential of developing lower cost products that can also reduce warranty claims.

What would be the impact on your profits if your key suppliers could reduce your total operating spend by just 5% (contract labor, materials, energy, consumables…)?

2. Expenditure Reduction:


Assets include inventories, building space, equipment and other capital expenditures.

One of our utility clients was able to reduce their annual fleet cost by 23% annually. Other companies have been able to extended equipment life, free up floor space and reduce other investment costs.

How much would you save if your suppliers could show you how to extend the life of just your operating equipment by 10%? Or reduce your inventory by 25%?

3. Asset Improvement:


Initiatives such as Lean Sourcing focus on improving process efficiency. Why? Because payroll costs are a significant organizational expense.

For companies that want to do more with less, the supply chain is a great place to start. Suppliers often have solutions that can dramatically reduce the time required to perform tasks from account and inventory management to maintenance and design.

While these costs are often considered “soft”, they provide you with the opportunity to eliminate temporary employees, overtime and avoid new hires.

If your suppliers could help you to improve your efficiency by 5%, what impact would this have on your profits?

4. Process Improvement:



Take the potential profit impact from the four previous pages:

1. Revenue Enhancement2. Expenditure Reduction 3. Asset Improvement4. Process Improvement

If these scenarios were to occur, how much could you put to your bottom line?

SourcingStrat was developed for just this purpose…to help you work with your suppliers to identify and measure the value provided by the opportunities your suppliers offer so you to make purchasing decisions based on how your suppliers can help improve your company’s operating profits.


To develop a competitive advantage through your supply chain by

providing the means to measure, track and compare suppliers on a

Total Cost basis.

Harvard Business Review: World Class companies innovate at 10 times the rate of average companies. Some of these World Class companies receive 60% of their innovative ideas from their suppliers.

Working with suppliers can help you to develop a competitive advantage…through both innovation and a lower operating cost. SourcingStrat facilitates this process by providing the means to measure, track and compare suppliers and their solutions in order for you to work more closely with your strategic suppliers and achieve your savings goals.

Purpose: Achieve Savings Goals

SourcingStrat let’s you review each solution your suppliers provide in three different levels of detail:

• Summary• Standard (shown here)• Detailed (for “auditable

evaluations”)


SourcingStrat also allows you to review the cumulative effect of the savings provided in a number of different charts, graphs and tables.

The chart here shows the savings provided by a supplier over a one year timeframe.


Reports can also be generated around the individual division or plant where the solutions were provided.


You can also include charts of the savings status:• Proposed (Offering)• Implemented• Savings Accepted• Reject


Additional graphs are available around the type of savings:

• One-time vs Ongoing

(shown here)

• Soft vs Hard



SourcingStrat Provides You with the Ability to Produce Reports Quickly and Easily in order to help you make strategic sourcing decisions.

These reports can be around your specific locations, suppliers or Commodity/Service Groups.

Use the Reports for: Business Reviews (local, regional or national) Contract Negotiations Proof of Savings (Contractual and “Auditable”) Supplier Selection Based on Total Cost Impact

Utilize a common format / language between you and your channel partners:

suppliers, integrators, distributors and manufacturers, in order to improve the

efficiency and effectiveness of the documentation process.


Imagine the amount of additional work you would need to perform if every supplier reported the savings they helped to achieve in a different format … or maybe you don’t have to imagine it, maybe you are faced with it today.

As you work with more suppliers to provide Total Cost savings, many will develop their own methodology for reporting the results to you…many of these may be lacking the detail needed to evaluate them, or the variety of formats may slow the process down.

Without a single format that all suppliers utilize, the process can be cumbersome and ineffective.

Purpose: Common Language/Format

For those companies that truly see the competitive and

cost advantages of working with suppliers to reduce

cost, a single system becomes critical in order to:

Improve your ability to capture Total Cost savings. Improve your ability to take advantage of saving

opportunities. Reduce the time required to evaluate the savings. Reduce the time required to compile reports in

order to make purchasing decisions on Total Cost.



Manufacturer

Customer

Import/ExportRecords

Direct User Access(where permitted)

SalesStrat

SourcingStrat

DistributorGuides

Solutions

Supplier

The programs allow your suppliers to export/send their

recorded events to you…

… you can allow them direct access into your system if desired – or they can allow

you into their system.

There are two sister programs we use to create a common format:

SalesStrat allows suppliers to demonstrate the value they provide you through their solutionsSourcingStrat allows you to see and evaluate

each supplier on a Total Cost basis

Manufacturers can also export their

product guides to their channel

partners to help document the value

of their products.

Where applicable suppliers can even share information between themselves (how they can work together to

reduce your operating costs).

Exportable to Other Reporting Formats

• PDF Reports – makes emailing results quick and

easy

• Excel – download your data and manipulate it into your own report format

• Word and PowerPoint – direct print


(Note: you get on-going updates and upgrades at no additional cost)

Three formats to document supplier value:

• Level 1: Memo format – minimal time and effort to document

• Level 2: Standard worksheet – quick/easy formulas to fill out (handles 85% of your documentation needs)

• Level 3: Detailed worksheets – the ability to create custom worksheet based on your needs/solutions (for highly technical solutions and/or auditable results)

Reminder: Suppliers can export records to you or enter the records into your system directly.


Level 1: Simple solutions – easy and quick to fill out:Fill in the Memo and Enter a Savings Value.

Purpose: Evaluate and Track Your Supplier’s Ability to Reduce Costs


Level 2: Typical solutions – memo and simple worksheets:Material, Freight, Process and Inventory Savings

Level 3: Technical solutions – auditable results

Same Memo area for the write up as in the other two levels…


…as well as custom worksheets that allow you to determine the costs to measure…


…costs can be added or removed to meet your needs.


Some customers want detailed “proof” of Savings

because of issues such as:• Sarbanes-Oxley• Six Sigma• Regulatory (Government, utilities…)

Level 3 can be used to provide you with this proof

through the data explanation tools that allow for

“auditable results”.

Note: providing this level of detail is optional and not

required by the program


Level 3: Technical solutions – auditable resultsYou have the ability to create formulas and explain each

value in the formula to create auditable records

While not required, these

detailed explanations also make it easier to

evaluate the value provided by

your suppliers.


Imagine If ….


Risk…you may not see much risk in switching suppliers

New Operating Costs

resulting from your current supplier

Cu

rren

t S

up

pli

er

“Opportunity”promised bynew supplier

Ne

w S

up

plie

r

Tota

l Ope

ratin

g C

osts

TimeLine

Your Company’s Original Operating Costs

Imagine If You Don’t Document

If you don’t measure this reduction in operating

costs, it is often forgotten.

So when a new supplier offers a

lower price…

Would reports like this one and the others shown in the presentation, help

you to:

Now Imagine the Possibilities if You Do Document Your Supplier’s Value

Select suppliers on their ability to reduce Total Cost? Evaluate savings opportunities more quickly in order

to take advantage of these savings sooner? Achieve/surpass savings goals? Help you to negotiate more cost effective contracts?

If the answer to these questions are “yes”, SourcingStrat can help you to achieve a competitive / cost advantage!

Strategic Business Solutions, L.L.C.(918) 494-8085

[email protected]

Thank You For Your Time

If you have any additional questions or comments, please feel free to contact us.

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Strategic Business Solutions : Solutions, Strategies, Success