Supply Chain Management Review

I’ve just returned to my Pittsburgh office, after attending and presenting two workshops at the 93^rd Annual ISM Conference, held this year in St. Louis, Missouri.

A few impressions of my own, melded with comments from fellow attendees:

• Attendance was lighter than last year’s Las Vegas venue – perhaps supporting the contention that location, not just content, affects attendance. Note: Next year’s conference will be in Charlotte, NC. One conference attendee wished out loud that ISM would arrange a golf outing as part of the Charlotte program, perhaps on Saturday or Sunday before the conference gets in full swing.
• Some very good, new topics on this year’s program, presented by some very talented speakers.
• Some “repeat” topics from past programs. Some of them a

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What might be the return on investment for your annual Supplier Recognition activities?

Benefits typically fall into two categories:

–  Further performance improvements from the premier suppliers that you recognized

–  Improvements from suppliers who want to become your premier, recognized supplier next year

Here is a snapshot of one company’s experience:

–  First year expenses of less than $ 50,000 (all-in expenses, including a full-page color ad in a major supply management magazine)

–  The “extra effort” of just one supplier who wanted to be selected in the second year generated new cost reductions of more than $1 million per year

–  ROI : 20x just based on one ...Read More

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For those of you who plan to attend next week’s ISM Conference in St. Louis, I’ll be presenting two topics:

• “The Gold Medal: Transforming Supply Management into a World-Class Driver of Corporate Performance” – Monday, May 5 at 9:00 am 
• “Speak Like a CFO, and Get Senior Management’s Attention” – Tuesday, May 6 at 2:30 pm

See you there!

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Are you ready for a supplier recognition event at your company? You are probably ready if:

• You have fairly good data on supplier performance
• You have agreement on the selection criteria
• You have a view that suppliers are part of the solution
• Your corporate culture is one where you recognize employees
• Senior management is willing to participate

You are probably NOT ready if:

• You have fairly poor data on supplier performance
• You don’t have agreement on the selection criteria
• You have a view that suppliers are part of the problem
• Your corporate culture is one where employee recognition is a strange idea
• Senior management can’t be bothered with purchasing activities

If you&...Read More

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A prerequisite for having a successful supplier recognition program is to have clearly defined roles. The key players are the Procurement Council, Selection Committee, Nominators, and Executives.

The Procurement Council establishes expectations and policy, appoints members of a Selection Committee, approves a budget, approves the selection criteria and process, reviews and approves the selected suppliers, and runs the logistics of the recognition event itself.

The Selection Committee communicates the nomination process to all parts of the organization, establishes clear decision-making criteria, reviews nominations, and selects the “best of the best” finalists for review by the Procurement Council.

The “nominators” are procurement personnel and internal clients who identify appropriate nominees based on the communicated criteria, pre...Read More

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Today’s guest blogger is James Baehr, who heads up the IT Strategic Sourcing practice at Greybeard Advisors LLC. Jim has had management roles in IT sales, IT operations, and IT procurement at major firms, before joining Greybeard. Jim can be reached at: Baehr@GreybeardAdvisors.com

How effective can a Strategic Sourcing partnership between Information Technology (IT) and Procurement be? The answer is: very effective.  

Part I of this mini-series called out the “old school” practices which still exist in many companies when acquiring Information Technology goods and services. It’s likely that the examples given irritated two camps. The first was those IT groups with no experience in true Strategic Sourcing - the guilty. The second was those companies who have adopte...Read More

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On occasion, I’ll be inviting knowledgeable experts to cover various topics relating to their subject matter expertise. Today’s guest blogger is James Baehr, who heads up the IT Strategic Sourcing practice at Greybeard Advisors LLC. Jim has had management roles in IT sales, IT operations, and IT procurement at major firms, before joining Greybeard. Jim can be reached at: Baehr@GreybeardAdvisors.com

Consider the possibilities – cost containment, standardization, supplier rationalization, risk management, and relationship management. These are just a few of the benefits realized by using genuine strategic sourcing to acquire Information Technology (IT) goods and services. With the commoditization of many technology products and services, it’s realistic to expect synergies between the I...Read More

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What are the reasons in favor of Supplier Recognition (an annual event in which your “best of the best” suppliers are publicly acknowledged and thanked, often followed by a press release naming those top suppliers)?

There are several:

·        It demonstrates to your supply base that you are serious about rewarding excellent performance

·        It can raise the bar for your entire supply base, once they understand how they benefit from your public recognition

·        It demonstrates to your own organization that it’s not just the negotiated deal that counts, it’s how well the supplier (and you) perform after the deal that m...Read More

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Last year I was speaking with the acting head of procurement at a fairly sizeable company (revenues greater than $1 billion). He mentioned that his former CPO, who left the company after less than 18 months, had been involved with an SRM consulting project at their company. He identified the consulting firm, and mentioned that this engagement lasted four months, and cost some large, untold figure.

My question was simple: what did you get for the four month project and the sizeable consultant’s bill? His answer shocked me: “We think we now know how to segment our supplier base.”

Further questions confirmed what I suspected: this company did not have a strong foundation for supply management transformation, and it did not have strong supply management business processes such as a rigorous strategic sourcing and negotiations management proce...Read More

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Suppliers who truly perform well deserve to be rewarded and publicly recognized. Shocked? You shouldn’t be.

How you involve your suppliers in achieving your corporate objectives is a critical philosophical – and practical – choice. “Beating up suppliers” is a short-term tactic, with long-term consequences. You don’t have to go very far to identify entire industries that have attempted to fix their own problems by beating up their suppliers. It has proven to be a short-sighted approach.

If you have adopted the type of strategic role that this column advocates – one in which you seek to optimize revenue opportunities, cost reduction opportunities, and capital intensity – that requires the active involvement and willing participation of your suppliers. And identifying the right relationship with each supplier is critica...Read More

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As a convenience to readers, here is an Index of topics covered to date in this column since its inception in late September, 2007.

September, 2007:

The Challenge (in Supply Management)

Welcome to Transformation Leadership - I (creating awareness and a roadmap)

 
October, 2007:

Welcome to Transformation Leadership – II (creating awareness and a roadmap)

The Leadership Imperative

Let’s be Candid (survey #1 invitation)

The Organization Chart Diversion – I

November, 2007:

 The Organization Chart Diversion – II

The Organization Chart Diversion – III

The Organization Chart Diversion – IV

“Long-Term Survival & Competitiveness – New Research (Part 1)”

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If you adhere to a genuine, rigorous strategic sourcing process, and a negotiations management process that is equally rigorous - and integrated with your sourcing methodology - you’ve probably noticed one thing: there is a lot of information to be organized and evaluated before you commence the negotiations phase.

In the absence of data and information, it can be easy to conclude that we should “go with our gut” in negotiations. Deluged with data and information, from an effective sourcing process, it can often be equally tempting to “go with your gut” in negotiations. Don’t. Instead, create a negotiations strategy worksheet.

A negotiations strategy worksheet includes the elements shown in the Figur...Read More

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