Best Practices in Supply Management Journal

53rd Edition, January/February 2012

Articles In This Issue
"SRM - Getting Value from What Isn't Ours"
"As the World Turns - Global Supply Management Trends"

SPS News, Founder Appearances, & Career Opportunities

 

The January/February issue of Supply Chain Management Review Magazine will feature an article written by Mark Trowbridge titled Preparing for a Winning Negotiation

 

Mark will present our two day Supplier Performance Management workshop in Hong Kong at the (5 Star) Eaton Smart Hotel & Resort on February 13 - 14.  Find out more at Hong Kong Event Link

Mark will  present a three day workshop titled Advanced Procurement Negotiations & Contracting at the (5 Star) JW Marriott Hotel in Kuala Lampur on March 26 - 28  Find out more at Malaysia Event Link

Robert Dunn will be the featured speaker for NAPM Arizona's dinner meeting on February 23rd.  For more information, email NAPMArizona@Cox.Net

For the 2nd consecutive year, Mark Trowbridge wrote one of ISM eSide Supply Management's 10 most-read articles.  Click to visit ISM article site.

Job Opportunities:  We are currently helping clients fill the following SCM career opportunities.  Please contact Strategic Procurement Solutions through our website if interested...

-  Sourcing Manager, Information Technology & Business Process Outsourcing, Service Sector, Raleigh, North Carolina.  Base Salary Between $85K and $95K, Excellent Bonus and Benefits Package.  Relocation Negotiable.

 

- Onshore Wells Materials Sourcing Manager, Oil & Gas Sector, Western Europe. Permanent Hire Position, Base Salary Between E88K and E108K (Euro), Excellent Benefits and Bonus Package. Relocation Negotiable. 

 

- Sourcing Specialist (Refinery MRO), Oil/Gas Sector, Texas, Permanent Hire Position, Base Salary Between $115K and $125K, Excellent Benefits and Bonus Package.  Relocation Negotiable.

 

- Offshore/Subsea Drilling Category Manager, Oil & Gas Sector, Texas. Permanent Hire Position, Base Salary Between $115K and $135K, Excellent Benefits and Bonus Package. Relocation Negotiable.

 

- Onshore Wells Category Manager, Oil & Gas Sector, Texas.  Permanent Hire Position, Base Salary Between $115K and $125K, Excellent Benefits and Bonus Package.  Relocation Negotiable. 

 

- Warranty/Repair Procurement Administrator, Airline/Transportation Sector, Midwestern State. Permanent Hire Position, Base Salary Between $65K and $70K, Excellent Benefits and Bonus Package. Relocation Negotiable. 

 

- Manager of Inventory Planning, Airline/Transportation Sector, Midwestern State. Permanent Hire Position, Base Salary Between $65K and $75K, Excellent Benefits and Bonus Package. Relocation Negotiable.   

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


This electronic journal is now distributed bi-monthly to nearly 11,000 Supply Management Professionals around the globe.  Click on the "Join our Mailing List" button if you would would like to receive without charge, and feel free to forward to your SCM colleagues!  In return, just keep SPS in mind if your organization ever needs top quality Supply Management Consulting, Employee Skills Testing, Training, P2P Efficiency Reviews, Cost Reduction or Staff Augmentation Services.

 

 

"SRM - Getting Value From What Isn't Ours" - by Robert Dunn - Principal, M.B.A. 

A speaker at a recent global supply chain conference in the Middle East (where one of Strategic Procurement Solutions' leaders presented a workshop and keynote address) said something quite  insightful..."Procurement is about managing a large part of our business, which we do not own, using people we do not employ". This observation summarizes an important truth about Supplier Relationship Management (SRM) which some senior executives still fail to grasp. That is, that the overall performance of today's companies (and governmental agencies) is critically-intertwined with the performance of their supply base.

Did you know that as much as 20% - 80% of the average company's expense base is now represented by external supplier expenses?  This has increased over the last decades with (i) a reduction in internal costs through automation and staff rightsizing, and (ii) the systematic outsourcing of key operations. Manufacturing companies have made key outsourcing decisions using LEAN principles and Low Cost Country (LCC) sourcing. Even service-sector companies have outsourced key back-office operations, information technology hosting, contingent labor resources, payroll and benefits administration, and other core functions. And all these decisions have placed more responsibility in the hands of the Supply Management team to ensure optimal supply chain performance.

The focus leading procurement groups have had on Strategic Sourcing is now beginning to increasingly-transition toward Supplier Relationship Management as the next threshold in optimizing costs. Let's face it...once a spend category has been "sourced" once or twice, most of the savings have been wrung out (at least those reliant upon marketplace competition). But 5% - 12% more value can be often be captured through applying a strategic approach to SRM. This article will describe several techniques being used by world-class organizations...

 

Scorecarding.  When I and my colleagues train corporate client groups in our two day Supplier Performance Management™ workshop, one of the questions we ask participants is, "When you were in college, how many of you would have studied as hard if no report cards were given by the teachers?" Not surprisingly, no one raises their hand. We then discuss how report cards serve multiple purposes: (i) Providing feedback on our performance, (ii) Giving us and our teacher (and our parents!) something meaningful to discuss in planning for the future, and (iii) Enabling us to compare our performance against others.

 

Re-Engineering Product Requirements.  Once we've used sourcing to narrow down the supply base for a key spend category, and the new suppliers have been performing well under contract for some time; can we review product or service requirements to see if we're paying for unnecessary specifications? Are weekly reports still necessary? Is aluminum necessary when chrome-alloy steel will work equally-well? Are first-article inspections still appropriate for a supplier which has consistently-high quality? Are press-checks still necessary for the marketing organization to perform? 

Supply Chain OptimizationOne of Strategic Procurement Solutions' clients is a Top 3 Global Consumer Goods producer. This firm is systematically seeking to geographically-align its key suppliers with the locations of its production facilities to minimize transportation costs and cycle time for perishable food ingredients. Doing this has driven hundreds of millions of dollars out of the supply chain, and improved overall quality. This type of change doesn't occur through competitive sourcing...but rather through long-term alliance partner negotiations.

More Information.  Many other ways exist to gain value from supplier relationships...even AFTER the contract has been signed.  Hopefull the foregoing ideas are helpful for readers who are seeking new ways to reduce costs.  Please email Info@StrategicProcurementSolutions.com if you'd like more information about our onsite Supplier Performance Management™ (2 day) training workshop or a 360 degree Supply Management Efficiency Review (which optimizes SRM with other attributes of supply chain performance.    

 

About the Author - Robert Dunn is one of Strategic Procurement Solutions' founding principals.  His 37 years of procurement leadership experience have included 13 years in the consulting industry, following successful corporate positions in the Financial Services, Technology, and Governmental for leading enterprises.  Mr. Dunn's business travels have taken him throughout North America, Europe, and Asia.  He has served as President of multiple ISM Chapters, as well as Chairman of the CAPS Executive Roundtable.  

 

 

 

 

 

"As the World Turns - Global Supply Management Trends"- by Mark Trowbridge, Principal, CPSM, C.P.M., MCIPS

The last few months have been very busy for me personally, with travels to client and conference sites in Asia, Malaysia, the Middle East, and throughout North America.  In fact, I'm drafting this article while on a flight from the USA into Canada.

 
During this time period, a lot has been changing in the global economy.  Areas of the world which had been growing slowly, unfortunately seem to again be slowing down.  Hopefully this trend won't continue. Key commodities continue to be in a state of constrained supply, but demand below pre-recession levels is keeping pricess from wildly-escalating.  And everyone seems to be waiting to see what will happen with the European community...and hoping a domino-like event won't be set in motion.
 
Supply management leaders are being very strategic as they warily-watch the global economy (as well as domestic economies they operate within).  There is a much-greater focus upon the integrity of the supply chain than I've seen at any other time in my 27 year procurement experience.
 
Some of this is due to the "Force Majeure" types of natural disasters we've seen recently.  Who would have thought that all airports in Europe would be shut down by an Iceland volcano erupting?  Or the earthquake and tsunami which struck Japan.  Or the impact of Hurricane Katrina?
 
But many concerns are due to continued security cautions. Just last week, I had a very intriguing conversation with a group of senior procurement executives I was training.  We were discussing the complexities of importing key products into the United States from Low Cost Countries (LCC).  The conversation turned to the devastating effect a terrorist event or threat might have to the speed of importing maritime container shipments from Asia into Europe or the United States.  With the current state of LCC outsourcing, the requirement that all containers  be physically inspected could significantly extend lead times and thus compromise many firms' supply chains.  
 
Other concerns SCM leaders need to address result from uncertainty on the "revenue" side of many companies.  Not only is consumer demand/confidence highly-variable, but so is corporate demand.  One of the most-difficult challenges for procurement executives is to plan out acquisitions of services and materials when the need for such products cannot be accurately forecasted.  Poor revenue/sales forecasting by the upstream side of an organization makes aggressive sourcing and procurement difficult.
 
With all the focus that has been placed upon cost savings through strategic sourcing the last two decades, some finance and procurement leaders seem to have forgotten that cost management is only one element of a successful procurement operation.  But supply chain security and continuity are also.
 
There is an old principle called the "Rights of Procurement" which identifies five essential elements of successful supply management.  These are:
 
1.  The Right Product or Service
2.  From the Right Source
3.  Delivered at the Right Time
4.  To the Right Place
5.  At the Right Cost
 
If we get all five of these "right", procurement leaders can still be successful in today's changing world.  But if we miss even one, the battle can be lost.  The stakes are higher today than they've ever been.  And who knows what will happen tomorrow!
 
A Happy New Year to all of Strategic Procurement Solutions clients and colleagues!
 
If you would like information about having us present our Foundations of Supply Management™ (3 day) training program to your team (which teaches top procurement groups many concepts like the Rights of Procurement), just visit www.StrategicProcurementSolutions.com 
 
About the Author - Mark Trowbridge, CPSM, C.P.M., MCIPS is one of Strategic Procurement Solutions founders.  His 27 years in procurement leadership began in the Manufacturing, Airline, and Financial Services sectors...culminating in a role leading three-quarters of the strategic sourcing activities, and all of the contracts management responsibilities, of Bank of America (then, the USA's third most-profitable company).   During his last two years with Bank of America, Mark's areas of responsiblities delivered a Quarter Billion Dollars in cost reductions.  During the last dozen years, Mr. Trowbridge has worked in the consulting field with many leading corporate and governmental clients.  His business travels have taken him throughout North America, Europe, the Middle East, Asia, and Malaysia.  He is a frequent author on supply management topcs, with articles appearing in publications like Supply Chain Management Review, Inside Supply Management, eSide Supply Management, and Strategic Procurement Solutions own Best Practices in Supply Management Journal.

Copyright 2012 - Strategic Procurement Solutions, LLC - All Rights Reserved