Professional Documents
Culture Documents
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WHAT IS THIS MAN FAMOUS FOR???
Theory of Relativity
E=mc2
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BUT HIS BEST WORK MAY BE HIS
DEFINITION OF INSANITY:
ALBERT EINSTEIN.
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So what does Albert Einstein have to do with
Effective
Relevant
Viewed as VALUED
Part of the Management Team
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WHAT DOES “BEST PRACTICE” MEAN?
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1. Establish a Govern Council
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2. Align the Supply Chain Organization
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TYPICAL SCM ORGANIZATIONAL DESIGN
Supply Chain
Supply Chain Leader Council
•Strategies
•Warehousing
•Efficiencies
•Inventory
Strategic Sourcing Tactical •Process Review
•Transportation
•Demand &
•Environmental Forecasting
•KAP-Vendors •Release orders-KAP’s •Disposal
•$ Volume Driven •Spot Orders
•Q A •Non-Repetitive Orders
•Spend Areas-Future •NON-CORE
•CORE Commodities Commodities
Contract Management
HIGH
LOSE / WIN WIN / WIN
LOW HIGH
COURAGE
The 7 Habits of Highly Effective People-Steven Covey 12
4. Set the Strategic Sourcing Strategy
• What is Strategic Sourcing?? Collaborative and Organized approach to spend
categories with objective of selecting suppliers best suited to provide maximum value.
• Strategic Sourcing implements cross functional and geographic teams for unified
decision making process with Supply Chain Organization guidance and leadership. This
must become a standard practice
• Benefits are:
9 Improved buy-in from the internal business units
9 Increased internal business unit satisfaction
9 Assures availability of goods and services (particularly in tight markets)
9 Increased responsiveness to customers changing needs.
9 Promotes teamwork
9 Streamlined Processes
9 Quality will be improved
9 Lower overall total cost and increased value 13
5. Establish Key Supplier Alliances
Strategic,
impacts ALLIANCE MGT
core Our focus is
business Routine SRM most likely here
Non-strategic,
easily Routine SRM Routine SRM
replaceable
THIS IS ABOUT:
Instill Total Cost of Ownership / Total System Cost Mindset
Move away from looking at just lowest price
More focus on best value
Move towards process improvement as a measurable
internal goal
Evaluation of all factors that make up the cost of goods
and services
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Total Cost of Ownership = A + (O+T+M+W+E) Less S
Source: The Executive Guide to Supply Chain Management, David Riggs/Sharon Robbins
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Total Cost Approach
Perceived
Purchase
Opportunity
Cost
Specifications Standardization
Procurement Practices
Inventory Practices
Warehousing Costs
Warranty Terms
Operational Practices
Disposal/Salvage Practices
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Total System Cost
Interaction Cost
Profit
Strategic
Profit Focus
Traditional
Focus
Supplier Cost (price only)
Supplier Cost
Traditional Strategic 19
7. Manage Compliance and Risk
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Top SIX Contract Management Strategies
(Aberdeen Group Research)
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8. Optimize Company Owned Inventory
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10. Establish Processes and Controls
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THANK YOU !!
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