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Skills for Tomorrow's Strategic Sourcing and Procurement Professionals

Skills for Tomorrow's Strategic Sourcing and Procurement Professionals. Robert P. Moody ISM Dallas Meeting October 11, 2007. Agenda. Introduction Operational Procurement Objectives Skills for Tomorrow Conclusion Questions. Procurement is important.

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Skills for Tomorrow's Strategic Sourcing and Procurement Professionals

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  1. Skills for Tomorrow's Strategic Sourcing and Procurement Professionals Robert P. Moody ISM Dallas Meeting October 11, 2007

  2. Agenda • Introduction • Operational Procurement Objectives • Skills for Tomorrow • Conclusion • Questions

  3. Procurement is important World Class Procurement Cost Savings Potential Estimated Realistic Savings as a Percentage of Spend Source: Corporate Executive Board Procurement Strategy Council Research

  4. What a difference a structured process makes … Source: Aberdeen Group - The CPO’s Strategic Agenda 2006

  5. Operational Procurement Objectives • The five rights: • Right time • Right quantity • Right place • Right source • Right price

  6. Profile the category Select sourcing strategy Step 1 Generate supplier portfolio Select implementation path 2 Negotiate and select suppliers 3 4 Integrate suppliers 5 Monitor the supply market 6 7 Skills for Tomorrow Utilize a structured procurement process • Initiated by GM in the 1980s • What is bought where? • Who sells what? • Where to buy what at “best value” • Identify suitable suppliers • Negotiate • Implement • Track results & restart (continuous cycle) Specific example: A.T. Kearney seven step strategic sourcing process

  7. Procurement Teams2 Skills for TomorrowSourcing and procurement as part of the larger organization Effective global procurement organizations generally employ a center-led organization with a category management concept Center-led procurement does not necessarily mean “centralized procurement” Notes: (1) Category Managers supported by Procurement Teams made up of corporate and business unit staff (2) Procurement Teams report dotted or solid line depending on the category/goal Source: ICG Commerce

  8. Skills for Tomorrow Marketing, influencing and engagement • Provide procurement leadership to all functional and business unit groups • Align with your stakeholders’ key objectives • Utilize cross-functional/business teams with clear roles and responsibilities • Sharing the spend analysis results can create internal support for sourcing changes that reap savings • Report-out results and track progress

  9. Skills for Tomorrow Project Planning and Management

  10. Skills for TomorrowSourcing KPIs Tier 1: performance of the business as a whole and enable the setting of business-wide targets Tier 2: performance of the configured processes and used to tactically manage the business Source: Corporate Executive Board OMR Toolkits

  11. Skills for Tomorrow Supplier relationship management - skills & tools • Supplier relationships are critical • Treat everyone with respect • Be data driven • Negotiate based on facts and knowledge • Share information when appropriate • Help your suppliers be more successful • Investigate software based SRM solutions

  12. Skills for TomorrowCost & “Best Value” • Total Cost of Ownership (TCO) is best suited for comparing the value of commoditized products or services • Make certain your model accounts for benefits, risks and the time value of money if they apply to your situation • Other Costs • Quality • Safety Stock • Supplier Development • Currency TOC • Logistics • Inland Freight • Ocean/Air Freight • Transfer charges • Taxes • VAT • Incentives Customs Duties & Fees Purchase Cost = + + + +

  13. Skills for TomorrowKeys to Procurement Transformation • Multi-year strategic planning • Supply base rationalization • Total cost focus • Metrics • Supplier development • Staff development • Integrated systems and processes • Technology that enables process excellence • Leadership

  14. Conclusion • Consistently apply the basic operational procurement skills • Utilize a disciplined process • Create a sustainable environment • Identify and deploy best practices • Engage the stakeholders • Utilize visible, auditable metrics • Share the wins

  15. Are you ready for tomorrow?

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