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Quality and Operations commitment to excellence Driving Value from a Supplier Relationship Management Program.

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Presentation on theme: "Quality and Operations commitment to excellence Driving Value from a Supplier Relationship Management Program."— Presentation transcript:

1 Quality and Operations commitment to excellence Driving Value from a Supplier Relationship Management Program

2 Quality and Operations commitment to excellence

3 Covidien Overview Welcome Women in Supply Chain Driving Value from Supplier Relationship Management (SRM)

4 Quality and Operations commitment to excellence Covidien is … A global healthcare products manufacturing company with nearly $10 Billion in annual revenue Well positioned with a diverse portfolio of products and technologies in attractive franchises A company with a history of quality and innovation Highly efficient and productive, producing strong margins and cash flow A leading player across our portfolio

5 Quality and Operations commitment to excellence Medical Supplies $1.8B 2012 Net Sales by Business Segment $9.9 Billion Medical Devices $8.1B 82% 18%

6 Quality and Operations commitment to excellence Medical Devices Overview 2012 Sales by Product Group  2012 Net Sales: $8.1B  Strong franchises, market leadership positions and a highly diversified product portfolio  Focus on growth through innovation, product leadership with superior clinical evidence, acquisitions and further geographic expansion  Ramp up R&D, globalize footprint and accelerate new product launches Vascular Energy Endomechanical Soft Tissue Repair Airway & Ventilation Oximetry & Monitoring Other

7 Quality and Operations commitment to excellence Medical Supplies Overview 2012 Sales by Product Group  2012 Net Sales: $1.8B  Leading provider of a broad range of high quality products used to improve patient care, including wound care, incontinence, needles & syringes, enteral feeding, operating room kits and accessories  #1 or #2 market positions across core product categories Nursing Care Medical Surgical Original Equipment Manufacturer SharpSafety

8 Quality and Operations commitment to excellence Carl Resteghini Kelly Carey Keith Lapointe Ann McCaffrey Kim Hardy Lisa Taylor Courtney Sullivan Abhinav Singh Jane Comeau Vanessa Linke John Richardson Brian Budzinski Lauren Bell Jeff Wright Marlon Lapp Bruce Graham Robert Simonelli Kevin Brennan (HR)

9 Quality and Operations commitment to excellence Welcome Northeastern Supply Chain MBA Students

10 Quality and Operations commitment to excellence

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12 MonthActivity AugustOfficial Kickoff Luncheon September Workshop: “How to Prepare for a Performance Review & Discussion” OctoberWorkshop: “How to Write a Robust IDP” November Panelist Discussion: “Supply Chain Career Paths at Covidien” DecemberLocal Philanthropy/Networking Event January Guest Speaker: Jessica Hameline – “Market Forces Shaping Covidien” The best way to stay informed about upcoming events is to join our PulseConnect site! Complete

13 Quality and Operations commitment to excellence

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15 Increase business value derived from collaboration Innovative/flexible Reduce demand activity, complexity and variability Aligned/loyal Shift from lowest price to TCO Operationally excellent Right goods/services at the right price Priced competitively Right goods/services at the right time and place Reliable/solvent Value Mgmt. Demand Management Total Cost of Ownership Purchased Cost Reductions Protecting the Revenue Stream (Supply Assurance) Value Supply Value PropositionRole of Supply Base Source: 2011 The Hacket Group, Inc. ; All Rights Reserved Collaboratively Focused Transactionally Focused

16 Quality and Operations commitment to excellence Supplier Relationship Management (SRM) is a model and supporting processes for maximizing the value of supplier relationships to the organization over the full relationship lifecycle. SRM defines approaches for on-going enterprise-wide interaction with suppliers as well as with other internal company personnel to plan and manage the relationships. SRM also defines formal mechanisms for targeting and driving proactive value generation and managing challenges and gaps SRM at Covidien IsSRM at Covidien Is Not A cross functional program that aligns supply chain activities with business needs A model for managing on-going interactions with suppliers in a way that maximizes long- term value A different view or mindset of the elements of joint Covidien and supplier success Just a procurement initiative The same thing as Strategic Sourcing or Category Management A technology initiative Executed as a one-time project Managed the same way across all suppliers A quick fix A new way to get margin concessions from the supply base

17 Quality and Operations commitment to excellence Supplier Stratification Supplier Enabled Excellence SRM Governance Performance Management Supplier relationships will be stratified based on strategic importance to prioritize resources and tailor management processes Capabilities of existing suppliers will be developed to deliver continuous improvement and proactive value generation Structured cross- functional model organized to maximize collaboration and effectively manage relationships Supplier performance will be managed across different supplier types and strata to maximize performance

18 Quality and Operations commitment to excellence Exit Strategic Core Value Covidien’s most strategic Suppliers with whom the organization will develop long-term strategic relationships to drive joint value Medium to long-term relationships that deliver significant value with active management and opportunistic investment Short-term transactional relationships with Suppliers that meet basic performance needs Value Creation & ROI 0-4 per GBU # Varies by Category Bottom 60-80% of Supply Base Supplier CriteriaDefinition

19 Quality and Operations commitment to excellence Exit Strategic Value Covidien’s most strategic Suppliers with whom the organization will develop long-term strategic relationships to drive joint value Medium to long-term relationships that deliver significant value with active management and opportunistic investment Short-term transactional relationships with Suppliers that meet basic performance needs Value Creation & ROI 0-4 per GBU # Varies by Category Bottom 60-80% of Supply Base Supplier CriteriaDefinition Core Business Medium to long-term relationships that deliver significant value. Will not require investment Core Investing

20 Quality and Operations commitment to excellence Supplier Perspective Cash Cow Develop MaintainMonitor SPENDSPEND HL H M M

21 Quality and Operations commitment to excellence Exit Suppliers as Identified Reassess Stratification as needed to ensure Alignment with Organization Stratification Manage Suppliers to Stratification Ratings Relationship Charters Solidified for Strategic/Core Investing Suppliers Governance Engage in Agreed Development Activities Develop the Strategic/Core Investing Suppliers with Specific Plans of Engagement and Monitoring Supplier Enabled Excellence Monthly Supplier Collaboration Meeting Track # Suppliers Added/Deleted to GASL Limited Status Rating Change Agreement Supplier Performance

22 Quality and Operations commitment to excellence Reduce Supply Base per Stratification Engage Deeper with Strategic /Core Investing Supply Base Early Supplier Engagement with R&D Suppliers On Site working with COV Development Teams Engagement with Supplier Development Teams Continue One Covidien Supplier Collaboration Meeting Track and Monitor Progress Link Improvement to Overall Business


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