1. Strategic Sourcing Best Practices
Gary L. Hopper
MBA, C.P.M., OPBC
Total Cost Solutions

2. Agenda Define strategic sourcing Seven Step Sourcing Methodology
Top Five Best Practices
Some Truths About Negotiations

3. What Is Strategic Sourcing?
Proactive activity
Anticipates future demand
Objective criteria
Measurable goals
Linked to mission/corporate objectives
Unique skills required
Senior management commitment

4. Seven Step Sourcing Methodology
Develop spend analysis
Determine business requirements
Conduct market analysis
Develop category strategy
Complete supplier evaluation
Select suppliers & negotiate agreements
Develop implementation plan & manage supplier performance

5. #1 - Getting to Yes by Fisher & Ury
Principled negotiations
Interest vs. position
Win - Win
Expanding the pie
BATNA
Tough on the problem - not the person
Jujitsu

6. #2 - Total Cost Total Cost of Ownership Risk Management Not just price
Life cycle cost
Based on product/service ROI
Risk Management
Not just mitigation
Quantify

7. #3 - RFP Process Compete everything material
Keep process consistent, repeatable and simple
Include boilerplate terms & conditions, NDA, BAA, SOW, etc.
Utilize weighted evaluation matrix to score bidders - use team approach
Engage in single source negotiations prior to award

8. #4 - Negotiation Planning
Phase #1: establish objectives and goals, gather information, plan strategies and tactics (75%)
Phase #2: discover needs, utilize tactics and counter-tactics, concession and commitment (20%)
Phase #3: review agreement, plan & prepare next steps, follow-up (5%)

9. #5 - Supplier Management
Clean and intelligent statement of work w/appropriate incentives/penalties
Performance management
The Golden Rule
Objective
Exception based
Select the best tool
Business reviews, service level agreements
Scorecards, governance plans

10. Some Key Negotiation Truths
The strongest don’t always win
You must first be aware of your own needs, assumptions and beliefs
The biggest bets are made at the end of the game
Get a grip - develop a detached attitude
Chill out - f you can’t think of the right thing to do - do nothing

11. A Few More… Be persistent Don’t be bashful Check your ego at the door
Never say “no” but “yes” has a price
Attitude is everything
Win-Win (80/20)

12. Resources “Getting to Yes” & “Getting Past No”
Negotiation Plan Template
Boilerplate T’s & C’s
(503)