Joani Scott

What to Expect Introduction Group Discussion SRM to Obtaining Superior Value Wrap Up / ?’s / Evaluation

Group Discussion What Does Superior Value Mean To You and Your Organization? What are You Doing to Achieve Superior Value from your Suppliers? How Do You Measure Superior Value? How Would You Rate (overall) Your Suppliers’ Superior Value Creation?

Research – Survey Discussion ROI & Viable Partnership

Research – Survey Discussion

Research – Graph of Survey

Why are We Here? Value Creation Few Contracts Encourage Suppliers to Identify Opportunities to Add Value Lack of Process to ID new Value Creation Ideas Lack of Incentives for Suppliers to Identify New Opportunities

Why are We Here? Value Creation 75% of suppliers say they regularly put most- preferred customers at the top of allocation lists for materials or services in short supply on a regular basis 82% say that these customers consistently get first access to new product or service ideas and technologies 87% of suppliers offer unique cost reduction opportunities to their most-preferred customers first Seizing the Opportunity

Value Creation Customer of Choice Are you a Customer of Choice? Suppliers Consistently/Proactively addressing your organization’s needs ahead of other companies? Are you receiving “Preferential Treatment” from all Suppliers (not only the Strategic Partners) providing support for a wide range of business needs? OR Do your Suppliers have limited services, resources available for your needs?

Value Creation “Customer of Choice” Preferred Customer / Customer of Choice Consistently receive competitive preference for scarce resources (Product Availability) Consistently receive most competitive pricing and cost reduction ideas for products and or services Reliable Pro-Active Communication from Supplier (Account Rep and Technical Team) Additional Value Adds

Value Creation Customer of Choice Becoming a Customer of Choice? View yourself as suppliers do Use communications with suppliers as an opportunity to uncover “hidden” decision criteria Being a customer of choice is as much about selling as it is about buying Low “maintenance” / cost-to-serve customers are as attractive to suppliers as low- cost suppliers are to buyers

SRM To Obtain Superior Value SRM - A MUST! Evaluate Baseline for Relationship ID Business / Product & Services Requirements Select ID Baseline for Agreements and Performance Set Tactical & Strategic Shared Goals Define Incentive Sharing Opportunities Manage Classify: Commodity, Value, Strategic Quarterly Business / Operational Reviews Monitor / Address Gaps in Relationship & Performance

SRM To Obtain Superior Value Balance of Power – A Must! Power drives the dynamics of Relationships Temporary Trust Equality (Equivalence) Balance One party drives partnership and requires consent Contracted Choice - Commitment Mutual, Duration, Exclusivity Duration

SRM To Obtain Superior Value Balance of Power – A Must! Power drives the dynamics of Relationships Coordinated Shared Direction Shared Values Shared Risk and Reward Creative Collaboration Synergies Creativity Consequence

SRM To Obtain Superior Value Top to Top Reviews Operational & Management Team Reviews Day-today Interaction / Execution Supplier Procurement

SRM To Obtain Superior Value Day-to-Day Objectives Place/Coordinate Orders Manage product/service flow Collect performance data Escalate issues

SRM To Obtain Superior Value Operational Review Objectives Monitor performance vs. scorecard Manage cost/value improvement efforts Resolve issues escalated from day to day Benchmark supplier to market Lead supplier development efforts Track benefits received from agreement

SRM To Obtain Superior Value Top-to-Top Review Objectives Conduct high level business and performance reviews Reinforce/support relationship objectives Discuss escalated issues from management team Monitor key new product development

Wrap Up Metrics: Value Add Establish metrics that are linked directly to business performance and to customer’s expectations. Cash-to-Cash cycle On-time performance to contract. How do you collectively improve your overall cycle time within your business?

Wrap Up Obtaining Superior Value Consider suppliers as an extension (arm) of your Procurement and Technology Team Utilize Collective Intelligence – Early Involvement Foster a netted integrated supply chain

Wrap Up Obtaining Superior Value Take the suppliers who are experts in certain domains and weave them together to enable you to collectively create solutions to satisfy your customers’ needs and support your business vision.

Wrap UP Obtaining Superior Value The Future requires Strategic Positioning, Collaboration, and Value Extraction Without Effective Relationship Management, most of potential value available can/will be lost! “Our Suppliers are only as good as we let them be” (David W Johnson, President of Entenmanns Bakeries (1966)

Questions?

Credits ICN: International Computer Negotiations ICN - Do Better Deals ISM: Institute for Supply Management SIG: Sourcing Interest Group Next Level Purchasing Association William L. Michels, President, ADR NA

Thank You!