0. Supplier Your Customer Firm MANAGING THE SUPPLY CHAIN
THE SECOND WAVE - CONTINUING TO HARVEST VALUE
Driving Costs Out of Shared Activities Delivers 4% to 8% Per Year Savings
Supplier
Your
Firm
Customer
Shared
Activities
Shared
Activities
4200 Montrose, Suite 590  Houston, TX
(713) Phone  (713) Fax

1. THE VALUE (SUPPLY) CHAIN STRETCHES FROM THE BEGINNING OF YOUR SUPPLIER’S SUPPLY CHAIN THROUGH ALL OF YOUR PROCESSES THAT CREATE VALUE FOR YOUR CUSTOMERS.
SUPPLIER’S
PROCESSES
R & D
Design
Make
Store
Deliver
Invoice
Sales
THE FIRM’S
PROCESSES
Procure
Design
Specify
Request
Purchase
Receive
Store
Issue
Pay
Make/
Sell
Install
Make
Maintain
Store
Deliver
Invoice
Shutdown
Dispose
Sales
End User
Pay

2. MANAGEMENT COMMITMENT
GETTING STARTED -
MANAGEMENT COMMITMENT
Phase I
Commitment
I. Value Chain Leadership Team (Senior Management Team)
A. Management Commitment
Consensus on the goal - 4% to 8% year-on-year improvement in total spend
Manpower resources
Endorse the process
Sponsor task force teams
Ground rules for counting savings
B. Empower Discovery Team
Team leader
Procurement expert
Content experts
1. Operations
2. Technical
Change management consultant

3. MANAGEMENT COMMITMENT
GETTING STARTED -
MANAGEMENT COMMITMENT
Phase I
Commitment
II. Discovery Team
A. Identify High Potential Cost Savings Opportunities
Total spend
Expected growth
Past experience
Critical to the business
Potential for process simplification
Market discontinuities

4. MANAGEMENT COMMITMENT
GETTING STARTED -
MANAGEMENT COMMITMENT
Phase I
Commitment
II. Discovery Team (continued)
B. Recommendations to Value Chain Leadership Team
Target areas for Phase II definition
1. Project definition
2. Recommended expense budget for Phase II projects
3. Examples
Freight
Tank maintenance
Professional services
Personal computers
Electric motors
Catalyst
C. Agreement and Commitment to Proceed to Phase II or Stop

5. I. Assemble Task Force Teams
Phase I
Commitment
Phase II
Development
SOLUTION DEVELOPMENT
I. Assemble Task Force Teams
A. Sponsor
B. Team Leader
C. Procurement Expert
D. Content Expert
Operations
Technical
E. Finance
F. Change Management Consultant
II. Define Scope of Initiative
A. Team Charter
B. Identify Stakeholders
C. Case for Action
D. Deliverables
E. Potential for Supplier Engagement
F. Budget Management Process
G. Initiate Preliminary Data Gathering
H. Plan and Timeline

6. III. Solution Development
Phase I
Commitment
Phase II
Development
SOLUTION DEVELOPMENT
III. Solution Development
A. Initiate Team Process
Ground rules, agenda
Clarify roles and responsibilities, time commitment
Identify sacred cows and paradigms
Barriers
Resources
B. Assess Baseline Performance
Define and flow chart current processes
Determine key process measures
Identify quick hit opportunities
Define all associated external expenditures
Assess existing and potential supplier base
Determine current contract status
Engage key suppliers as needed
Determine total process cost
Initiate benchmark/best practices

7. IV. Identify and Analyze Future State Solutions
Phase I
Commitment
Phase II
Development
SOLUTION DEVELOPMENT
IV. Identify and Analyze Future State Solutions
A. Engage Suppliers As Needed
B. Generate Solution Alternatives
C. Evaluate Risks and Rewards
D. Define Risk Mitigants
E.. Evaluate Scenarios
F. Identify Critical Success Factors
G. Rank Scenarios

8. V. Finalize Proposal and Implementation
Phase I
Commitment
Phase II
Development
SOLUTION DEVELOPMENT
V. Finalize Proposal and Implementation
A. Develop Future State Process Flowchart
B. Validate Solution Meets Stakeholder Requirements
C. Define New Future State Procedures/rights
D. Identify Process Enablers
E. Define Information Required to Manage the Process
F. Define Necessary Skills for the Process
G. Identify Necessary Resources to Operate
H. Identify Organizational Changes Required
I. Obtain Preliminary Commitment From Key Suppliers
J. Define Preliminary Implementation Plan and Schedule
K. Determine Implementation Cost of Proposed Solution
L. Identify Potential Implementation Barriers

9. VII. Approval and Funding
Phase I
Commitment
Phase II
Development
SOLUTION DEVELOPMENT
VI. Final Report Out
A Package Business Case to Pursue
B. Deliver Final Report
C. Document Key Learnings
VII. Approval and Funding
A. Provide Decision Information
B. Execute Budgeting
C. Initiate Change Communication Plan

10. I. Assemble Implementation Team
Phase I
Commitment
Phase II
Development
Phase III
Implementation
IMPLEMENTATION
I. Assemble Implementation Team
A. Sponsor
B. Team Leader
C. Procurement Expert
D. Content Expert
Operations
Technical
E. Finance
F. Change management consultant
G. Selected Suppliers

11. IMPLEMENTATION II. Implementation Phase I Commitment Phase II
Development
Phase III
Implementation
IMPLEMENTATION
II. Implementation
A. Critical Success Factors
B. Metrics
C. Project Time Lines
D. Infrastructure Support
IT enablers
Resources/manpower budgets
E. Project Teams
Internal staffing
Supplier involvement
Timelines
Milestones

12. III. Supplier Involvement
Phase I
Commitment
Phase II
Development
Phase III
Implementation
IMPLEMENTATION
III. Supplier Involvement
A. Strategic Alliance/Joint Venture/Sole Source/Other
B. Supplier Agreement
Scope
Objectives
Contributions/benefits
Commitments
Performance measures
Terms and conditions
Exit/clause

13. IMPLEMENTATION IV. Training V. Reporting Phase I Commitment Phase II
Development
Phase III
Implementation
IMPLEMENTATION
IV. Training
A. New Processes
B. New Skills/Competencies
C. Curriculum
D. Facilities
E. Instructors
F. Mediums
G. Target Audience
H. Scheduling
V. Reporting
A. Key Metrics
B. Progress Towards Future State
C. Information to Key Stakeholders

14. IMPLEMENTATION VI. Knowledge Capture VII. Deliverable Phase I
Commitment
Phase II
Development
Phase III
Implementation
IMPLEMENTATION
VI. Knowledge Capture
A. IT Support Infrastructure
B. Architecture
C. Data Input Sources
D. Accessibility
E. Updating
F. Integrity
VII. Deliverable
A. 4% to 8% Year-On-Year Savings in Total Spending