Supplier management - an indispensable instrument
for the prequalification of suppliers
Thomas-M.MaierIn-house lawyer, KELAG Wärme GmbH
Kiev, 6-7 september 2012
1TMM - 2012
Agenda
Introductory remarks
Procurement strategy
Commodity strategy
Supplier strategy / Supplier management
Process
Content
Principles
Assessment / practical example
Lessons learnt
2
Introductory remarks (1)
The upmost aim of any effort to improve a companies procurement is to rise efficiency and effectiveness and to reduce risks …
…therefore the challenges to manage are:
Cost pressure
Rising Risks (raw materials, costs of exchange, …)
Complexity of procurement laws
Globalization
Time pressure in any project
Changing technologies
Corruption
3
Introductory remarks (2)
In the field of purchase and procurement the answers may be …
A reasonable procurement strategy
A balanced commodity strategy, that is in line with the requirements of the company
An efficient supplier management
Predominantly this will lead to a liaison with the best and most competitive suppliers
4
Introductory remarks (3)
In the history of procurement it is to notice that expectations and benefit as well as the roll of time changed
In the past (till 80´s): Enough time / quality and price were crucial
Nowadays : procurement is an interface between top-management and the carrier of demand / beside short time, quality and price information and its rapid change is crucial
Factor of success
Vision, aim, strategy
Team (!), communication, methods and tools (!)
5
Procurement strategy (1) The procurement strategy is part of the materials logistics of a
company and in this field crucial for
Quantity and quality of …
…particular works, goods and services …
… within a certain prize frame
Partner: The supplier
Question is: Where do you want to go and what do you need?
6
Procurement strategy (2)
7
PVO (purchase volume)
Com
ple
xit
y /
ris
ks
Less aggressive or defensive position
Technical Standardisation
Supplier Management
Supplier management
Innovation, Joint Development, Use the market excessively
Risikmanagement
Reduce sourcing costs
C-Materials
Automatisation
Strategic Sourcing,
Use the market
Supplier Management
Zero
Commodity strategy (1)
Before starting with the supplier management one must know indispensable which commodities a company needs; therefor you need to know the company´s aims.
Need to know:
Overview on commodities (in case of my company: insulated pipes, works, plants, control engineering – not food chemistry, boats & caravans, medical instruments, …)
Own position in the group
The market and its tendencies
8
Oral Example: preinsulated pipes
Commodity strategy (2)
9
ResultStrategy(how?)
Tactics(with what?)
Who does what? Vision / aims
Review &Controlling
Ressources
Various influencing
factors
Values
Supplier strategy and supplier management(1)
In most cases the PVO reaches up to 50% of a company´s turnover – the performance of the procurement efforts therefore is decisive. Question is: How to find YOUR supplier?
The challenges are
Concentration on the best
Suppliers with the capability to support you in your own aims
Suppliers with sufficient and good ressources
Ability for cooperations
Potential for innovations
Generation of win – win (b2b) and win (b2c) situations
10
Supplier strategy and supplier management(2)
Why supplier management?
Creating competition in between the market participants
Breaking up monopolistic market powers (if feasible)
Reducing costs
Knowing the technology is conditional for being up-to-date
Growing together
Creating long term relations (if feasible)
Creating mutual confidence to detect risks earlier
Reducing Costs of logistics
Creating sustainability
11
Supplier strategy and supplier management(3)
Factors of success for your choice?
Using a holistic approach (starting with the procurement strategy, then the commodity strategy and afterwards the supplier strategy)
Applying fair methods of choice when entering a partnership
Using transparent and open minded criteria
Searching individualism
Creating a “good relation management” (if feasible)
Being direct – also when ending a partnership
The question is: How can I reach my aim with MY supplier?
12
Supplier management / process
13
Company
vision, aims
Procurement strategy
leads to
commodity Strategy
leads to
Supplier strategy
Needs
quantity, quality,
date, terms,
conditions,
sustainability
market
Raw materials,Suppliers,
Surroundings,Other
influences
Suppliermanagement
Supplier management
Phasing out
Assessment
Advancement
and
corrective action
Control &
reviewDevelopement
Choice of suppliers Tender
and
Execution of the
contract
Supplier management / content
14
Supplier management
Phasing outAdvancement and
corrective action
Control&
review
Choice of suppliersAssessment
Development
Supplier management / principles
Company wide and consistent work
i.e. Prices and economies, quality, logistics, technology and management
Assessment is depending on the commodity strategy
PVO influences the assessment, but does not steer it
Categorization must be clear
A-, B- and C – supplier and “traffic light categorization”
Using SWOT-Analyses
Documentation and re-evaluation
“The system must be lived”
15
Supplier management / assessment
Practical example
16
Lessons learnt
Depending on the branch the implementation of a strategic approach for procurement is very hard
Company with 200 people: 1,5 years till you “harvest your first fruits”
Timeframe is depending on resources
“Knowledge-curve” about suppliers and market is rising steeply after 2 years
Knowledge is always parked anywhere – with a strategic approach you use means and methods to create a knowledge pool
Supplier management is a permanent process
17
Contact
18
Mag. iur. Thomas-M. Maier, LL.M.Head of strategic procurement and legal department
Tel: + 43 / 676 / 7941117
E-Mail: [email protected]
KELAG Wärme GmbHSt. -Magdalener-Straße 819506 VillachAustria
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