Managing Monopolies and Single Source Suppliers

Transcription

1 Managing Monopolies and Single Source Suppliers Associate Trainer Anil Joshi Director NEVI Purspective ITIDA International

2 Ok, who is NEVI Purspective Offices worldwide Offices to be opened in 2013 Offices in The Netherlands, UK (London), Austria (Vienna) PR China (Shanghai) and Brasil (Sao Paolo) 100 % subsidiary of the Dutch Purchasing Management Association

3 International Customers Service Providers FMCG & Retail Pharma & Chemical Electronics & Production THE NETHERLANDS CHINA BRASIL AUSTRIA THE UNITED KINGDOM 3

4 And who is Anil Joshi Services Keynote speaker Change manager Trainer Conference facilitator Executive coach Talent scout. Themes Strategy Leadership Relationship management Category strategy Account management Negotiations Customer days Supplier days. A privilege to support clients in 26 countries Even when you do nothing Do it with INTENSITY

5 Some opening thoughts Monopolies are inherently dysfunctional because innovation is stifled. Eventually other forces will destroy a monopoly, just as railroad and steel monopolies were destroyed. Robert Porter Lynch (2005)

6 Future success factors Source: Prof. R. Monczka/AT Kearney

7 Value in relationship management Phase 1 Phase 2 Phase 3 Phase 4 High Competitive Management Support Price Cost Product/ Service/ Process Value Chain 20% 10% 5% Cost Advantages Low Low Competency of Purchasing High

8 What is a monopoly? What is a single source? Is there a difference?

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10 Level of involvement with supplier/customer Simple Complex Relationship Development Model Single deal based Competitive When I win, you lose! Transactional When the price is right! Value generation based Co-operative We need eachother Collaborative We are business partners! Transactional Collaborative Nature of supplier/customer relationship Adapted from: Malcolm McDonald, Cranfield Univeristy Where are you...?

11 Attractivity is essential

12 Suppliers are Rational, max. Economic Value To whom we bring innovation: To those who can benefit more and are not too hard on negotiations Suppliers estimate value for customers: Sometimes they do not know how

13 but people working in suppliers are human We tend to do business with people that we like How do your suppliers view you? OR

14 Kraljic-model & Bensaou-model Kraljic (1983, Harvard Business Review) Bensaou (1999, Sloan Management Review)

15 Drivers of dependency Buyer dependency - Effort ( trouble and expense ) needed to switch suppliers for certain commodities - Extent to which there are enough potential suppliers to ensure competition with the current supplier in the long run - Availability of alternative sources of supply (short-term) - Amount of relationship specific investments by Buyer (tangible (e.g. facilities) as well as intangible (e.g. knowledge of each other s company and dedicated persons) investments) - Percentage of commodity requirements procured from a particular supplier Supplier dependency - Amount of relationship specific investments by the supplier (tangible (e.g. facilities) as well as intangible (e.g. knowledge of each other s company and dedicated persons) investments) - The extent to which the supplier would face a financial crisis if the buyer would withdraw its business - Percentage of supplier s total revenues sold to the buyer - Total business volume of the business relationship (in mln euro) Gulati & Sytch (2007, Administrative Science Quarterly)

16 Portfolio Management Evalueer de impact van de leverancier op uw strategie ontwikkeling EXPLOITEERBAAR Ongunstige relatie Bekijk de machtsverhoudingen Overweeg andere bronnen VERWAARLOOSBAAR Mismatch Accepteer korte termijn Verander van leverancier KERN Gezonde positie Verbeter de eigen winst ONTWIKKELING Leveranciers-ontwikkeling methodes Moedig deelname aan Relatieve omzet EXPLOITEERBAAR Voorzichtig Ontwikkel wederzijdse afhankelijkheid Zoek competitie NUISANCE Zeer hoog risico Zoek competitie Verhoog aantrekkelijkheid KERN Goede match Potentiële lange termijnsrelatie ONTWIKKELING Potentiële match Werk nauw samen om de business te ontwikkelen Relatieve kosten Aantrekkelijkheid van u als klant EXPLOITEERBAAR Gemiddeld risico Houd de prijsontwikkeling in de gaten Zoek alternatieven KERN Sterke positie Behoud relatie Bied andere mogelijkheden aan Leverancier risico EXPLOITEERBAAR Gemiddeld kostenrisico Houd prijs en service goed in de gaten Verander van leverancier KERN Goede match Intensiveer relatie Behoud lange termijn relatie VERWAARLOOSBAAR Mogelijke mismatch Passieve relatie Zoek alternatieve leverancier ONTWIKKELING Veel interesse van leverancier Zorg voor incentives Ontwikkel wederzijdse afhankelijkheid VERWAARLOOSBAAR Hoog service risico Verander van leverancier Zorg voor drijfveren ONTWIKKELING Potentieel risico Ontwikkel wederzijdse afhankelijkheid Zorg voor drijfveren

17 Gedifferentieerde Leveranciers Relaties Routine-Hefboom-Bottleneck-Strategisch Belang voor de eigen organisatie hoog Voorkeur Commercieel Partner Beperkte Collaboratie laag hoog Belang voor de leverancier Verwaarloos-Exploiteer-Ontwikkeling-Kern Gebruik de aantrekkelijkheid / waarde matrix om het belang van beide organisaties te bepalen Betrek gedifferentieerde leveranciers relaties in je artikel groep strategie Een partner relatie vereist gezamenlijke inspanningen en opbrengsten

18 Supplier Relationship Behavior differ Information sharing / communication Alignment of goals Engineering / user involvement Supplier Involvement Purchasing focus Strategic Cost Management Joint process mapping Performance metrics Joint problem solving Buyer / supplier commitment Time frame

19 Use this questionnaire Supplier Relationships Behavior Questionnaire In order to fill out below questionnaire we kindly ask you to keep in mind a specific business relationship. The other party could either be one where you believe a close relationship already exists or one where you believe it is important to your business and where you should perhaps improve this relationship. There are two steps in this exercise. 1. Score the eleven questions for the relationship you are focusing on during this training. Be honest with yourself and don t indulge in wishful thinking. 2. Collect the answers and use the results to determine the intensity of the relationship. STEP 1: Answer the eleven questions below for the relationship you have in mind. Again we stress, be honest and don t indulge in wishful thinking. For each question, select the answer (a, b, c or d) which most accurately describes the actual status of your selected relationship. 1. Information sharing/communication: a Fully integrated (systems, schedules, inventory, EDI, etc.) b Co-operative on selected issues c Co-operative and inclusive of budget objectives d Limited, usually one way; specific to requirements 2. Alignment of goals: a Cost/Profit goals emerging b Total alignment; strategic planning coordinated c Alignment of goals and philosophy d Occasionally coordinated: capability to meet specific needs 3. Engineering/user involvement: a Ongoing team member, involved in total process b Requirements definition/specs; ad hoc team player c Design team member, dissolves after implementation d Systematic/continuous 4. Supplier involvement: a Ongoing team member, involved in total process b Reactive; negotiated price and T & C c Systematic/continuous d Design team member, dissolves after implementation 5. Purchasing focus: a Ad hoc team leader; commercial input, design team member facilitates coordinated implementation b Assure timely supply c Systematic/continuous d Ongoing team member, involved in total process 6. Strategic cost management: a Cost drivers of sub-processes understood b Total system cost quantified and cost drivers determined c Price comparison may include elements of quality and service d Supply/value chain cost drivers of sub-processes managed 7. Joint process mapping: a None to limited b Supply value chain processes evaluated and optimized c Detailed mapping of joint processes eliminate duplication d Customer/supplier processes mapped to eliminate non-value add 8. Performance metrics: a Business decisions driven by ongoing review of measures b Measures for cost profitability, quality; reactive performance c Subjective, limited d Measures for cost, profitability, quality exist with B-I-C targets 9. Joint problem solving: a Suppliers solve problems to gain or maintain acceptance; minimum input to customer problems b Pro-active ongoing approach to mutual problem solving c Equal responsibility for problem solving d Fact-based solving of mutual problems 10. Buyer/supplier commitment: a Single source or very limited supply base b Several suppliers, some restriction; limited suppliers, some quality ranking c Multiple suppliers d Committed to single source of very limited supply base 11. Time frame: a Spot buy, usually </= 1 year b Open ended c > 1 year < 3 years d Per ongoing reviews STEP 2: Collect the previous answers and circle per question your answer (a, b, c or d). Be careful and note that the order of the answers varies for each line in the table. Determine the relationship intensity profile by connecting the circles and count the number of answers you gave in each column. Element Commercial Supplier Limited Collaboration Preferred Supplier Supplier Partnership Information sharing / d b c a communication Alignment of goals d a c b Engineering/user b c a d involvement Supplier involvement b d a c Purchasing focus b a d c Strategic cost c b a d management Joint process mapping a c d b Performance metrics c b d a Joint problem solving a d b c Buyer/supplier c b a d commitment Time frame a c d b Total of column

20 Supplier Account Plan de basis

21 Supplier Account Plan de basis SUPPLIER ACCOUNT BUSINESS PLAN for (SUPPLIER NAME) Supplier/Client Logo Here [CORPORATE ADDRESS] Table of Contents Submitted by: Table of Contents... 2 Document Objective... 3 Account Profile... 3 Value Proposition... 7 Account Strategy... 8 Account Plan... 9 Supplier Account Manager Name of Supplier Account Management Team Your Logo Here [Date] [Company Name] Confidential File: Name of Supplier Account Team Strategic Account Business Plan.doc Date Published: [mm/dd/yy] Itida International BV Anil Joshi aniljoshi@itida.nl Web: [Company Name] Confidential Page 2 6/28/2012 Itida International BV Anil Joshi aniljoshi@itida.nl Web:

22 Stakeholder engagement plan Is there anything missing?

23 Attractivity building blocks Expected Economic Value Increasing comfort level of supplier Managing the misalignment Managing the perceptions Document

24 Supplier Relationship Management Assessments Module THE NETHERLANDS CHINA BRASIL AUSTRIA THE UNITED KINGDOM

25 Attractivity Building Blocks EXPECTED VALUE INCREASED VOLUME TOTAL COSTS INNOVATION COMFORT TRUST COMMUNICATION TRANSPARENCY ALIGNMENT STRATEGY PERCEPTIONS ATTITUDE OPERATIONS STRUCTURE INTEGRATION JOINT PROGRAMS CONTINUITY THE NETHERLANDS CHINA BRASIL AUSTRIA THE UNITED KINGDOM

26 Assessment In order to assess the attractivity of your organization as a customer for this supplier: - Indicate for each of the subelements of each building block the impact on your attractivity. For each subelement some examples are given to support the thinking process - Discuss these findings in your team and define an attractivity score for each building block - Determine the overall level of attractivity of your organization as a customer for this supplier and note the top 10 reasons that support your findings THE NETHERLANDS CHINA BRASIL AUSTRIA THE UNITED KINGDOM

27 Expected Value Increased Volume New markets High volumes Long term commitments Sole supplier Margin Total Costs Joint improvement plans TCO knowledge Optimised supply chain Innovation Access to technology/knowledge Willingness to share Alignment of roadmaps Joint development ESI Risk sharing EXPECTED VALUE INCREASED VOLUME TOTAL COSTS INNOVATION THE NETHERLANDS CHINA BRASIL AUSTRIA THE UNITED KINGDOM

28 Comfort Trust Ethical behaviour Knowledge sharing Previous experiences Not inclined to rebid Prepared to listen Communication Cross-organizational & cross-functional teams Open communication Structured communication Open for feedback Atmosphere in communication Transparency Clear communication matrix Strategic Alignment Alignment of roadmaps COMFORT TRUST COMMUNICATION TRANSPARENCY THE NETHERLANDS CHINA BRASIL AUSTRIA THE UNITED KINGDOM

29 Alignment Strategy Alignment of vision Alignment on size and ambitions Top level commitment Shared end-users Perceptions Existing biases / misperceptions Feedback based on facts Attitude Power balance Professional attitude Payment attitude Win-win relationship as focus Operations Joint operational controls Use of existing systems ALIGNMENT STRATEGY PERCEPTIONS ATTITUDE OPERATIONS THE NETHERLANDS CHINA BRASIL AUSTRIA THE UNITED KINGDOM

30 Structure Integration Integration in Order Fulfillment process Integration in Product Creation process Joint Programs Development programs Marketing programs Supply Chain optimization programs Cost reduction Continuity Structural communication platforms Crossfunctional teams STRUCTURE INTEGRATION JOINT PROGRAMS CONTINUITY THE NETHERLANDS CHINA BRASIL AUSTRIA THE UNITED KINGDOM

31 Assesment Conclusion - Agree on your attractiveness as a customer for this supplier - Determine the strategy (collaborate vs compete) - Align vision and discuss follow-up THE NETHERLANDS CHINA BRASIL AUSTRIA THE UNITED KINGDOM

32 Summarizing the approach and tools Assess the type of relationship Where should it go? Assess dependency Differentiated approach to supplier Supplier account plan Attractivity building blocks analysis / workshop Profiling Follow through

33 Thank You Stay in Touch