David Wohler. Vice President of Global Sourcing and Real Estate - Covidien

Transcription

1 David Wohler Vice President of Global Sourcing and Real Estate - Covidien Covidien August 2, 2011

2 Driving Value from a Supplier Relationship Management Program David Wohler, VP Global Sourcing

3 The Expectations Assessment Process Success Defined QUALITY BEGINS WITH ME 3

4 QBWM: The Expectations Suppliers shall adopt and implement a Quality Improvement strategy and the expected elements to achieve the following: Establish Employee connection to the final customer i.e. the Patients Define the impact employee performance has on Quality of the finished product Expected Elements Implement a Recognition program to positively reinforce employees for courageous behaviors Create finished product usage and CTQs awareness through training/videos/healthcare professional visits Promote robust problem solving approach through front line employee involvement Develop balanced approach to Quality and Production through line side Visible Metrics and consistent communications

5 Assessment Process The implementation effectiveness will be assessed through : Audits Performance Review Meetings Self- assessments based on defined criteria Effective adoption/integration of the program as assessed as above Proactive identification and resolution of issues likely to impact finished goods quality and performance Favorable impact on KPIs as monitored by and/or reported to Provider

6 QBWM : Engaging with Suppliers Focus on proactive approach : Compliance and Quality : BBQ, Product Awareness, Communication, Blame free culture Supporting in Implementation : Aligned with stratification : Training : Assessment / Report-out : Playbook Sharing Best Practice : Desirable (Risk based approach)

7 SUPPLIER RELATIONSHIP MANAGEMENT Covidien August 2, 2011

8 Value Supply Value Proposition Collaboratively Focused Role of Supply Base Increase business value derived from collaboration Value Mgmt. Innovative/flexible Reduce demand activity, complexity and variability Demand Management Aligned/loyal Shift from lowest price to TCO Total Cost of Ownership Operationally excellent Right goods/services at the right price Purchased Cost Reductions Priced competitively Right goods/services at the right time and place Protecting the Revenue Stream (Supply Assurance) Reliable/solvent Transactionally Focused Source: 2011 The Hacket Group, Inc. ; All Rights Reserved

9 Definition of SRM Supplier Relationship Management (SRM) is a model and supporting processes for maximizing the value of supplier relationships to the organization over the full relationship lifecycle. SRM defines approaches for on-going enterprise-wide interaction with suppliers as well as with other internal company personnel to plan and manage the relationships. SRM also defines formal mechanisms for targeting and driving proactive value generation and managing challenges and gaps SRM Is A cross functional program that aligns supply chain activities with business needs A model for managing on-going interactions with suppliers in a way that maximizes long-term value A different view or mindset of the elements of joint Provider and supplier success SRM Is Not Just a procurement initiative The same thing as Strategic Sourcing or Category Management A technology initiative Executed as a one-time project Managed the same way across all suppliers A quick fix A new way to get margin concessions from the supply base

10 Supplier relationships will be stratified based on strategic importance to prioritize resources and tailor management processes Supplier Stratification Supplier Excellence Capabilities of existing suppliers will be developed to deliver continuous improvement and proactive value generation Structured crossfunctional model organized to maximize collaboration and effectively manage relationships SRM Governance Performance Management Supplier performance will be managed across different supplier types and strata to maximize performance

11 Stratification Tiers and Logic Supplier Criteria Definition Value Creation & ROI < 3% Strategic Core Investing Provider's most strategic Suppliers with whom the organization will develop long-term strategic relationships to drive joint value Medium to long-term relationships that deliver significant value with active management and opportunistic investment # Varies by Category Core Business Medium to long-term relationships that deliver significant value. Will not require investment Bottom 60-80% of Supply Base Value Short-term transactional relationships with Suppliers that meet basic performance needs Exit

12 Stratification Stratification evaluates a Supplier s strategic importance and potential value Supplier Impact Supplier Alignment Supplier Integration Development Role Criticality of Commodity supplied Role of Supplier Supplier Value Proposition Performance Potential Supply Chain Alignment / Scalability Business Management / Quality Culture Use of Supplier IP Switching Costs Technical Integration Access to Advanced Technologies R&D Collaboration

13 Governance: Supplier Relationship Charter Supplier Relationship Charter Document is a collaborative document that is completed and written jointly between the parties. Supplier Relationship Charter Document will be completed for all Strategic and Core/Investing Suppliers. Supplier Relationship Management Relationship Charter Supplier Material / Service Provided COV SRM Rating Category Description Date Overview of the Supplier Relationship COV Location Annual Spend $MM/year Part(s) Provided Supplier Mfg Location Contract Period TOTALS: Key Individuals who Manage Supplier Relationship COV Name COV Roles Supplier Name Global Sourcing Lead Quality Lead Executive Sponsor (Add Additional Positions as required) Supplier Roles Global Sourcing Lead Quality Lead Executive Sponsor (Add Additional Positions as required)

14 Partnering with key suppliers to deliver sustainable improvements with mutually beneficial outcomes that will enhance Provider s supply base to exceed safety, quality, compliance, service, and cost expectations

15 Proposed Scope of Supplier Excellence

16 Supplier Performance: Performance Requirements Measurements for all suppliers On-Time Delivery 1 st Pass Yield Fill Rate Core/Strategic Competitiveness Measures Innovation # Supplier Corrective Actions / Non Conformance Reports Customer Satisfaction Overall Relationship Health Diversity Spend # Major/Minor Findings during Quality Audits Quality Culture Acceptance QBWM Net Promoter Score Total Cost of Acquisition Performance Outcomes Compliance to Relationship Charter Supplier Accountability Communication Business Reviews Scorecards

17 Supplier Perspective H S P E N D M Cash Cow Maintain Develop Monitor L M G R O W T H H

18 11 Core Skills Global Sourcing 1. Business Intelligence: Linking and Leveraging 2. Competitive Analysis 3. Industry Analysis 4. Supplier Analysis 5. Economic Analysis 6. Sourcing Strategy Formation/Implementation 7. Competitive Bidding 8. Negotiation 9. Commercial Agreements 10.Supplier Relationship Management 11.Policy Application

19 Critical Success Factors Formal program focused on SRM development and rollout: Single company-wide SRM program Tangible SRM goals Dedicated SRM team (COE) Internal (and supplier) communication and education On-going planning, tracking, and communication of value and wins Common processes, policies, tools, and templates Active senior management leadership of the program Management goals include SRM rollout Formal senior-led program governance Adoption of key SRM best practices Focus on making strategic relationships strategic Aggressive rationalization of lower tier suppliers Systems and data aligned with SRM processes for scaled rollout

20 Thank You