Supplier Management & Procurement Strategies for Facility Managers
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Moderator: Today s Presentation Josh Amos, IFMA Components Liaison Presentation Title: Supplier Management & Procurement Strategies for Facility Managers Presenter(s): Tim Schmidt ebid Systems
Presentation Logistics Polls will be used throughout the webinar Q&A at the end of the presentation Quick survey at the conclusion of the Webinar PowerPoint & Recorded Webinar will be available online via FMCC s Website (fmcc.ifma.org) Your Participation is Greatly Appreciated!
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Learning Objectives 1. What is Strategic Sourcing 2. How to apply Strategic Sourcing to facilities management 3. Tactics for addressing common Strategic Sourcing goals 4. Improve the bottom line with Strategic Sourcing
Presenter Bio Background in procurement and technology Sourcing technology expert Participated in hundreds of sourcing events over 20 years
Participant Poll #1 To what extent is procurement part of your job? Procurement is my main job responsibility. I perform procurement functions as part of my job. I oversee procurement activities of others. I am involved with procurement but have no procurement responsibilities. Procurement is not part of my job.
Participant Poll #2 What best describes your approach to facility management? Manage facilities for company-owned rental properties. Manage facilities for company-used commercial properties. Outsourced facility management provider. Other type of service provider. None of the above.
What is Strategic Sourcing? Strategic sourcing is an institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. Strategic sourcing techniques are also applied to nontraditional areas such as services or capital. The goal of the strategic sourcing process is to lower costs, improve quality, and reduce risks.
Steps to Strategic Sourcing Analyze current spend and supply sources Categorize suppliers Implement appropriate sourcing strategies Execute sourcing strategy
Step 1: Analyzing Spend Get spend detail from accounting Group spending into broad categories Look for: What are the largest categories of spend? How many different suppliers per category? What are the pricing variations for the same product or service? Create list of target areas for improvement
Step 2: Categorize Suppliers Categorize suppliers by risk impact on facility Downtime Occupational hazards/safety Liability Loss of business opportunities Categorize suppliers by cost impact on facility Cost does not equal expensive Cost does not equal price
Cost Impact Kraljic s Portfolio Purchasing Model Risk Impact
Cost Impact Kraljic s Portfolio Purchasing Model Routine Suppliers Large product variety Low value per product High labor transaction costs Risk Impact
Cost Impact Kraljic s Portfolio Purchasing Model Strategic Suppliers Critical for product s cost price Dependent upon supplier Routine Suppliers Large product variety Low value per product High labor transaction costs Risk Impact
Cost Impact Kraljic s Portfolio Purchasing Model Leverage Suppliers Many competitors Commodity products/services Low switching costs Strategic Suppliers Critical for product s cost price Dependent upon supplier Routine Suppliers Large product variety Low value per product High labor transaction costs Risk Impact
Cost Impact Kraljic s Portfolio Purchasing Model Leverage Suppliers Many competitors Commodity products/services Low switching costs Strategic Suppliers Critical for product s cost price Dependent upon supplier Routine Suppliers Large product variety Low value per product High labor transaction costs Bottleneck Suppliers Relatively low value Few alternatives Monopolistic markets Risk Impact
Step 3: Identify Procurement Strategies Use the Kraljic Portfolio Procurement Model Blanket PO Competitive Bidding Partnerships Secure Supply Contrast with current processes
Cost Impact Kriljic s Procurement Strategies Routine Suppliers Large product variety Low value per product High labor transaction costs Blanket PO / eprocurement Risk Impact
Cost Impact Kriljic s Procurement Strategies Strategic Suppliers Critical for product s cost price Dependent upon supplier Partnership Routine Suppliers Large product variety Low value per product High labor transaction costs Blanket PO / eprocurement Risk Impact
Cost Impact Kriljic s Procurement Strategies Leverage Suppliers Many competitors Commodity products/services Low switching costs Competitive Bidding / esourcing Routine Suppliers Large product variety Low value per product High labor transaction costs Blanket PO / eprocurement Strategic Suppliers Critical for product s cost price Dependent upon supplier Partnership Risk Impact
Cost Impact Kriljic s Procurement Strategies Leverage Suppliers Many competitors Commodity products/services Low switching costs Competitive Bidding / esourcing Routine Suppliers Large product variety Low value per product High labor transaction costs Blanket PO / eprocurement Strategic Suppliers Critical for product s cost price Dependent upon supplier Partnership Bottleneck Suppliers Relatively low value Few alternatives Monopolistic markets Secure Supply + Find Alternatives Risk Impact
Step 4: Execute Sourcing Strategy Develop goals for each supplier segment/spend category Develop tactics for each goal Continuously assess suppliers and strategy Use technology where appropriate
Cost Impact Common Sourcing Goals Routine Suppliers Reduce number of suppliers Automate transactions Risk Impact
Cost Impact Common Sourcing Goals Strategic Suppliers Marry the supplier s daughter Routine Suppliers Reduce number of suppliers Automate transactions Risk Impact
Cost Impact Common Sourcing Goals Leverage Suppliers Compete projects over $10,000 Eliminate non-performing suppliers Implement central vendor database Strategic Suppliers Marry the supplier s daughter Routine Suppliers Reduce number of suppliers Automate transactions Risk Impact
Cost Impact Common Sourcing Goals Leverage Suppliers Compete projects over $10,000 Eliminate non-performing suppliers Implement central vendor database Strategic Suppliers Marry the supplier s daughter Routine Suppliers Reduce number of suppliers Automate transactions Bottleneck Suppliers Identify new part supplier Replace proprietary equipment Risk Impact
Tactic 1: Supplier ID and Prequalification Centralize supplier (and potential supplier) information Implement multi-dimensional supplier prequalification Financial References Verification of licenses and insurance Implement public supplier registration
Tactic 2: Competitive Sourcing Requests for Proposal (RFP) Multi-dimension decision process Performance based criteria Focus more on what rather than how Scored responses Request for Quote (RFQ) Most common for commodity items Focus on what Include all cost dimensions Use prequalification process
Guidelines For Competition Develop specifications not based upon single supplier s capabilities Define objective supplier criteria before sourcing event Share the selection criteria Set a reasonable deadline for all suppliers Share Q&A with all suppliers Do not share bid information with suppliers until after the award Do not negotiate with lower scoring supplier without giving favorably scored supplier the same opportunity Stick to your own rules
Tactic 3: Supplier Assessment Periodically evaluate the quality of suppliers Define Key Performance Indicators (KPI) Invite different stakeholders to score suppliers on KPI Create a place for people to log relevant supplier information Make results available to decision makers Periodically evaluate performance for each supplier segment
Supplier Assessment Example
Tactic 4: Use Appropriate Software Supplier Management Central vendor information Supplier approval Tracking Key Performance Indicators (KPI) esourcing Automate sourcing processes Ensure competition Reporting and feedback eprocurement Catalog purchasing Verified pricing agreements Automated transaction processing
ebid exchange Supplier Management Central Vendor DB Self-maintained Custom fields Vendor approval Central supplier notes Track performance
ebid exchange esourcing RFx Management RFx Templates Notifications Q&A Mgmt Document Mgmt Online Bid Submission Automated Tabulation Bid Scoring
Vinimaya ecatalog
Review Learning Objectives 1. What is Strategic Sourcing 2. How to apply Strategic Sourcing to facilities management 3. Tactics for addressing common Strategic Sourcing goals 4. Improve the bottom line with Strategic Sourcing
Q&A Tim Schmidt +1 (206) 855-8430 tschmidt@ebidsystems.com www.ebidsystems.com
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