...Aligning Sourcing and procurement strategy to corporate strategy/strategic supplier selection analysis, Collaboration methods and mechanisms INTRODUCTION Organizations are operating in an environment characterized by continuous economic, social, natural and political disruptions to their sources of supplies and services/ consumers and markets. To survive in this turbulent and highly competitive market place, these organizations must continually monitor their competitive positions alongside their internally controllable functional strategies to ensure they are proactively aligned with the overall corporate strategy. To succeed therefore in this fact evolving global competitive business environment, an innovative business concept Supply Chain Management was introduced to help align the functional strategies with the overall business strategies and suppliers. During World War I and II, the success of a firm was not dependent on what it could sell, since the market was almost unlimited. Instead, the ability to obtain from suppliers the raw materials, suppliers and services needed to keep the factories and mines operating was the key determinant of organizational success. Consequently, attention was given to organization policies, strategies and procedures of the supply chain functions which resulted to activities termed logistics, souring, procurement, material management. By the open of 1970’s, organizations faced two most challenging problems: an international shortage of almost...
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...Introduction………………………………………………………………………..……...3 The 3PL market…………………………………………………………………………...4 Procurement As competitive advantage…………………………………………………4 1. Center-led procurement…………………………………………………………..5 2. Strategic sourcing………………………………………………………………….5 3. Supplier integration……………………………………………………………….6 4. Enterprise spend management……………………………………………………6 5. Cross-industry benchmarking…………………………………………………….7 6. E – Procurement…………………………………………………………………...7 Advantages of Apple’s procurement……………………………………………………..8 Disadvantages of Apple’s Procurement…………………………………………………..9 Conclusion…………………………………………………………………………………10 Introduction: When Apple design guru Jony Ive wanted a new feature for the next MacBook: a small dot of green light above the screen, shining through the computer’s aluminum casing to indicate when its camera was on, the problem? It’s physically impossible to shine light through metal. Apple discovered it could use a customized laser to poke holes in the aluminum small enough to be nearly invisible to the human eye but big enough to let light through. Applying that solution at massive volume was a different matter. Apple needed lasers, and lots of them. Most of Apple’s customers have probably never given that green light a second thought, but its creation speaks to a massive competitive advantage for Apple: Operations. This is the world of manufacturing, procurement, and logistics in which the new chief executive officer, Tim Cook, excelled, earning him...
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...grew, so did the legacy information system it used for both internal communications and external dealings with customers. BAL, however, faced difficult decisions as it sought to upgrade its procurement systems and processes to improve operations. In early 1999, BAL recruited a new national procurement manager, Russell Menere. His immediate task was to look for gains in productivity by improving procurement processes, either through cost savings or by reduced processing time. To meet this objective, he initiated a number of short-term improvements. These included the rationalization of number of BAL's suppliers, improving BAL's relationships with its key suppliers; the introduction of a credit-card purchasing system for low-value, large-volume consumables and the adoption of electronic ordering processes with BAL's larger suppliers. In 2002, with new opportunities available through e-business technology, Russell needs to decide what BAL's next step should be. Should BAL invest in a new system that would simplify the procurement process across different divisions and support complex interfaces with suppliers? Should BAL continue to sit on the fence and seek short-term improvement? Could BAL afford to wait? The main issue would be how to implement and obtain cost effective e-procurement system that is integrated with current...
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...'Procurement is essentially delivering value through relationships' Procurement and Contract Management This article is a literature review on the topic ' Procurement is essentially delivering value through relationships' . Procurement has been always considered to be the least among functions like Marketing, Finance, Human Resource Management etc...even though about 60% of the operating cost is for procurement and in cases like a manufacturing company it is even more. The recent Economic crisis has forced the top management to focus on this aspect of the business more carefully. This review explores the various aspects of procurement, in order to understand the concept of procurement some of the basic concepts like buyer and supplier, business relationships and customer value have been defined. Further I have tried to establish how procurement can add value to a business and to do this I have quoted examples from various business websites and journals. The review is also able to describe how a long term business relationship between the Buyer and Supplier can benefit each other both in terms of growth and financially. Every positive side has a negative side to it, I have been able to show some aspects of the negative side of it. Overall it can be concluded that procurement does deliver value through relationships. Introduction Procurement process is one of the most essential part of a business or a project. Through this process you are exposed to the potential market...
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...What are today’s hot topics in procurement that are mostly shared/discussed on the Internet and on social media sites like Twitter, LinkedIn, Facebook, YouTube, etc.? Introduction “The procurement function is constantly evolving, with many organisations going through significant transformations over the past decade. Now more than ever, there is a considerable emphasis on the integration phase and the focus has shifted to delivering the value proposition through collaboration and partnerships.” (http://www.procurementleaders.com/forum-zurich) Financial crises have been troubling our economies and it seems that every new crisis has a bigger impact than the one before. As a result, top management is looking more and more towards procurement with the goal to improve their bottom line. But lately procurement has shifted from strictly operational to a more strategic function. Hot topics are not only low cost sourcing, but also supplier integration to become more innovative, procurement technology’s contribution towards profitability and growth, and how social media affects talent management (http://spendmatters.com/uk/procurement-hot-topics-agenda-2014-part-2/). However, the measurement of procurement contribution is often a very sensitive subject. There are no clear boundaries between the various functions involved and thus tensions are bound to occur when it comes to target savings per function at the end of the year. Among today’s hot topics is also the identification...
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...of Shared Services West (SSW) had been to drive value through the regionalization of strategic sourcing. SSW has evolved into a shared service provider, allowing for the full continuum of Supply Chain Services (Procure-to-Pay – P2P) to their equity member hospitals. | TABLE OF CONTENTS Executive Summary…………………………………………………………………………………………………..…………………1 Issue Identification…………………………………………………………………………………………………….………………..2 Operating Environment and Root Cause Analysis……………………………………………………………………2 – 4 Alternatives and/or Options………………………………………………………………………………………………………...5 Recommendations and Implementation Plan………………………………………………………………………………..6 Monitor and Control……………………………………………………………………………………………………………....7 – 8 Resources……………………………………………………………………………………………………………………………………8 EXECUTIVE SUMMARY Healthcare organizations are facing funding constraints and budget deficits which have created a need to find greater value within the supply chain. With the reality of an aging and diverse population requiring different needs, they are under considerable pressure to improve financial and operational efficiency. As organizations head into the future they are striving to create a better system that achieves higher quality at lower costs. The formula to get there is to attain value, which equals quality over cost. Shared Service Organizations (SSO) exist to leverage volume Procure-to-Pay (P2P) procurement functions to secure better costs from its suppliers. This practice is becoming more...
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...Benefits of sustainable sourcing Sustainable procurement is a high profile matter for businesses today. It can help to save money, reduce waste, improve competitiveness and build a business’ reputation. As part of their sustainability programmes, many oil companies have invested in local transportation networks or built schools. They provide jobs and by sourcing supplies locally help to develop the local economy. The global oil industry has a responsibility to the countries in which it operates to manage its operations in as sustainable way as possible. A purchasing manager might want to consider whether the supplier behaves responsibly, for example, adhering to ethical standards or sourcing raw materials in an ethical way. For example, Shell is working with its existing suppliers to implement the Shell Supplier Principles. These set out the minimum standards which Shell suppliers need to meet. These include using energy and natural resources as efficiently as possible to minimise impact on the environment and covering health and safety issues. Efficiency Other aspects of sustainable business include managing waste effectively and reducing the company’s carbon footprint. This can be improved by choosing suppliers who also take their responsibilities towards environmental impact seriously. For example, Marks & Spencer made £70 million of efficiency savings during 2010/11. Alongside reductions in waste and packaging and increased energy efficiency, the company is working...
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..._______________________________________________________________ _______________________________________________________________ Report Information from ProQuest January 09 2014 16:51 _______________________________________________________________ 09 January 2014 ProQuest Table of contents 1. How Procurement Excellence CREATES VALUE........................................................................................ 1 Bibliography...................................................................................................................................................... 11 09 January 2014 ii ProQuest Document 1 of 1 How Procurement Excellence CREATES VALUE Author: Blascovich, John D; Markham, William J Publication info: Supply Chain Management Review 9.5 (Jul/Aug 2005): 44-52. ProQuest document link Abstract: A.T. Kearney's 2004 "Assessment of Excellence in Procurement" (AEP) study reveals that senior executives expect supply management to go well beyond its traditional role. Rather than focusing on price reductions, executives are challenging the organization to capture value from the supply market. This view represents a huge advance in their understanding of procurement's potential. Nearly all leaders and most followers recognize that the key to their business strategy is value creation. Yet leading organizations use their foundation of excellence to create more value and gain competitive advantage from supply markets by focusing...
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...DEPARTMENT OF ENERGY FEDERAL PROCUREMENT SYSTEM BALANCED SCORECARD PERFORMANCE ASSESSMENT FY2003 2 MISSION To provide acquisition and assistance services to support accomplishment of the Department’ s programmatic goals and objectives. VISION To deliver on a timely basis the best value product or service to our customers while maintaining the public’trust and fulfilling public policy s objectives. STRATEGY To change the present system’culture, management s systems, and line processes consistent with the principles of Quality Management, in order to establish and maintain: a customer focus, a sense of urgency, continuous and breakthrough process improvement, and an emphasis on results. 3 BALANCED SCORECARD STRATEGIC PERSPECTIVES CUSTOMER What must we excel at? How do our customers see us? FINANCIAL MISSION VISION STRATEGY LEARNING AND GROWTH INTERNAL BUSINESS PROCESSES Do we get the best deal for the Government? Do we continue to improve and create value? CUSTOMER To Achieve Our Vision, How Should We Appear To Our Customers? 4 FINANCIAL To Succeed Financially, How Should We Appear To Our Stakeholders? MISSION VISION STRATEGY INTERNAL BUSINESS PROCESSES To Satisfy Our Stakeholders and Customers, What Business Processes Must We Excel At? LEARNING AND GROWTH To Achieve Our Vision, How Will We Sustain Our Ability To Change And Improve? BALANCED SCORECARD PERSPECTIVES AND OBJECTIVES CUSTOMER - Customer Satisfaction...
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...Tata DOCOMO HELPING TATA DOCOMO WITH THEIR PROCUREMENT TRANSFORMATION INITIATIVE Client: Tata DOCOMO • Industry: Telecommunications Tata Teleservices (TTSL) provides telecommunications services to about 85 million clients in thousands of towns and villages across India. Among its services are mobile and wireline telephone (under the Tata Indicom brand), fixed wireless phones (Walky), public telephone booths, and Internet access (Photon). Founded in 1996, TTSL is a subsidiary of the conglomerate Tata Group. It also provides wireless phone service through a joint venture with Japan-based NTT Docomo. Tata Teleservices Limited launched 3G services for the first time in India, under the brand name Tata DOCOMO. With 3G, Tata DOCOMO redefined the face of telecom in India. Overview Need: Tata Docomo realized that they were losing out due to cumbersome supplier registration and bidding processes. They wanted to automate their business processes and streamline their procurement activities. They had to collaborate better with their 500 suppliers and enable better transparency. Solution: Bristlecone implemented SAP SRM and helped leverage supplier registration, supplier evaluation, bidding and auctioning process, supplier collaboration and SRM analytics. Benefit: Bristlecone helped revamp the procurement processes and automated bidding & auctioning. With the solution, they were able to shift from transactional purchasing to strategic purchasing. Suppliers were provided with better...
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...Case Analysis- Local Context Executive Summary: In the case we are challenged with the lofty task of enhancing the procurement process. In effort to accomplish this goal, Mars has implemented the online auction model. This is where an RFQ or request for quote is issued and suppliers make bids to satisfy the request. After adopting this model for procurement there were challenges that presented itself. The optimal solution varied, based on the conditions and constraints imposed on the model. In this exercise we had to develop strategies to determine the winner of the multi-item allocation in combinatorial auctions, with regards to the optimal policy. We also had to address the shift in market demand for Mars products. And this initiative exhibited proximity constraints, and supplier conditions were imposed. In conclusion, we found that each scenario warranted a solution, and the team had to generate a customized solution for every constraint. This exercise is a microcosm of how business works outside of academia. There isn’t a cookie cutter solution for procurement or any business process. As an executive one must be vigilant and sensitive to the changes in the market and the constraints imposed on the supply chain. Question 1 As always, we will build a base-model to understand the main thrust of the problem by relaxing some considerations (constraints). For example, for now, we will ignore the constraint of the number of winning bidders and/or maximum total winning...
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...PFS. * PFS handles a large amount of data, there by many IT systems for batch processing, office computers, network systems, internet & private extranets. * Majority of PFS, IT work has been done in-house & occasionally relied on to IT consulting firms. As a result, PFS is trying to cut cost significantly. * PFS prefers most competent single vendor in specific categories for key strategic & conceptual projects, since they felt one supplier will be most able to complete it & also gain leverage over the PFS entire IT system. * PFS realized that Procurement is one large area for lowering operating costs & improving their customer service to end users. Plan is to implement an end to end (e2e) solution for their procurement process. * Few consulting firms (Excalibur, Merrimac) claimed to have expertise in ERP, process engineering, logistics etc. but they lacked IT System maintenance expertise. Hence PFS were considering inviting Infosys also to submit a proposal, who has strong expertise on maintenance, wherein lacked in consulting & strategic projects. PFS felt Infosys learning curve shall be shorter due to which cost saving can be higher. * Infosys sets up a core team to build a proposal. The proposal should highlight value proposition....
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...Hutchens Partner +1-212-551-6499 robert.hutchens@booz.com Booz & Company INtrOductION By now, most companies have ridden one or more strategic sourcing waves that have collectively saved their organizations billions of dollars. Yet even after having benefited from these initiatives, the average company still leaves on the table unrealized savings equaling 5 to 10 percent of its total spending. These savings are not lost because of ill-conceived strategies or organizational incompetence; rather, their loss is inherent in flawed or incomplete procurement operating models. There are many reasons that the operating models constructed to procure and pay for goods and services prove inadequate. They may not include the processes, tools, or resources needed to fully execute the sourcing strategy. They may not be properly connected to organizational decision making or sufficiently integrated into key corporate planning processes. Decisionmaking authority and accountability may not be clearly defined. Or the IT systems that enable them may be fragmented, impeding efficiency and clouding the visibility necessary to ensure compliance with overall purchasing policies and objectives. In order to mitigate these problems and deliver on purchasing’s cost, quality, and service commitments, companies must evaluate and design their procurement operating models along four fundamental dimensions: organization, processes, technology, and performance management (see Exhibit 1, page 2). Together...
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...culture by utilizing self-directed work teams in an organizational structure of three interlocking circles – Produce Product (PPG), Create Demand (CDC), and Provide Support (PSC). Consistent with this culture, through the years, Harley-Davidson encouraged site independence. However, when Gerry Berryman joined Harley-Davidson in 1995 as VP Materials Management, he recognized the strategic opportunity that existed in optimizing supplier relationships throughout the company. Therefore, in 1996, Harley-Davidson began the development of a corporate Supply Management Strategy (SMS) intended to move the company from a site-specific, transactional mentality to a long-term focus on supplier relationships. By July 1997, the initial planning meeting was held for an integrated procurement system, the supplier information link (SiL’K). Harley-Davidson followed a very thorough and rigorous process in implementing SiL’K to allow the organization time to become comfortable with this new philosophy and to ensure engagement and enthusiasm for SMS. By November 1997, momentum had built to the point that procurement managers were will to provide several part-time resources to the SiL’K project team. Their goal was to move the project from strategy to action. The next four months were spent...
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... 7 Part 7 Conclusion 7 Part 1: Executive Summary Following a detailed examination of Boeing Australia Limited’s current procurement processes, I am recommending that BAL continue to use its existing legacy systems. There is a limited budget at this time to invest in new projects. BAL has done an impressive job initiating many short term improvements and I feel at this time it makes sense to allocate our resources and focus on this continuous improvement program. In order to arrive at this decision, an analysis of the pros and cons of implementing a new e-procurement system was conducted. Due to the large monetary investment required and the overall scale of this project, it is not practical to commit to a new system today. We have been successful at executing many effective changes in the area of procurement and will continue to do so in the future. This will help to streamline our processes, improve customer and supplier relations and most importantly, will ensure that Boeing Australia will meet its long term strategic goals. Russell Menere National Procurement Manager Boeing Australia Limited Part 2: Issue Identification The current issue facing Boeing Australia Ltd. (BAL) is the critical decision of investing in a new e-procurement system. The existing procurement process is quite complex and there are redundancies throughout the system. Not only is this process extremely time consuming; it negatively impacts BAL’s...
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