• When searching for a new supplier what works today and what needs to change to make it a more strategic and less tactical process?

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  • Answers (4)

  • Stephen Rowe

    31/01/2019 02:38AM

    Lisa,

    Today's markets are quite volatile with ever increasing technological advances (depending on market). One of the biggest changes I see is that the day of evergreen or excessively long term agreements are over and we should be looking more towards Partnering with companies with a key element of accessing their R&D capabilities and motivating them to select our organisation as the customer of choice for new technology. There is a difference between a legal agreement driving a win/loose, better to Partner and deliver a win/win.

    For me, the tender process,in a mature Procurement operation, would be last choice not first as the market and supplier base should, by now, be already known.

    In my view, the key to being strategic, is not to spend time focused on Price, look for the sustainable value that can be delivered. This value can be: new technology driving efficient processes, access to new customers to deliver growth, Better environmental footprint to deliver good PR.

    Steve

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  • Sivaramakrishnan Sethuraman

    07/02/2019 11:07PM

    In my opinion, we should not look for a supplier when doing a sourcing process. We should look out in the market for a "solution provider" who can contribute in all areas such as innovative product design linked with the process capability, innovative/new process that can give better quality or reduced cycle time with better efficiency, better MOQ (minimum order quantity) understanding our demand and thereby reducing the IHC (inventory holding cost), impeccable parts tracking system and so on. To put simply, most importantly, a supplier should be able to identify mistakes or possible improvement in our product design. He will be the best supplier to develop strategic relationship with instead of one who will produce the part based on our design.

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  • Katalin Brennan

    31/01/2019 05:12AM

    Much in agreement with Steve. Partnering mentality is key. I know of the Vested model (http://www.vestedway.com/) that is all about creating a win/win partnership... maybe you can look at their materials for inspiration.
    Other things that help make the transition are: leadership that encourages creative approach, analytics on supplier types and characteristics (it is easier to identify new/potential suppliers if you know what you are looking for), KPI (yes) to select suppliers for (if you can't measure...), remember strategic means long-term (resist solving today's problem without understanding consequences).
    At the end, the change from tactical to strategic vendor selection boils down to people's mindset (both sides)... so cultivate ideas and people.

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  • Hi Lisa
    A very important question and one that the Procurement profession often neglect when going through the motions to appoint a vendor. Stephen makes a valid point regarding "value" however Procurement practitioners will often equate value to price (not cost) which drives them to a vendor decision making conclusion that is flawed. Lowest price does not necessarily equate to long term sustainability or mutual SRM outcomes.
    There are many models that have been developed that address the process for defining the roadmap to vendor selection. Personally I utilize Kraljic's Customer Preferencing & Supplier Positioning model. The key to this model is that Procurement / Supply Chain functions will identify how they perceive / define vendors within a marketplace segment and as importantly, how the potential vendor(s) perceives the buying organisation.
    Good luck
    Ash

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    Sivaramakrishnan Sethuraman I totally agree with the model you pointed out. Based on the amount of business that we are going to give the supplier, we can find out where we stand as his customer. This way, even though we might not have Capacity reservation agreement with the supplier to start with, we can at least be rest assured what risk we might potentially have or what are the opportunities when there is a growth in the demand which will also make us focus on having a contingency plan.

    07/02/2019 10:45PM

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