The Purchasing Chessboard

Transkript

1 Leveraging The Power of Procurement Forum 2014 The Purchasing Chessboard John Blascovich Partner A.T. Kearney, Inc. November 17, 2014

2 Introduction to the Purchasing Chessboard 2

3 An A.T. Kearney survey shows that CEOs see purchasing gaps in meeting the challenges of today s market 200 CEOs survey on their company s purchasing Adequate Information Systems 3.3 One Voice to the 3.2 Adequate Representation in S&OP Planning 2.9 Regarded as a Cross-Functional Task 2.9 Differentiated Approaches to Reduce Cost 2.7 Appropriate Staffing 2.6 Adequate Use of Analytics 2.5 1= Fully disagree 4= Fully agree 3

4 We conducted a diligent search for a comprehensive model to describe the challenges of purchasing Models to describe the challenges of purchasing Client s Situation Expected Deliverables Product Life Cycle Type of Industry Post merger integration Turnaround Growth Cost reduction Innovation Time to market Development Introduction Growth Industrials Consumer goods Services 4

5 We found that an ancient concept works best to describe the challenges of today s purchasing Understanding demand and supply 1,000 years Key drivers then Demand Supply Key drivers now Demand Supply 5

6 From a strategic perspective, the factors driving demand and supply determine the interaction with suppliers Demand and supply Factors driving supply Number of credible suppliers Split of market shares among suppliers Merger and acquisition dynamics in the supplier market Entry barriers for new suppliers Ease of substituting supplier Entry barriers for new products Availability of products Supply Demand Factors driving demand Client s share of relevant demand (in the region) Growth perspectives offered to suppliers by client Opportunities for suppliers to further develop competencies through working with client Opportunities for suppliers to further develop image through working with client 6

7 Being successful in purchasing requires profound understanding of demand and supply The playing field Introduction to the Purchasing Chessboard buying platinum for catalysts buying fuel injection systems Supply Power buying airline tickets buying forgings Demand Power 7

8 Standard RFI/RFP has been deployed effectively at most companies around the globe Standard situation RFI/RFP Introduction to the Purchasing Chessboard supply demand and supply Supply Standard situation demand and supply demand Demand 8

9 In case of high demand, target prices are determined and dictated to the suppliers demand supply demand and supply Supply Standard situation demand and supply Demand demand Levers for cost reduction and value generation: Leveraged competition Globalization pricing review Target pricing 9

10 In case of high demand and supply, a partnership-based approach yields the best results for added value supply and high demand supply demand and supply Supply Standard situation demand and supply Demand demand Levers for cost reduction and value generation: Value chain Integrated operations planning Value partnership Cost partnership 10

11 Unilateral dependency on suppliers requires new rules of the game supply situation supply demand and supply Supply Standard situation demand and supply Demand demand Levers for cost reduction and value generation: Innovation on demand Risk Re-specification Technical data mining 11

12 For pure commodity products and services, demand- and contract- are the most effective levers. supply and demand supply demand and supply Supply Standard situation demand and supply Demand demand Levers for cost reduction and value generation: Co- Demand Commercial data mining Volume bundling 12

13 To help buyers master the tools of their trade, we developed The Purchasing Chessboard Framework to select strategies 4 basic strategies 16 approaches 64 methods Supported by comprehensive training material Backed up by sanitized s from > 500 purchasing projects in the past 3 years 13

14 Supply The Purchasing Chessboard 8 Invention on demand Leverage innovation network Functionality assessment Specification assessment Value chain reconfiguration Revenue sharing Profit sharing Strategic alliance 7 Core cost analysis Design for Product teardown Design for manufacture tiering Sustainability Project based partnership Value based 6 Vertical integration Intelligent deal structure Composite Process Collaborative capacity Virtual inventory Total life cycle concept Collaborative cost reduction 5 Bottleneck Political framework Product Complexity reduction Visible process organization Vendor managed inventory development fitness program 4 Sourcing community Buying consortia Cost data mining Standardization RFI/RFP process Expressive bidding Total cost of ownership Leverage market imbalances 3 Procurement out Mega supplier strategy Master data Spend transparency market intelligence Reverse auctions Price Unbundled prices 2 Compliance Closed loop spend consolidation across generations Make or buy Best shoring Cost regression analysis Factor cost analysis 1 Demand reduction Contract across product lines across sites Global LCC Cost based price modeling Linear performance pricing A B C D E F G H Demand 14

15 Invention on demand Core cost- Analyse Vertikale Integration Engpass -Management Einkaufsgemein- schaft Einkaufs-out Compliance Management Nutzung von Innovations-netzwer k Design for Sourcing Intelligente Vertrags-struktur Management politischer Rahmenbedingungen Einkaufs-konsortien Mega Strategie Closed Loop Spend Management Bewertung von Funktiona-litäten Produkt -Teardown Composite Benchmark Produkt- Nutzung von Kostendaten Master Data Management Lieferanten-konsoli-dierung Spezifika-tionsanalyse Design for Manufacture Prozess-s Komplexitäts-reduktion Standardi-sierung Ausgaben-transparenz Bündelung nach Generationen Wertketten- rekonfigu-ration Lieferanten- Tiering Kollaboratives Kapazitäts Transparente Prozess-organ RFI/RFP-Prozess Lieferanten-markt-forschung Make or Buy Nachfrage-reduktion Vertrags- Bündelung nach Produktlinien Bündelung nach Standorten Global Sourcing Invention on demand Core cost- Analyse Vertikale Integration Engpass -Management Einkaufsgemein- schaft Einkaufs-out Compliance Management Energie Nutzung von Innovations-netzwer k Design for Sourcing Intelligente Vertrags-struktur Energie Management politischer Rahmenbedingungen Einkaufs-konsortien Mega Strategie Closed Loop Spend Management Motore Reifen MRO Farbe Lager Bewertung von Funktiona-litäten Produkt -Teardown Composite Benchmark Produkt- Nutzung von Kostendaten Master Data Management Lieferanten-konsoli-dierung Kunststoff Fracht Stahl Achsen Spezifika-tionsanalyse Design for Manufacture Prozess-s Komplexitäts-reduktion Standardi-sierung Ausgaben-transparenz Bündelung nach Generationen Guß Getriebe Wertketten- rekonfigu-ration Lieferanten- Tiering RFI/RFP-Prozess Lieferanten-markt-forschung Make or Buy Nachfrage-reduktion Vertrags- Bündelung nach Produktlinien Bündelung nach Standorten Global Sourcing Fracht Natronlauge Holz Investitionen Umsatz-teilung Nachhaltig-keits- Virtuelles Bestands- Lieferantengesteuerte Bestände Expressive Bidding Reverse Auktionen Best Shoring LCC- Sourcing Umsatz-teilung Zellstoff Nachhaltig-keits- Virtuelles Bestands- Lieferantengesteuerte Bestände Chemikalien Expressive Bidding Reverse Auktionen Best Shoring LCC- Sourcing Hydraulik Gewinn-teilung Projektbezo-gene Partner-schaft Lebenszyklus-konzept Lieferanten-entwicklung Total Cost of Ownership Preis-s Kosten-regressions-analysis K Gewinn-teilung Zylinder Projektbezo-gene Partner-schaft Lebenszyklus-konzept Lieferanten-entwicklung Total Cost of Ownership Preis-s Kosten-regressions-analysis Preismod Zellstoff Strategische Allianz Value-Based Sourcing Lieferanten-fitness- Programm Kabinen Nutzung von Entbündelung von Preisen Faktorkosten-anal yse Linear Performance Pricing Strategische Allianz Value-Based Sourcing Partner-schaft Lieferanten-fitness- Programm Nutzung von Entbündelung von Preisen Faktorkosten-anal yse Linear Performance Pricing Invention on demand Core cost- Analyse Vertikale Integration Engpass -Management Einkaufsgemein- schaft Einkaufs-out Compliance Management Reisen Nutzung von Innovations-netzwer k Design for Sourcing Intelligente Vertrags-struktur Management politischer Rahmenbedingungen Einkaufs-konsortien Bauleistungen Mega Strategie Rohmaterial Closed Loop Spend Management Bewertung von Funktiona-litäten Produkt -Teardown Composite Benchmark Produkt- Nutzung von Kostendaten Master Data Management Lieferanten-konsoli-dierung Instrumente Stahlbau Spezifika-tionsanalyse Design for Manufacture Prozess-s Komplexitäts-reduktion Hydraulik Standardi-sierung Ausgaben-transparenz Antriebe Bündelung nach Generationen Telekommunikation Wertketten- rekonfigu-ration Lieferanten- Tiering RFI/RFP-Prozess Lieferanten-markt-forschung Make or Buy Nachfrage-reduktion Vertrags- Bündelung nach Produktlinien Bündelung nach Standorten Global Sourcing Invention on demand Core cost- Analyse Vertikale Integration Engpass -Management Einkaufsgemein- schaft Energie Einkaufs-out Compliance Management Nutzung von Innovations-netzwer k Design for Sourcing Intelligente Vertrags-struktur Management politischer Rahmenbedingungen Einkaufs-konsortien Mega Strategie Rohmaterial Reisen Closed Loop Spend Management Bewertung von Funktiona-litäten Produkt -Teardown Composite Benchmark Produkt- Nutzung von Kostendaten Master Data Management Lieferanten-konsoli-dierung Spezifika-tionsanalyse Design for Manufacture Prozess-s Komplexitäts-reduktion Standardi-sierung Ausgaben-transparenz Fracht Verpackung Bündelung nach Generationen Handelsware Verlängerte W erkbank Tanks Wertketten- rekonfigu-ration Lieferanten- Tiering Kollaborativageent RFI/RFP-Prozess Lieferanten-markt-forschung Make or Buy Nachfrage-reduktion Vertrags- Bündelung nach Produktlinien Bündelung nach Standorten Global Sourcing Pumpen Umsatz-teilung Nachhaltig-keits- Fördertechnik Fracht Virtuelles Bestands- Lieferantengesteuerte Bestände Expressive Bidding Reverse Auktionen Best Shoring LCC- Sourcing IT Umsatz-teilung Nachhaltig-keits- Virtuelles Bestands- Lieferantengesteuerte Bestände Expressive Bidding Reverse Auktionen Best Shoring LCC- Sourcing Ventile Gewinn-teilung Projektbezo-gene Partner-schaft Lebenszyklus-konzept Lieferanten-entwicklung Total Cost of Ownership Preis-s Kosten-regressions-analysis S Gewinn-teil Projektbezo-gene Partner-schaft Lebenszyklus-konzept Lieferanten-entwicklung Total Cost of Ownership Preis-s Kosten-regressions-analysis Kost Spezielle Komponenten Strategische Allianz Value-Based Sourcing Lieferanten-fitness- Programm Entbündelung von Preisen Faktorkosten-anal yse Linear Performance Pricing Strategische Allianz Sourcing Partner-schahe Lieferanten-fitness- Programm Nutzung von Entbündelung von Preisen Faktorkosten-anal yse Linear Performance Pricing Invention on demand Core cost- Analyse Vertikale Integration Engpass -Management Einkaufsgemein- schaft Einkaufs-out Compliance Management Nutzung von Innovations-netzwer k Design for Sourcing Rohmaterial Intelligente Vertrags-struktur Management politischer Rahmenbedingungen Einkaufs-konsortien Mega Strategie Closed Loop Spend Management Bewertung von Funktiona-litäten Produkt -Teardown Composite Benchmark Produkt- Nutzung von Kostendaten Master Data Management Lieferanten-konsoli-dierung Spezifika-tionsanalyse Design for Manufacture Prozess-s Komplexitäts-reduktion Standardi-sierung Ausgaben-transparenz Bündelung nach Generationen Wertketten- rekonfigu-ration Lieferanten- Tiering Transpar RFI/RFP-Prozess Lieferanten-markt-forschung Make or Buy Nachfrage-reduktion Vertrags- Bündelung nach Produktlinien Bündelung nach Standorten Global Sourcing Invention on demand Core cost- Analyse Vertikale Integration Engpass -Management Einkaufsgemein- schaft Einkaufs-out TCU Compliance Management Nutzung von Innovations-netzwer k Design for Sourcing Intelligente Vertrags-struktur Management politischer Rahmenbedingungen Einkaufs-konsortien Mega Strategie Closed Loop Spend Management Bewertung von Funktiona-litäten Produkt -Teardown Composite Benchmark Produkt- Nutzung von Kostendaten Master Data Management Sinter Kupplung Lieferanten-konsoli-dierung Spezifika-tionsanalyse Design for Manufacture Prozess-s Komplexitäts-reduktion Standardi-sierung Ausgaben-transparenz Bündelung nach Generationen Wertketten- rekonfigu-ration Lieferanten- Tiering Kollab T RFI/RFP-Prozess Schaltung Lieferanten-markt-forschung Make or Buy Nachfrage-reduktion Vertrags- Bündelung nach Produktlinien Bündelung nach Standorten Global Sourcing Lager Hydraulik Feinschneidteile Umsatz-teilung Nachhaltig-keits- Virtuelles Bestands- Lieferantengesteuerte Bestände Expressive Bidding Reverse Auktionen Best Shoring LCC- Sourcing Umsatz-teilung Nachhaltig-keits- W erkzeuge Virtuelles Bestands- Lieferantengesteuerte Bestände Expressive Bidding Reverse Auktionen Best Shoring LCC- Sourcing Gewinn-teilung Projektbezo-gene Partner-schaft Lebenszyklus-konzept Lieferanten-entwicklung Total Cost of Ownership Preis-s Kosten-regressions-analysis ierung Gussteile Gewinn-teilung Zeichnungsteile Projektbezo-gene Partner-schaft Lebenszyklus-konzept Lieferanten-entwicklung Total Cost of Ownership Preis-s Kosten-regressions-analysis rung Strategische Allianz Value-Based Sourcing Lieferanten-fitness- Programm Nutzung von Entbündelung von Preisen Faktorkosten-anal yse Linear Performance Pricing Strategische Allianz Synchronisierung Value-Based Sourcing Lieferanten-fitness- Programm Nutzung von Marktun-gleichgewichten Schmiedeteile Drehteile Entbündelung von Preisen Faktorkosten-anal yse Linear Performance Pricing Introduction to the Purchasing Chessboard Applying The Purchasing Chessboard yields highly specific profiles Client case examples Construction equipment maker EPC company Automotive supplier Fiber producer Refractory producer Gear box maker 15

16 Supply The Purchasing Chessboard for a construction equipment maker 8 7 Invention on demand Core cost analysis Leverage innovation network Design for Engines Functionality assessment Product teardown Specification assessment Steel Design for manufacture Value chain reconfiguration tiering Revenue sharing Hydraulics Sustainability Profit sharing Project based partnership Strategic alliance Value based 6 5 Vertical integration Energy Bottleneck Intelligent deal structure Tires Political framework Composite Bearings Product Process Axles Complexity reduction Gearboxes Collaborative capacity Visible process organization Virtual inventory Vendor managed inventory Total life cycle concept development Collaborative cost reduction fitness program 4 Sourcing community Buying consortia Cost data mining Standardization RFI/RFP process Expressive bidding Total cost of ownership Cabs Leverage market imbalances 3 Procurement out Mega supplier strategy Paint Master data Spend transparency market intelligence Reverse auctions Cylinders Price Unbundled prices 2 Office material Compliance Closed loop spend consolidation across generations Castings Make or buy Best shoring Steel fabrications Cost regression analysis Factor cost analysis 1 Demand reduction Travel Contract MRO across product lines Freight across sites Global LCC Cost based price modeling Linear performance pricing A B C D E F G H Demand 16

17 The Purchasing Chessboard has proven highly useful to manage the skill profiles of buyers Command of methods Illustrative Experts from other functions who are buying Individual buyers Desired profile of buyers Invention on demand Leverage innovation network Functionality assessment Specification assessment Value chain reconfiguration Revenue sharing Profit sharing Strategic alliance Core cost analysis Design for Product teardown Design for manufacture tiering Sustainability Project based partnership Value based Vertical integration Intelligent deal structure Vertical integration Intelligent deal structure Composite Process Collaborative capacity Virtual inventory Total life cycle concept Collaborative cost reduction Bottleneck Product Bottleneck Political framework Product Complexity reduction Visible process organization Vendor managed inventory development fitness program RFI/RFP process Sourcing community Buying consortia Cost data mining Standardization RFI/RFP process Expressive bidding Total cost of ownership Leverage market imbalances market intelligence Reverse auctions Price Procurement out Mega supplier strategy Master data Spend transparency market intelligence Reverse auctions Price Unbundled prices consolidation Make or buy Compliance Closed loop spend consolidation across generations Make or buy Best shoring Cost regression analysis Factor cost analysis Contract across product lines across sites Global LCC Demand reduction Contract across product lines across sites Global LCC Cost based price modeling Linear performance pricing Typically 3-5 methods used Usually focused on the specifics of the commodity in focus Typically 8-15 methods used Usually covering several commodities Full command of 64 methods Responsible for narrow scope of sub-commodities Accumulates depth of commodity knowledge 17

18 Buyers in full command of The Purchasing Chessboard by far exceed the traditional perimeter of purchasing. Cross-functional competencies needed Entrepreneurship Manufact. Controlling Statistics 18

19 Based on the positioning in the Purchasing Chessboard the timing of savings realization can be derived Timing aspect of the Purchasing Chessboard Benefits within 12 months Benefits within 6 months Benefits today Benefits tomorrow 19

20 Summary The Purchasing Chessboard responds to every possible challenge in the supply market... assigns the right method to optimize material costs in every possible supply market situation... can be used for development of purchasing strategy as well for operational optimization of material and services costs... is a compilation of insights and experience from more than 500 purchasing projects performed worldwide over the past three years... has been used successfully in a wide range of industries and countries 20