Supply Strategy Slidesppt.ppt

March 8,200121 November 2000,Supply Strategy Profitability Review,Supply Strategy Objectives,Provide a structured approach to supply managementPrioritize and segment suppliers based on importanceRiskAnnual SpendEstablish and document a standardized methodology to improve both company and supplier understandingCommunicate strategic supply objectivesImplement standard performance measuresFacilitate on-going improvement activitiesBusiness relationshipProcess improvementCost reduction,March 8,200121 November 2000,Supply Strategy Profitability Review,The 5S of Supply Management,SORT Select suppliers for addition to or subtraction from the supply base.SET-IN-ORDER Segment supply base into appropriate categories based on risk and spend.SHINE Survey processes and systems as well as measure overall performance.STANDARDIZE Define responsibilities and audit supply management processes.SUSTAIN Review the performance of overall supply management process.,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSORT,Select suppliers to satisfy new or existing requirementsDefine requirementsReview existing supply base capabilitiesSearch for supplier with capabilitiesQualify new supplierRemove unnecessary or under performing suppliersIdentify poor performance(delivery,quality,price,etc.)Identify low business level and/or infrequent purchase activityDefine existing supplier capabilities and eliminate redundancies,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSET-IN-ORDER,Establish A place for everything Partnership(High Risk/High Spend)Contractual(Low Risk/High Spend)Surveillance(High Risk/Low Spend)Transactional(Low Risk/Low Spend)Segment the supply base into the 4 quadrants Everything in its place Risk analysis(inherent and short-term)Spend(annual business volume)Identification of opportunities for changing quadrants,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSHINE,SurveySite surveysSupplier self assessmentsRemote surveysThird party certificationsPerformance MeasurementEstablish a“base line”Implement performance measuresConduct periodic performance assessments,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSTANDARDIZE,Formalize procedures,schedules,and practicesSORTSET-IN-ORDERSHINEReview 3S implementation periodicallyTrain supply management personnel,partnership teams,and suppliers in 3S implementationImplement MRP for purchasing and train purchasing personnel in its use,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply Management SUSTAIN,Periodic review of supply management process performanceSupply base segmentationSupplier performance measurementsCritical project updateSupply management process effectivenessAnnual SUPPLIER DAY for key suppliersRewards and recognitionBusiness reviewStrategic planning inputsPerformance review and feedback,March 8,200121 November 2000,Supply Strategy Profitability Review,Implementing 5S Supply Base Maintenance,Worldwide Supply Strategy,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSORT,Select suppliers to satisfy new or existing requirementsDefine requirementsReview existing supply base capabilitiesSearch for supplier with capabilitiesQualify new supplierRemove unnecessary or under performing suppliersIdentify poor performance(delivery,quality,price,etc.)Identify low business level and/or infrequent purchase activityDefine existing supplier capabilities and eliminate redundancies,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSORT,Wastes Avoided by SORTWaste of clerical activity:too many suppliersWaste of disruptions:excessive sales callsWaste of poor quality/delayed shipments:high risk suppliers receive inadequate communication/follow-up,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSORT,Value contribution by SORTReduced administrative costs(reduced#of suppliers)Improved quality(choosing best suppliers)Improved on-time delivery(choosing more reliable suppliers),March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSET-IN-ORDER,Establish A place for everything Define segmentation criteria(e.g.,spend and risk)Establish guidelines for segment improvementsSegment the supply base into the 4 quadrants Everything in its place Assign EVERY supplier to an appropriate segmentEstablish supplier-specific improvement plans as appropriate for the assigned segmentEnsure cooperation of affected partiesImplement improvement plans,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSET-IN-ORDER,Wastes Avoided by Set-in-OrderWaste of clerical activity:too many suppliersWaste of travel:visiting the wrong suppliersWaste of travel:lack of focus during visitsWaste of disruptions:excessive sales callsWaste of poor quality/delayed shipments:high risk suppliers receive inadequate communication/follow-upWaste of money:paying too much Waste of money:participating in bidding for items that will not be moved,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSET-IN-ORDER,Wastes Avoided by Set-in-OrderWaste of travel:visiting the wrong suppliersWaste of travel:lack of focus during visitsWaste of poor quality/delayed shipments:high risk suppliers receive inadequate communication/follow-up,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSET-IN-ORDER,Value contribution by SET-IN-ORDERReduced costs:reduced#of suppliers,more appropriate actions with high spend suppliersImproved quality:implementing improvement plansImproved OTD:implementing improvement plansReduced lead time:implementing improvement plansEnhanced design assistance:partnership focus,March 8,200121 November 2000,Supply Strategy Profitability Review,Segmentation Matrix,High,Low,High,Risk,Annual Spend,March 8,200121 November 2000,Supply Strategy Profitability Review,Segmentation Matrix,Allows targeted control(risk control,cost control,inventory control)Enables targeted improvement(partnerships,LTAs,surveillance,etc.)Makes the best use of limited supply management resources(strategic,supply engineering,etc.)One size does not fit all,March 8,200121 November 2000,Supply Strategy Profitability Review,Segmentation Matrix,High,Low,High,Risk,Annual Spend,March 8,200121 November 2000,Supply Strategy Profitability Review,Segmentation Matrix,High,Low,High,Risk,Annual Spend,March 8,200121 November 2000,Supply Strategy Profitability Review,Partnership,CriteriaHigh Risk/High Spend suppliersStrategic,long-term relationshipCommon business philosophyActivitiesRoutine visits/annual surveys(ISO annual periodicals,re-cert every 3 years)Active continuous improvement initiativesSWOT analysis and FMEA,March 8,200121 November 2000,Supply Strategy Profitability Review,Supplier Partnerships,Strategic supply agreement objectivesSpecify partnership activities on both sidesCommunicate volume expectationsClarify quality requirementsDocument design control,change notification specifics,and other details of the business relationshipOn-going process improvement/cost reduction commitmentsIdentify key contacts in both organizationsPeriodic supplier surveys,including routine visits to/from both companiesParticipation in forecasting and strategic planning activities related to relevant products,March 8,200121 November 2000,Supply Strategy Profitability Review,Segmentation Matrix,High,Low,High,Risk,Annual Spend,March 8,200121 November 2000,Supply Strategy Profitability Review,Segmentation Matrix,High,Low,High,Risk,Annual Spend,Consolidate,Consolidate&Reduce Risk,Reduce Risk,March 8,200121 November 2000,Supply Strategy Profitability Review,Surveillance,CriteriaHigh Risk/Low Spend suppliersMonitoring relationshipBusiness/technical risk assessmentActivitiesRoutine surveysFMEA(risk assessment/prioritization of risks),March 8,200121 November 2000,Supply Strategy Profitability Review,Segmentation Matrix,High,Low,High,Risk,Annual Spend,March 8,200121 November 2000,Supply Strategy Profitability Review,Contractual,CriteriaLow Risk/High Spend suppliers“Arms length”relationshipSelection based on priceActivitiesGroup leverageFree Markets On Line reverse auctionsLong Term Agreements,March 8,200121 November 2000,Supply Strategy Profitability Review,Segmentation Matrix,High,Low,High,Risk,Annual Spend,March 8,200121 November 2000,Supply Strategy Profitability Review,Classifying inventory(or suppliers)according to some measure of importance(usually annual spend)and allocating control efforts accordingly.A-very importantB-moderately importantC-least important,ABC Classification System,March 8,200121 November 2000,Supply Strategy Profitability Review,ABC Analysis,March 8,200121 November 2000,Supply Strategy Profitability Review,Segment Pareto:Spend,Low,High,Annual Spend,March 8,200121 November 2000,Supply Strategy Profitability Review,Segment Pareto:Risk,High,Low,Risk,March 8,200121 November 2000,Supply Strategy Profitability Review,Segmentation Matrix,High,Low,High,Risk,Annual Spend,Consolidate,March 8,200121 November 2000,Supply Strategy Profitability Review,Transactional,CriteriaLow Risk/Low Spend suppliersApproximately 70%of suppliersConvenience relationshipTransaction cost vs.priceActivitiesMove to Contractual through consolidationE-Business purchasesMinimize administration costs(distribution,supplier managed inventory,etc.)Carry higher levels of inventory,March 8,200121 November 2000,Supply Strategy Profitability Review,Transactional Consolidation,Move to Contractual through consolidationReview all suppliers with low spend and/or low account activityNote redundancy in capabilitiesConsolidate buying activity with Best-in-Class suppliersConsolidate buying activity with competitive distributors,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSHINE,SurveyDefine customizable survey process that may be used for any supplier in any segmentTrain teams in how to survey a supplierPerformance MeasurementEnsure measures adequately describe success,particularly for teamsEstablish a“base line”Implement performance measuresClearly define required performance levelConduct periodic performance assessments,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply ManagementSTANDARDIZE,Formalize procedures,schedules,and practicesSORT:survey procedures and schedulesSET-IN-ORDER:segmentation,partnership,SWOT,Production Part Approval,and Failure Modes&Effects Analysis processes also SSA and LTA documentsSHINE:Surveys,procedures for 3rd party certification,and self-assessmentQuarterly 3S supply group reviewsIncorporate 3S duties into personal plansTrain supply management personnel,partnership teams,and suppliers in 3S implementation with annual reviews,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply Management SUSTAIN,Periodic review of supply management process performance(Board Level)Supplier performance measurementsCritical project updateSupply management process effectivenessAnnual SUPPLIER DAY for key suppliersRewards and recognitionBusiness reviewStrategic planning inputsPerformance review and feedback,March 8,200121 November 2000,Supply Strategy Profitability Review,Supply Strategy Summary,5S provides a structured approach to supply management.All suppliers will be ranked based on importance.The method for improving suppliers will be documented and communicated.Standard performance measures will be adopted,while still allowing for customized partnership measures.The 5S approach will facilitate on-going supply improvement activities resulting in near-term and longer-term improvements in delivery,lead time,price,quality,and design support.,March 8,200121 November 2000,Supply Strategy Profitability Review,Steps in ImplementingThe 5Ss of Supply Base Management,Brooks Instrument-2001,March 8,200121 November 2000,Supply Strategy Profitability Review,5S:Next Steps Checklist,SORTPerform a quick sort of the existing supply basePoor performers(delivery,quality,cost)Low purchase volumeRedundant capabilitiesIdentify capabilities to addNew requirementsExpanded capacity,March 8,200121 November 2000,Supply Strategy Profitability Review,5S:Next Steps Checklist,SET-IN-ORDERAgree on segmentation criteriaSegment all suppliers into appropriate categoriesEstablish supplier-specific improvement plans as appropriate(See segmentation checklists)Ensure cooperation of process owners(purchasing,manufacturing,engineering,supplier)Includes orientation meeting(purpose,philosophy,process,etc.)May include ongoing team participationRank improvement opportunities and implement in order,March 8,200121 November 2000,Supply Strategy Profitability Review,5S:Next Steps Checklist,SHINEDefine customizable survey processTrain survey teams and lead auditorsDefine measures(Relate to strategic objectives)Supplier measures(general,segment-specific,supplier-specific)Customer-supplier team measuresBrooks Instrument supply-related measures(e.g.,payment performance)Establish measurement performance baselineEstablish required performance levelsSchedule performance assessments,March 8,200121 November 2000,Supply Strategy Profitability Review,5S:Next Steps Checklist,SHINEDefine customizable survey processSchedule audit team trainingDefine measures(Relate to strategic objectives)Supplier measures(general,segment-specific,supplier-specific)Customer-supplier team measuresBrooks Instrument supply-related measures(e.g.,payment performance)Establish measurement performance baselineEstablish required performance levelsSchedule performance assessments,March 8,200121 November 2000,Supply Strategy Profitability Review,5S:Next Steps Checklist,STANDARDIZEDocument survey proceduresDocument segmentation(emphasizing key supplier partnerships and surveillance suppliersDocument supplier management processesMRP procedures and reviewsTeam guide for partnershipsSWOT analysis guideProduction Part Approval Process procedureFailure Modes and Effects Analysis proceduresStrategic Supplier AgreementTrain supply personnel in supply management processesIncorporate 3S duties into personal plans,March 8,200121 November 2000,Supply Strategy Profitability Review,5S:Next Steps Checklist,SUSTAINSchedule board level supply management reviewDocument for ISO management reviewSupplier performance measurementsCritical project updateSupply management process effectivenessPlan annual supplier day for key suppliers(prior to Brooks Instrument strategic planning process),