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Integrated supplier management

Consumer expectations have become increasingly volatile leading to shorter innovation cycles. Best-in-class organizations have advanced capabilities to structure and manage that external value creation. While most Procurement teams are traditionally strong and at ease in cost-reduction, the smart and structured integration of supplier-driven innovation remains a huge challenge for Procurement teams and is often executed in a rather tactical manner.

We help our clients to create transparency on the nature of their suppliers’ value creation, create processes to accommodate those inputs and the corresponding organization to sustainably anchor new ways of working.

We support our clients in an in-depth assessment of their suppliers’ value contribution to their top and bottom-line.

Next to traditional features such as total cost or product quality this evaluation encompasses harder-to-quantify but not less important factors to enrich or extend existing partnerships such as innovative capabilities, advanced enabling technology or a superior logistics infrastructure and network.

Once the nature of the external value contribution has been made transparent (both to all internal stakeholders and suppliers) specific supplier development plans can be set in motion. Here again, ‘classical’ Procurement targets (e.g. cost efficiency, streamlined, competitive & demand-driven product portfolio) are included but complemented by a close cooperation between both teams – on client and supplier side – to adapt new ways of working as quick and as integrated as possible.

Action plans will be backed up by a multi-functional relationship matrix to ensure that the right people are brought together. Joint workshops will support the R&D activities and ensure continuous improvement across the department.

To illustrate: While the focus on classical commodities (high-volume/low innovation) would be on details like complexity reduction concerning redundant SKUs or eliminating random purchases of like-products, the approach for specialty items would be a different one. These specifically needed items have a high innovational aspect with often low quantities. In a classical cost reduction analysis, these products would most probably fall out as they are not in the Top 20 items in terms of spend.

Our approach is different: We support our clients in bringing in our expertise to find a suitable blend of commodity items and specialty items for our clients’ portfolios. Our experience shows, in a balanced product portfolio there is no black and white. In most cases, specialty items are an essential part of it. Eliminating them would cause a loss of uniqueness in the market, hence a loss of an important USP.

Procurement being one of the major interfaces to the outside world needs to be the major driver of value creation both across all functions (internally) and beyond the own organization. That cross-functional nature calls for senior management attention with all functional and business leaders to make sure that strategies are aligned and necessary resources (within and outside of Procurement) are mobilized.

Build a truly cross-functional system that makes Procurement and business stakeholders “business partners,” equally involved and equally accountable is one of our key goals in Procurement initiatives.

Create efficient two-way relationship

The newly-found transparency will help you to clearly identify more transactional supplier relationships and use all available tools to automate them as much as possible. Efforts on both sides of the two-way relationship can be streamlined thus leading to an increased productivity of your Procurement teams.

Become your suppliers’ customer of choice

Procurement teams play an integral part in identifying and capturing external innovation. Becoming your suppliers’ customer of choice – especially in innovation-heavy markets has become an indispensable quality. In addition, this allows you to identify and exclude suppliers with potentially poor performance at an early stage. Measuring suppliers’ capacity for innovation is a challenge that primarily requires qualitative assessment points.

Evaluating your suppliers is especially important to find out where it is worth adopting a strategic focus to make target-oriented investments. Which suppliers offer especially great potential in terms of your growth? Using an extensive list of criteria, we conduct the supplier evaluation and obtain feedback in all relevant areas of your company (procurement, product development, production, logistics, etc.).

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