Strategic Sourcing in Supply Chain: Elevating Procurement for Business Success
Summary
TLDR欢迎参加MIT供应链管理微硕士项目的直播活动。课程负责人Miguel Rodriguez和Palo Sosa Junior介绍了本次系列直播活动。特邀嘉宾Niranjini Kumar,麦肯锡管理顾问,将分享战略采购和供应链管理的见解。她讲述了如何提升采购专业人员的价值。课程内容包括供应链管理的基本原理、供应链动态、供应商关系管理、数字化和人工智能在采购中的应用等。活动还提醒参与者课程认证的重要性,提供认证链接以便参与者获得MIT证书并支持项目的持续运作。
Takeaways
- 🔍 供应链管理网络研讨会介绍了MIT的Micromasters项目及其课程。
- 🎓 主讲人是McKinsey的管理顾问Niranjini Kumar,她拥有MIT供应链管理硕士学位。
- 🔗 供应链管理的“源到付”过程涵盖了从选择供应商到支付供应商的所有活动。
- 📊 详细讲解了如何进行类别管理、供应商选择和谈判、以及合同管理。
- 🛠️ 强调了“主数据管理”的重要性,确保在整个采购过程中保持数据一致性。
- 💡 介绍了应急计划的重要性,以及如何评估和应对供应链中断风险。
- 🔬 通过“应该成本模型”示范了如何从材料成本、人工成本等各个方面进行成本谈判。
- 🤝 强调了供应商关系管理(SRM)在战略和日常运营中的重要性。
- 🌐 数字化和AI在现代采购中的应用,涵盖了从数据分析到合同管理的多方面。
- 📈 通过采购过程的整体视角,展示了如何通过捕捉、保留和推动价值来实现企业的增长和效率。
Q & A
MIT微硕士供应链管理的现场活动的主讲人是谁?
-主讲人是Miguel Rodriguez,他是MIT交通与物流中心的研究员,也是SE1x供应链基础课程的负责人。
这次活动的联合主持人是谁?
-联合主持人是Paolo Sosa Junior,他是SC3x供应链动态课程的负责人。
这次活动的主要议程是什么?
-议程包括:嘉宾演讲约25分钟,然后是观众提问环节,主持人会选出问题向嘉宾提问。
这次活动的嘉宾是谁?
-嘉宾是Niranjini Kumar,她是麦肯锡的管理顾问,主要经验在运营、战略和采购领域。
Niranjini Kumar的教育背景是什么?
-她拥有MIT供应链管理的硕士学位,并且是2021年混合课程的校友。
供应商关系管理(SRM)是供应链管理过程的哪个部分?
-SRM涉及源到合同和采购到支付两个方面,确保战略和事务性两方面的信息互通。
什么是应价模型?
-应价模型是通过从底层构建成本模型,根据市场数据和供应商提供的信息进行成本分析和谈判,以确保最优的采购成本。
数字化和AI在采购中的影响是什么?
-数字化通过高效的ERP系统和自动化流程提高效率,而AI可以用于花费管理、合同管理和供应商关系管理等方面。
采购价值不仅仅是节约成本,还有哪些方面?
-采购的价值还包括产品质量和可靠性、创新能力、生产效率、运营不中断、可持续性和合规性等方面。
如何制定和实施供应链的应急计划?
-应急计划包括评估风险水平、测试和分析数据、制定应急措施,并确保有防范措施和合同要求来减少供应链中断的影响。
Outlines
👋 欢迎与介绍
在这段视频中,主持人米格尔·罗德里格兹介绍了MIT微硕士供应链管理项目的直播活动。他介绍了自己是MIT运输与物流中心的研究员,并是SE1x供应链基础课程的课程负责人。米格尔还提到,这次活动是秋季系列活动的首次直播,由SE1x供应链基础和SC3x供应链动态课程共同举办。他还邀请了同事帕罗·索萨共同主持,帕罗是SC3x课程的负责人。
📋 直播活动议程
帕罗·索萨简要介绍了本次直播活动的议程。首先,嘉宾演讲者将进行约25分钟的演讲,之后会有时间回答观众的问题。帕罗鼓励观众使用Zoom的Q&A功能提交问题,而不是聊天框。随后,米格尔提醒大家,课程验证链接将在聊天框中发布,验证对于获得MIT证书和支持该项目非常重要。最后,两位主持人介绍了今天的嘉宾演讲者尼兰吉尼·库马尔。
🎤 嘉宾介绍与话题概述
尼兰吉尼·库马尔,麦肯锡的管理顾问,作为嘉宾演讲者,分享了她在多个行业的运营、战略和采购方面的经验。她持有MIT的供应链管理硕士学位,并是微硕士项目的校友。尼兰吉尼将讨论战略采购和供应链,并分享如何提升采购专业人员的价值。她还介绍了自己的背景,包括在餐饮品牌国际(Tim Hortons和Burger King的母公司)工作的经验。
📝 参与者背景调查与目标设定
尼兰吉尼询问观众的行业背景和对采购的熟悉程度,以便调整内容。她列出了今天的三个主要目标:理解端到端的采购过程,找出可以立即实施的机会以增加业务价值,并确定如何开始这些改进。
🔍 采购过程概述
尼兰吉尼详细介绍了采购的端到端流程,涵盖从战略采购到供应商付款的所有活动。她解释了采购过程的两个主要部分:源头到合同(Strategic Procurement)和采购到付款(Procure to Pay),强调了保持数据管理和合同管理的重要性。
💡 采购价值与效率
尼兰吉尼强调了采购过程中的各个步骤如何产生价值,不仅限于节约成本,还包括质量、创新、效率、业务连续性和可持续性等方面。她解释了如何通过保持数据一致性和优化合同条款来最大化这些价值。
🔄 价值捕捉与保存
尼兰吉尼展示了如何通过详尽的成本模型和市场洞察来捕捉价值,并在整个采购生命周期中保持这些价值。她讨论了采购中遇到的挑战,并提供了确保供应链连续性的战略性建议。
📊 战略性价值保持
尼兰吉尼强调了在制定应急计划时评估风险和影响的重要性。她提出了应对不同类型中断的具体措施,并解释了如何通过供应商关系和合同要求来实施这些措施。她还讨论了如何平衡成本和效益以优化安全库存和供应商管理。
💻 数字化与人工智能在采购中的应用
尼兰吉尼讨论了数字化和人工智能(AI)在现代采购中的应用。她介绍了如何通过先进的ERP系统和自动化工具提高采购效率,并提到AI在花费管理和合同管理中的潜在应用。她还强调了数字化和AI如何帮助减少手工操作并提高整体流程的效率。
👏 活动总结与感谢
活动接近尾声,主持人们总结了关键内容,并感谢尼兰吉尼的精彩分享和观众的积极参与。他们还提醒大家秋季系列的下一场直播将在十一月初进行,并鼓励观众注册和验证SE1x和SC3x课程。尼兰吉尼和主持人向所有参与者道别,感谢他们的支持和提问。
Mindmap
Keywords
💡供应链管理
💡战略采购
💡供应商管理
💡数字化转型
💡人工智能
💡成本分析
💡风险管理
💡供应链优化
💡采购流程
💡战略价值
Highlights
MIT供应链管理微硕士课程的秋季系列首次直播活动,由Miguel Rodriguez和Paolo Sosa共同主持。
嘉宾Niranjini Kumar分享了她在麦肯锡作为管理顾问的经验,特别是在运营、战略和采购方面。
讨论了战略采购和供应链的重要性,以及如何提升采购专业人员的角色以增加对公司的价值。
强调了从战略采购到支付给供应商的整个流程(Source to Pay Process)的重要性。
介绍了如何通过采购流程的不同阶段来识别和实现节省成本的机会。
强调了采购价值不仅仅在于节省成本,还包括质量、创新、市场竞争力等多个方面。
讨论了如何通过数字化和自动化提高采购流程的效率。
Niranjini Kumar分享了她在MIT供应链管理硕士学位期间的学习和经验。
介绍了如何通过采购策略和供应商选择来提高公司的竞争力和市场地位。
探讨了采购流程中的合同管理环节,以及如何确保合同中的条款和条件能够为公司带来长期价值。
强调了在采购流程中考虑整体价值链的重要性,而不仅仅是单个环节的成本节约。
讨论了如何通过采购流程的数字化转型来提高整个组织的效率和生产力。
分享了在COVID-19疫情下,采购如何面临成本和供应短缺的挑战,并采取战略性价值保护措施。
介绍了如何通过建立强有力的供应商关系和合作伙伴模式来提高采购流程的透明度和效率。
讨论了如何利用人工智能和机器学习技术来优化采购决策和预测市场趋势。
强调了在采购流程中实施风险管理和应急计划的重要性。
分享了如何通过持续的流程改进和性能监控来保持采购流程的持续优化。
讨论了数字化和自动化在采购到支付(Procure to Pay)流程中的应用,以及如何通过技术提高支付效率。
强调了在采购流程中实施可持续性和社会企业责任(CSR)的重要性。
Transcripts
foreign
[Music]
welcome to another life event of the MIT
micromasters in Supply Chain management
I am Miguel rodriguezia a researcher at
the MIT Center for transportation and
Logistics I'm the course lead for se1x
supply chain fundamentals so first I
just want to thank everyone for joining
us today and this is the first live
event of the Fall series which is a
series of cross-course Life events for
se1x supply chain fundamentals and sc3x
supply chain Dynamics and that's why I'm
really happy to be co-hosting this live
event today with my colleague Palo Sosa
Junior course lead for sc3x hi Paolo how
are you
hey Miguel hi hi everyone thank you for
the introduction it's great to be here
with you all
um we are excited to share some great
insights about supply chain in this live
event so um today we're going to follow
those agenda first our guest speaker
will give us a presentation that will
last around 25 minutes after that we
will have some time at the end when she
will answer questions from you guys from
our audience uh so we encourage you to
participate and use the Q a feature in
zone not the chat box but the Q a
feature then Miguel and I will take
those questions and channel as many as
we can to our speaker and before we
introduce our guest speaker we want to
share something with all of you uh right
Miguel
yes that's right Paulo so we just want
to remind everyone that verification for
both courses at c1x and sc3x still open
we'll be posting the verification links
on the chat right now uh so remember
verification is really important for
those of you guys who are taking the
courses because the only chance to get
to get the certificate from MIT upon
successful completion and it's also the
best way to support a program and that
will allow us to keep us giving away
this content for free to thousands of
Learners around the world so if you like
the content if you like these events
please verify it so we can keep doing
this for you guys and without further
Ado let's introduce our guest speaker
Paulo
all right so today we are honored to
have niranjini Kumar as our guest
speaker she is a Management Consultant
at McKinsey as a consultant she has
experience across different Industries
uh most of her work focuses on
operations and strategy and procurement
that's why today she's going to be
talking about strategic sourcing and
supply chain and she will be sharing
with us how to elevate the role of
procurement professionals to add more
value to companies during Genie holds a
master's degree in Supply Chain
management from MIT she was part of the
2021 Blended cohort so she is also a
micromasters alumina which means she
passed all courses from the micromasters
program like many of you are doing right
now and as you may know one of one among
many other benefits from earning the
micromasters program Prudential is that
you become eligible to apply to the sem
Blended Masters program at MIT just not
just
and also to other universities around
the world so welcome niranjini thank you
Paulo and Miguel looking forward to you
know meeting you all here
yeah thank you so much for joining us so
let's get started um the floor is yours
awesome so let me share my screen here
and as Paula mentioned we're really
going to be talking about strategic
sourcing and supply chain okay so before
we go on
um
just a bit of quick introduction about
myself I saw some of uh some of the
folks here are from Canada too so
um hey to everyone in Canada so I am
from Toronto Canada
um as follow mentioned I'm a Management
Consultant at McKinsey so prior to that
um I've been in the industry at
restaurant Brands International which is
a consumer like food and beverage
company which owns Tim Hortons Burger
Kings and multiple other brands so I
used to work in their procurement
strategy team for about
um six to seven years
um so really familiar with um you know
procurement on the end-to-end basis and
at McKinsey I focus more on like
um the source to pay as a whole
transformation which we'll talk about in
in a few minutes
um so really like a lot a lot of my life
has just gone into a procurement
um so I'm looking forward to this uh
having a great discussion with you all
um and as follow mentioned have an MIT
uh went to MIT just like you all did
micro Masters I joined the Blended proof
program and prior to that I have a
background in material science
engineering from natural University of
Singapore so in my free time usually
like paddling and cycling so in summers
that's where you'll see me okay so let's
move on so I thought I'd kind of start
off with a quick poll or like a chat
just to kind of understand
um the background of
um uh the folks here so
um if you can just put in your chat
um like which industry do you represent
um just so that like Paulo and Miguel
can can let me know like what the
response is so energy I see energy
industry consumer
that's awesome
and then maybe we'll go into a bit more
context on how familiar are you with
procurement so that we can make sure we
are covering the content accordingly
okay so it's a mix it's a mixed group of
people with different levels okay that's
perfect so
I guess we'll go into our objectives for
today so given that we have a mixed
group of people the diverse group of
people across all the industries and
different level of understanding so I
think the first objective is going to be
pretty good so it's really just
understanding the end-to-end procurement
process
um and like the different aspects of
procurement and we'll just get it get a
bit of get deep into that and then once
we have the end-to-end procurement
process I think the second one is going
to be the more important chunk I think
that's what you're all excited about
it's really just what are the one or two
like big opportunities that we can
Implement in our procurement function
today to drive value
um to the business and the third one is
now that we know the process now that we
have the opportunities like where do we
even get started right so that's that's
kind of like a framework of what we will
cover today
and I hope this um this kind of like
helps everyone
um get an overall View and you know key
takeaways that you can take into your
work
um and then start implementing pretty
soon so starting off with the
procurement process so like a
procurement course we usually call it
the source to pay process I know
different organizations use different
terms but I'm kind of just having a
general like a general view of this so a
source to pay process includes all the
activities from the Strategic sourcing
process all the way to the vendor is
paid so from the time you pick a
supplier till the time the vendor is
paid so that is the overall source to
pay process the tricky thing about
source to pay processes it has two main
segments one is the source to contract
process and the procure to pay process
the source to contract is typically in
organizations called the Strategic
procurement or the category management
team and the procure to pay process is
usually
um it's probably not even in the same
organization
um that the procurement team falls under
it's sometimes under accounts payable
it's sometimes under supply chain it is
it is Def it's a it's a very different
scope and it's a very different type of
activity so usually like source to
contract and procure to pay may not be
within the same function so because of
this a lot of procurement professionals
are not able to look at the process and
optimize the process from an end-to-end
perspective everyone's kind of focused
on their role what their team does what
their objectives are and therefore there
is a there is a lot of opportunities
lost because of that size low-based
approach so which is why here we're
going to start off with what does the
end-to-end process looks like and where
are the overlaps and how can we
how can we navigate this and make sure
we are looking at it holistically all
the time right
so Source the contract process I think
many of you I saw are familiar with the
procurement process so this is probably
the process that your everyone's most
familiar with which is the oops sorry
category um category and spend
management so here what you would do is
you would understand the overall spend
portfolio of your company and organize
it by categories which sub players are
you buying from what is the quantities
really getting a good understanding of
your spend based
and then once you have a good
understanding of your spin base then you
start analyzing opportunities do you
have a tail spend do you have a
non-consolidated spend do you have
anything that's not under contract which
could go under a contract do you have
multiple suppliers each charging
different prices is there a price
Arbitrage analysis that you can run and
move everything to one supplier so you
are coming up with initiatives and
coming up with opportunities on how to
optimize your spend here
and once you come up with opportunities
that's when you draft your category
strategy your category strategy could be
holistic it could have all these
opportunities which suppliers do you
want to choose do you want to have a
dual sourcing model uh how critical is
this to the business
and what impact do you uh wish to drive
from this category so the candidate
strategy could be one year it could be a
three-year category strategy it could be
a five-year category strategy I think
that really depends on the procurement
policies of the company so once you have
a category strategy you move on to the
next big step which is the vendor
selection negotiation so here you will
research potential suppliers
um that suit your profile so this could
be from any kind of data analysis or
industry reports you could have a
third-party
um third party report who could do a
third party provider who could find new
suppliers for you
um and then you could also have like
trade shows
um you know where you can bring in
suppliers and they can share the more
Innovative uh products and what what
they are working on
um and once you have a list of suppliers
that you've shortlisted to consider for
this negotiation you would then start
looking at the supplier capabilities and
track records so in terms of software
capability some of the key things you
would look at are
um you know is the suppliers what are
their service levels what is their fill
rate and do they have a good quality and
safety certifications are they capable
of innovation and innovating with your
company and Partnerships and then like
what what was their performance record
like last year if there was an increment
Supply if they're not if they're a net
new supplier can you get any references
from some of their other um from some of
their other customers so that you really
get a good understanding of what you're
to be getting into and what are the type
of Partnerships that you want to be
establishing with the sub layers so with
this you have a really good
understanding of what you need for your
products you have a really good
understanding of where your suppliers
are and what you need from your
suppliers so with these two pieces of
information then you would go on to the
next step which is kicking off the RFP
and I know more of most of you are
familiar with the RFP at some capacity
or the other so you would have different
rounds of RFP and you would negotiate
terms and this is where the bulk of the
procurement or this is what people
assume the procurement job is which is
really just the one step right people
ignore all the other steps but this is
kind of that step that procurement is
generally known for
and then comes the next part which is
contract management this is again one of
the parts that's usually missed out uh
the contract management piece because
once you have the car once you have the
cost it's not just the cost that drive
value to the organization do you have
um a good payment term structure do you
have slas into the contract do you have
kpis do you have any penalties if the
supplier doesn't achieve the fill rate
do you have a quality
um do you have a quality standards that
you're holding the suppliers accountable
to because once you sign the contract
you're going to be fixed with that
supplier for three to five years so have
you thought about your
product strategy and your business
strategy holistically and have you
Incorporated all the slas and the
relevant kpis into the contract so that
becomes a huge driver for category
management
so this is kind of the source to
contract
um or the category management side of
procurement but then once everything is
done it moves to the other side of
procurement which is procured to pay
which is technically the handoff happens
in the master data management site right
so this becomes very very critical I
know a lot of category managers do the
contract and then you know I've seen
companies where the contract is done and
then the invoices come in that is
mismatches there's price discrepancy not
only is this value leakage but it's
organizational effective Effectiveness
impact so this is where Master data
management becomes a very crucial part
which is preserving the value that is
captured by the procurement team so once
you have the new suppliers on board have
you onboarded them onto your Erp or all
the relevant databases have you updated
the prices have you updated the payment
terms
so that like you know you're preserving
the cash flow so Master data management
preserves all the values that's captured
all the hard work that's done is the
preserved in the master data management
category
and once all your database are clean and
then goes to the procure to pay site
which is someone sends an acquisition
for for a new product or services for
those I saw a lot of folks in the energy
sector so in this someone from the field
um from the field would uh place an
order for
um for a pipe or a valve
um and then that would go into the
buying theme which is the which is
consist of the procurement buyers who
would then generate um and communicate
purchase orders and then once the
purchase orders are received by the
suppliers the suppliers acknowledge it
and then it comes to the invoice
processing
the invoice processing is also very
crucial part of the procure to pay
process because typically in large
organization this is an outsourced
function so how do we make sure our
company's policies are translated or
transferred to the outsourced company
and how are we ensuring that the
standards are adhered too and at the
same time we want to make sure the
invoice processing is automated it's
efficient as possible because if there
are issues with the invoice which
directly impacts the supplier because
now it results in more rework for the
supplier and the supplier incurs will
pass on that cost back on to you
so and once the inverse processing is
done the invoice processing aspect
checks if the invoices are matching
against the POS sometimes matching
against the contract they do all the
checks and if it's all perfect then it
goes on for the payment processing so
this is how the whole SRP process looks
like so every decision that we make
Upstream in terms of category management
it's really important to think about the
impact that we'd have on the in the
downstream for example if you do a
tiered tier discounts or if you do a
volume based rebate it's easy to put it
on a contract but then are you do you
have the relevant features and Fields in
your Erp to capture those have you
trained your accounts payable team to
actually check for those volume based
rebates because you can negotiate a
great volume based rebate put it on a
contract but if you don't have the
infrastructure and governance in the
procure to pay process to capture that
you are not going to see that value and
you rpnl at the end of the day
so this is why it's important to always
look at procurement in a holistic in a
holistic fashion
so moving on right so I think one thing
that's very clear from that slide that I
showed up from the example that I shared
a structurement is all about value so
every step has value associated with it
every dollar that you're saving in one
step we want to make sure it moves
throughout the entire value chain and at
the end of it you're capturing at that
at that last step but I just want to
pause here for a minute
procurement value it's not just a bottom
line savings we always talk about bottom
line savings which is very easy to
quantify and you know and I think that's
what we are mainly focused on yes that
is true but there's also these other
aspects of procurement whether it's Val
where there's value to the organization
which we need to think about when we are
thinking about our rfps our category
strategies or our supplier selection
quality and reliable products are we
engaging the right suppliers to make
sure we are providing the good quality
um and reliable product for our
organization or do we have the right
Partnerships in place are our suppliers
driving Innovation for the company
which also drives to the overall revenue
and growth of the company is it
improving our company's competitive
position in the market because we have
better products we have more Innovative
products and we are able to get into the
market faster than the others
third one productivity and efficiencies
so here I want to go back to the procure
to pay process when this when the
supplier sends an invoice are we turning
around the invoice very quickly and are
we paying the suppliers on time
um you know as our response rate pretty
good and because if it's good and it's
going to be an efficient process for
everyone or are we getting stuck in like
process redundancies and that's again a
procurement
that's again a procurement contributing
to the overall efficiencies of the
company
the fourth one is like running
operations without disruptions do we
have strong contingency plans in place
which we're going to cover um in a bit
as well how can we make sure our
business is running smoothly and do we
have the right infrastructure in place
from a procurement standpoint to enable
that for the company
the one that's becoming more and more
popular is the sustainability and CSR so
we have a lot of sustainability
governance in place we have standards
requirements we have reporting
requirements they're all different for
EU for North America so as procurement
uh professionals we are making the
decisions for the company in terms of
sourcing strategy we select the origin
of the supplier we need to understand
the traceability so are we are we
selecting the right suppliers who can
support
the latest requirements and who can also
evolve with that ever-changing
requirements
and then finally the compliance and
governance so this is in terms of the
contractual
um contractual risk for the company are
our contracts well protected do we have
the right indemnification Clauses in
place and are we being compliant with
all the regulations and policies that is
set by our different geography so like
just to kind of like scale back here
like
procurement is not just about the dollar
savings there is really just a lot of
factors that's enabling the business
growing the business protecting the
business from any disruption so it's
always important for us to just take a
step back and think like you know are we
thinking about the holistic strategy
it's not just the end to end like from a
value driver perspective are we covering
all the value drivers is our procurement
enabling the business at the end of the
day
so there's a lot of there's a lot of
value in procurement and we just need to
make sure we're constantly pushing for
it constantly thinking about it
and like today there's three three
things
um that that we can take out take on
from here like the first thing is how
can we capture value so we talked about
different levels of value here the first
one is how can we capture the value this
is a new opportunities and the second
one is how do we preserve the value so
once you have captured all these value
both qualitative and quantitative how do
we preserve it and that's throughout the
entire uh procurement life cycle
and then the third one is how do we
enable value right like how do we be an
enabler to the overall business
um business growth
of the organization
so today because of like the time that
we have
um really just want to get into like two
main examples of capturing value and
preserving uh value and if time permits
we can
um we can discuss about enabling value
okay
so let's come to the first segment which
is capturing value so here is an example
of a cost breakdown of any product any
widget or it could be Services you know
have materials in here but you could
replace that with Services as well so
here is a cost breakdown
of the of the model I think there's two
questions to ask here the first one is
do we have this level of understanding
for all our products in the system today
or even for our critical products in the
system today so that's question number
one that we need to ask ourselves
second question we need to ask ourselves
out of this cause breakdown how many
which of these breakdowns could be
actually negotiate can we negotiate
every single aspect or is there only
like two or three items that we think we
can negotiate
here is the answer right you can pretty
much negotiate everything in this cost
in this cost breakdown model
and we'll go into like one by one
examples the first one is the material
the material cost this is probably like
you all probably thought you could
definitely negotiate the material cost
you're absolutely right material costs
are probably the most straightforward
cost you can negotiate because we have
commodity Trends available we have
industry reports there's benchmarks
um and you know there's so many data
sources online that if you know what
material it is if you know the raw
material breakdown that goes into it you
can easily negotiate
the material cost right and then next
comes the tricky part which is the labor
cost can we really negotiate the labor
cost labor costs they are generally
fixed uh because you have you might have
minimum wage regulations and you might
have certain um other wage regulations
or regulations which is true
but the labor cost really pushes the
thinking on do we how can we make the
process better how do we make the
manufacturing better are there any way
stage are there any time efficiencies
are we running the plan like as fast
like you know as much as we can
is that automation opportunities
available there are so many
opportunities
um that I've seen where sometimes
packaging is not very automated it's
pretty manual but then like UV you get a
tool and the tool probably costs thirty
thousand dollars or forty thousand
dollars and then once you install the
tool the packaging process is automated
which which kind of like you know make
sure the production moves faster and at
the same time it saves on some of the
cost as well so here we're really just
talking about automations and
efficiencies
next one is like utilities and
maintenance this isn't more of a
negotiation but it's more of really
understanding how much of your product
represents in the overall manufacturing
process so if there is a manufacturing
plant and if they have five customers if
your your production is running for 20
of the time are you making sure that you
are getting charged for that 20 of the
overall overheads are like are you
getting charged for something more than
what is allocated and if it's something
more then you need to ask the question
we'll subtract hey why is why is this
higher then maybe the supplier would say
oh there's a lot of changeover because
you keep changing from A to B to C
within your product portfolio then you
have a discussion with the supper okay
can I run a for two weeks and then B for
three weeks and then C for X number of
weeks in that case I minimize the
changeovers so these are the discussions
that you would have to negotiate this
similarly for QA and testing you know is
the frequency right are you over testing
it or do you have requirements that are
the testing conditions are not easy to
replicate and the manufacturing plant is
struggling with it and therefore your
costs are higher
um r d and sales similarly like is your
r d pipeline actually materializing into
new products or are you just having the
suppliers build Innovation Pipeline and
it's not really materializing because
you're not giving the right instructions
in that case you can provide feedback to
the r d team to make sure that like you
know we are having a good pipeline
that's materializing
and then finally margins I'm sure this
is one of the things that you have uh
you you thought we could negotiate as
well with margins extremely it's
benchmarking with other suppliers and
here you could also give additional
volume to the sub players here is where
you have a true discussion right if
you're planning to give 50 off
um your business what if you give 70 of
the business in that case you can have a
true discussion about like a partnership
model uh where you can negotiate the
margins
and then Freight again that's a more
straightforward one as well where you
could have another Freight forwarder uh
provide codes or you could look at your
internal
um Trucking Company get the codes and
you could really compare from like two
three sources on what would be the best
cost for the Lane right so pretty much
you can negotiate everything in a should
cost model and drive savings
right so here when you see the should
cost model and the supplier cost there
is opportunity over here but then
there's like how can we really make this
happen right this is not an easy task I
think the first thing is you need
leverage with the suppliers right so do
you have another option like do you you
know do you have that volume leverage
that you can actually have a discussion
about their manufacturing plans you can
visit their manufacturing plans and
actually like take a look at all these
like labor cost utilities and so on the
second thing is you need a partnership
model if you have a very transaction
relationship with a supplier they are
not going to open up the books um and
give out the costing for you so do you
have a partnership model with them what
do they have um to get out of
um this relationship with you so you
need to make sure we're establishing a
win-win relationships when we're doing
this and the third one is are internal
resources and time doing this is not
easy so having this level of breakdown
for every single product for every
single player is not an easy task and
this also combined with the benchmarks
and you making a should cost model this
is a huge time consuming task so we
really need to prioritize which products
are we going to do this far and that
takes time and resources at the
company's end so that is one of the key
watch outs as well so once so how how
can we actually capture this right I'm
just going to quickly skim through this
so first step we saw a cost breakdown
that was in the blue color and then we
get the market insights and we
understand the value drivers through
research through Factory visits
um and you take a look at your company's
policy or r d pipeline you understand
the value drivers of this and then you
build the should cost model and then
once you develop the should cost model
that's what you would incorporate in
your RFP
and here is the main thing again there
is a value loss here which is
once you have a shoot cost model in your
RFP it doesn't stop there you need to
maintain the should cost model and this
is through your contract process and
once you have the contract process and
also through your master data process
again that's where the value capture
gets lost so preservation comes again in
place so every six months maybe you take
a look at commodity cost every one year
take a look at the labor cost maybe
every one year you take a look at your
QA requirements how do you preserve this
how are you sustaining it and driving
this forward and forward
and not doing it as a one-off exercise
so otherwise you're gonna You're Gonna
Lose the value that you captured as well
so that's really like on one one example
of value capture I started touching upon
value preservation and I think you're
kind of getting the gist of like like
tactically how are we preserving the
value that we capture but I want to
change the direction a bit over here we
want to look at strategic value
preservation over here and I know with
covid a procurement has been facing a
lot of challenges with the cost with
shortages and so on
so I want to like swap it to a strategic
value preservation which is contingency
planning
so
in contingency planning are we ready to
handle a disruption I think the general
answer would be yes because I have dual
Source I have a safety stock uh there's
so many things
um that you know in large procurement
organizations have a contract in place
everything is great
so but then here is really just
understanding strategically like are we
how can we make sure we are ready to
face A disruption right so the first one
is assessing the level of risk the
answer may be yes for everything yes you
may be you may be able to handle a
short-term disruption in some time a
long term it's a midterm disruption but
what is really a long-term impact so
short-term disruption could anywhere be
like a plan shutdown or like there's a
small failure or there's a changeover so
on midterm could be anything from like
labor strikes uh Power shortages uh like
prolonged power shortages a long term
could really be something more on the
infrastructure in and around the factory
like roads
um transportation systems or it's a
factory issue and that would be like a
long-term disruption so when you're
thinking about handling A disruption
it's not just a yes or no it's really
just yes or no for the different types
of disruption so it's really getting
into the next level of granularity over
there
and then once you determine if you're
ready to handle a disruption the next
thing is like assessing the level of
risk or like impact of risk so which is
going to be a huge impact obviously the
short term might not be a huge impact so
there is no uh there you know there's no
point putting a lot of effort in there
but then we really need to start
thinking about the midterm and the long
term and what is the risk what does this
mean for our organization does it mean
we just move on or do we replace another
product or does it really going to stop
our business and impact the revenue and
the growth of the company so that's the
question we need to ask like what does
this mean what is a supply shortage mean
for the organization and this could be
different for different products right
so that's the level of granularity that
we need to get to until once you have
that you could do a stress test or run a
data analysis or do a role play on like
what would happen in these scenarios and
how can my supply chain respond to it
maybe we'll take an example in the next
page but
really just getting into the details and
then you draft a contingency plan so you
put a plan in place and then you
contractually
um either can be a contract or you can
make sure you have preventive measures
in place or maybe it's an r d plan to
approve an alternate product so how are
you putting a plan in place and ensuring
you're making sure that this doesn't
happen in the future so that's really
like holistically how we think about
contingency planning
so if I move on to the next page here is
an example so we're saying we we are
seeing a line shutdown due to a tool
failure so maintenance manager has
advised it would take about five weeks
to repair and reinstall the total so we
know because of this the production will
only resume after six weeks and this is
a critical product for your business
right so this is important
to ensure we have consistent Supply
so an example we have an inventory about
one week at the warehouse in transit
half a week we ended at a week they have
another line which is great
um and that can run at a regular
capacity at 25 percent so totally we
have about four weeks of supply
but we're estimating a supply gap for
about two weeks right so which is which
is which is fine and but this is an
important product to your business so
what actions can we take over here
so again depending on the level of
impact and the shortages and depending
on the criticality of the product we can
think about these are the preventive
measures that we need to take in place
right so it can be a dual Source can we
make sure it's a multi-sourced um with
other suppliers how do we increase the
Safety stock
both internally and externally can we
increase the capacity of the production
lines alternate products alternate
facilities
Safety stock of the tools so why don't
we if there's a tool failure has this
tool failure happen often can we buy
another tool if it's ten thousand
dollars but it preserves
um uh preserves the growth of the
business
so here are some of links here is an
example right here are all the things
that we need to think about as
procurement professionals it's not just
on safety stuff but there's a lot of
other factors in terms of strategy and
the level of detail to which we get to
but again going back to the question of
like what is the balance right like we
cannot do this for every single product
we cannot have multiple suppliers
approved for everything in that case you
are not consolidating your spend you're
highly fragmented the balance is the
probability of occurrence like what what
is really the more probable occurrence
with such maybe it's a short term and a
midterm maybe you're not maybe you think
a long-term disruption is not going to
be highly probable the second one is
supplier performance is a supplier
consistently delivering or is the
supplier always running into issues the
third one is cost you can buy tools you
can increase your safety stock but
Safety stock is cost as well how are you
kind of balancing it are you having the
right Safety stock for the right
products or are you having safety stocks
for some of the transactional products
that's actually not required right and
how can we enable contingency planning
like just thinking about like a
characteristic approach a carried
approach would be like having great
Partnerships with the supplier sub
players think it's a win-win
relationships and they want to make sure
that your business grows because they
are invested in your business and the
stick approach here would be like
contractual requirements you just put it
in your contract hey you need to make
sure you have tools for me you have four
weeks of safety stocks and that's the
that's the stake approach right so
and another example of how we can think
about procurement holistically end to
end and not just limited
um to cost
um
uh to to the cost constraints that we
have
I'm going to quickly move on I think we
are almost approaching time so we saw
two examples of like value capture and
uh value preservations but like I said
that's just very like it's a very
one-off example for one of these pillars
we have so many value like we have so
much value across the whole value chain
and really think about enable enablement
is really digitization automation
eliminating redundancies
from the organization and so on so when
we think about it holistically end to
end I think we would be able to drive
more value and also have a strategic
play in with the business have strategic
seat along with the right stakeholders
and you know enable the growth of them
business and just thinking about like
where can we get started right I think
the first thing when you saw all these
things is data you just need a baseline
data to start off with and then second
one is really just having the right
metrics and targets are we tracking
metrics regularly do we have the right
targets and are we constantly pushing
our aspirational targets
and how do we have do we have the right
processes in place to govern the whole
uh govern the whole end-to-end chain and
we have the right governance and do we
have the right uh digitization and
automation to enable the overall process
so these are kind of things where we
should start thinking about
um so that we can take these information
and start acting on on an end-to-end
transformation
perfect it was a great presentation
thank you so much you touched so many
relevant topics here I'm pretty sure the
audience appreciate this as well we have
more than 300 of people connected to us
which is great
um so let's start sharing some questions
the first one I have here is from
paulinho so he is asking about supplier
relationship management so is supplier
relationship management s uh RM
considered a part of source to contract
procure to pay or is it a different
process as a whole and how can a company
implement it to generate value
okay so so Supply relationship
management they have uh they almost have
two aspects to it one is on the source
to contract piece there's a supply
relationship management so here what
you're doing is you're creating supplier
scorecards and how are they performing
in terms of QA r d how are they in terms
of cost
um in terms of innovation capabilities
um do they have a contingency plan in
place
um so here is where you would have your
strategic so um strategic supplier
scorecard management and then on the
transactional side you would still have
a supplier uh management where here is
where are they paying the invoices on
time are they do are they supplying the
invoices at the right standards or are
they submitting wrong invoices all the
time which is creating inefficiencies
within your organization and are the
invoices price usually matching the POS
at at a good rate are they the payment
terms complained so you almost have two
aspects of um SRM um in in the company
but I think irrespective of what you
have I think they should all be um they
should be talking to each other and
working as cybers if it's if it's in the
Strategic side if you have an SRM in the
Strategic side do you have the regular
Cadence in place to get the information
from your transactional the day-to-day
people who are actually seeing the
issues are you feeding that into your
scorecards and sometimes you might have
a supply relationship just on the
procurement
um procure to pay aspect so how are you
consolidating your reports and sending
it to the relevant category manager so
they are taking the relevant insights
from it so it can be it can be either in
in either organizations because it it
doesn't really matter but what is
usually lacking in organization is the
two teams talking to each other and
that's what's really
um helpful enabling and to your next
next question how can this inform
strategy right so I think this is where
having a more balanced scorecard would
come into play so when you're putting
into Supply category strategies in place
have a have a supplier scorecard in
every single category strategies if
you're putting a category strategy for
um let's say valves how how one page for
each of the uh each of the sub players
scorecards in there if there are five
sub players have five pages for the
scorecards in the review the scorecards
before you make a decision on um your
supplier Award right so in that case
you're using the scorecard you're using
the information to drive strategic
negotiations and if a supplier comes and
tells you like why you didn't pick even
though the cost was higher show them the
score could be transparent with them on
the scorecard say you're great on price
but compared to the other suppliers you
are not very collaborative on Q a or
your r d capabilities are not up to the
match are you able to invest in
additional resource do you have pipeline
opportunities if you are able to do that
we will consider that you um we will
consider you for the RFP so this is
really how you can merge your day-to-day
information your strategic information
and take it to the Contracting
information so information is just
you know available everywhere and the
same information across the whole
procurement organization hope that thank
you mirandini for for sharing we have a
lot of questions we are not going to
have time to address all of them I'm
just uh letting the Learners know but
um if you guys are okay we can go to a
couple more questions uh so nifa Seth
announcing is asking if you can clarify
a little bit about the shoot cost model
in terms of uh bottom line savings
because as he he wants to know more
about that and I also have a follow-up
question because I've been working on
cost analysis my whole life uh so I
don't know if as a procurement expert
you have an any kind of like rule of
thumb uh to to guide uh procurement and
analysts where they should look first
you know maybe not maybe it's just a
higher cost but maybe there is something
else behind the scenes that can be also
valuable for our Learners
um where to put their efforts yeah
perfect that sounds good so great
question so on the should cost model
like how does it drive bottom line
savings right so here is an example of
what what the cost you have received
from the suppliers so here all the blue
uh the blue bars are the cost breakdown
that the suppliers provided probably
during an RFP
and the green ones are slightly
different I know they're not in the same
page but then the should cost model
basically takes these costs and tries to
build it up from the bottom up so if I
have let's say
um let's say a plastic bottle so a
plastic bottle if it's a dollar so how
much plastic goes into the plastic
bottle the supplier should be able to
provide that your spec sheets will be
able to provide that so taking that
amount of plastic that goes into the
bottle so that'll be your material cost
and and you can compare that with the
plastic pricing depending on the type of
plastic you can get the index easily
like how much a pound of plastic would
cost and then maybe you add a yield
Factor right because in the
manufacturing you have some
manufacturing glasses maybe a three
percent or a five percent loss over
there so with that you can actually
build up what a plastic cost should be
and then you have the cost that the
vendor has provided so if the vendor has
provided two dollars and yours should be
cost based on your index is one dollar
so that is your one dollar savings can
you take your should be cost to go to
the vendor and say hey I looked at the
plastic price and it's costing me only
one dollar why do you have two dollars
in that and that's the negotiation you
take that data into the negotiation and
come back with some savings and that's
how it's going to drive bottom line and
how it would also work is the supplier
is probably using a different
um a range of plastic prices over 12
months maybe you can have a six months
rolling average or you can potentially
even hedge in like very measure
procurement organization you can have
the supplier hedge at a particular price
so these are some of the ways that you
can bring the model back in
and to your second question on where do
you start the basic things to start
would be material costs right that would
be the simplest things to start on a
commodity especially on commodity driven
products and then the margins the
margins are going to be really
partnership driven so if you have a good
Partnerships in place you can really
have an open conversation about it so Ma
and then if you're willing to give more
business if you have that piece of the
pie available I think margins would be a
great discussion to start Freight again
a very uh very easy Benchmark so as you
run an RFP you can get a bunch of quotes
from your Freight forwarder so I think
the top three things uh from like a
effort versus
um
impact would be material margins and
Freight thank you so much for the answer
yeah really insightful yeah next
question yeah sure um so we have two
questions here one I can answer myself
and the other one I share with near
Genie so the first one is from shikar
um shikari is asking which scx course
would be most relevant to build
knowledge around the topics covered in
today's webinar so for sure sc3x and
su-1x so by Chain Dynamics and supply
chain from Dominos so near and Jenny
shared about risk management
interactions with suppliers also went to
place an order can't make some
calculations so these topics are well
explained in covert as well uh in these
two courses at c3x and sc1x and you can
enroll yourself uh the verification
deadline for 1X is Wednesday right
Miguel
today in two days and for 3x in the
other week so you can use the links we
have shared uh in the chat box to enroll
yourself and now the question to your
ingenious so Siva is making um actually
is asking can you talk about
digitalization and AI influence in
procurement
yeah no awesome so I think that's that's
a great question because that is
becoming more and more um
popular these days right so so let's let
me go to digitization first and then go
into AI so in terms of digitization I
think this is a lot of companies are
moving towards it there is still a lot
of opportunities over here digitization
could be as simple as having a very
efficient Erp systems that's capturing
your spin base so you don't have to
manually go over and do this in a lot of
advanced Erp systems or interface Erp
interfaces this should cost model can be
done within the Erp this is not a manual
Excel activity that's going to take time
and effort
um so that's that's more on
um more on the category management side
and on the category uh the procure to
pay side this is basically
um interface of uh invoices so invoices
and POS are done manually today but with
the digitization you could have you
could generate a PO that would interface
directly with the uh with the suppliers
Erp so they would directly receive the
PO and they would can flip the PO into
an invoice so in that case you're
reducing a lot of manual this whole
invoicing process saying bucket is
highly automized this is becoming more
and more touchless day by day a lot of
advanced company with higher
digitization have touchless invoices
about 1995 targets which means no single
human being is actually touching an
invoice when the invoice is being
touched it's only to handle
discrepancies and exceptions when the
price doesn't match and so on otherwise
it's just seem throughout and
when the invoice comes in it gets
automatically matched to the vendor it
does the price check automatically
against the PO and it turns around and
goes ready for the payment queue so
that's where digitization could have end
to end right
and then coming into AI so I think with
AI there's a lot of I think a simple
like in a more simple AI or like more
traditional AI would be on your spend
management there's a lot of tools today
on like spend Cube tools that you can
purchase or like you can um you can
integrate into your Erp which does a lot
of these analytics
um analytics for you like a price
Arbitrage analytics or tail spend
analytics
um so those analytics a lot of those
that I even talked about that are they
can all be done by Advanced analytics um
tools today there's more and more uh
coming up on gen AI with like chat Bots
for like negotiating uh negotiating like
transactional spend uh data where you
can find suppliers for like non-critical
aspect of it uh there is cha there's
chat Bots and like gen AI for contract
management Pieces Just making sure
they're con like you know making sure
um it the chat like you know gen AI kind
of highlights the risks that's
associated with your contract
um and then there's you know there's
there's more coming up these days but I
guess that's more evolving but I think
the fundamentals
um of AI would really be on the spend
Cube and on the procure to pay aspect
because Security pay is very manual in
most organizations today so having a
good Erp and having the right interfaces
like
um like a Vendor Portal which can
incorporate even an RFP inside like an
Ariba or a Koopa can have uh can kick
off rfps and receive invoices they have
the whole STP process integrated within
them so that's kind of like some of the
digitization automation opportunities
available out there thank you so much
niranjini for for sharing so much with
our Learners I think we we probably have
to leave it here because we want to be
really respectful with everyone's time
and so again thank you so much uh to
everyone also who decided to join us
today it's been a super insightful
session uh in procurement and Before We
Say Goodbye just want to remind the
audience a couple of things this was the
first life event of the Fall series we
still have one more upcoming webinar is
going to be in early November probably
so stay tuned for that uh also Paulo
mentioned enrollment for sc1x and sc3x
is still open but closing very soon
actually and if you're enrolled in one
of those courses verification also
closes at two and two days for a second
X and one week from now for sc3x so we
encourage you to go ahead and verify
right now by clicking on some of the
links that we shared before finally
again thank you niranjini for the
session it was uh amazing thank you so
much Paolo for for everything too so if
you want to share any final words with
the Learners feel free thank you all
thank you so much near ingenie it was
great to have you here with us
thank you everyone you guys have an
amazing great great questions as well
yeah goodbye everybody for joining have
a great week foreign
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