Strategic Sourcing in Supply Chain: Elevating Procurement for Business Success

Summary

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

00:00

👋 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。

05:01

📋 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。

10:03

🎤 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。

15:03

📝 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。

20:05

🔍 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。

25:07

💡 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。

30:07

🔄 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。

35:09

📊 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。

40:10

💻 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。

45:10

👏 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。

Keywords

💡供应链管理

供应链管理是指对产品从生产到交付给消费者的整个流程的管理。在视频中，供应链管理是核心主题，涉及如何优化采购、生产和物流等环节，以提高效率和降低成本。例如，主讲人提到通过采购战略来提升公司价值。

💡战略采购

战略采购是指通过系统化的方法和长期规划来选择和管理供应商，以实现最佳的采购效果和成本控制。视频中提到，战略采购能够提升采购专业人员在公司中的价值，举例说明如何通过有效的采购策略来提升公司的竞争力。

💡供应商管理

供应商管理是指与供应商建立和维持合作关系的过程，确保供应链的稳定和高效。视频中讨论了供应商关系管理（SRM）的重要性，以及如何通过供应商评估和绩效管理来优化采购流程。

💡数字化转型

数字化转型指的是利用数字技术改进业务流程和运营效率。视频中讲述了在采购过程中实施数字化转型，如通过ERP系统和自动化发票处理来提高效率和降低错误率。

💡人工智能

人工智能（AI）是指机器模拟人类智能的技术。视频中提到，AI可以用于供应链管理中的数据分析和自动化决策，例如通过智能算法优化库存管理和供应商选择。

💡成本分析

成本分析是对产品或服务的成本构成进行详细分析，以发现潜在的节约机会。视频中介绍了如何通过应计成本模型来分析和降低材料、人工等各个环节的成本，从而实现成本节约。

💡风险管理

风险管理是在供应链管理中识别、评估和应对潜在风险的过程。视频中探讨了如何进行应急计划，以应对供应链中可能出现的短期、中期和长期的中断，确保业务连续性。

💡供应链优化

供应链优化是通过改进供应链各个环节的效率和效益，达到整体优化的目的。视频中详细说明了如何通过优化采购策略、供应商管理和流程自动化来实现供应链的优化。

💡采购流程

采购流程是指从需求确定到供应商选择、订单执行和付款的整个过程。视频中分解了从源头采购到支付的各个步骤，强调了每个环节在确保整体采购效率和成本控制中的重要性。

💡战略价值

战略价值指的是通过长远规划和决策为公司创造的长期价值。视频中强调了采购部门如何通过制定和实施有效的采购策略，为公司带来不仅是成本节约，还有质量、创新和可持续发展等多方面的战略价值。

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