Supplier Management Process Implementation

Background

This global pharmaceutical company had experienced a number of critical supply interruptions and recognised that its supplier management processes were limited and inconsistently applied.
Future Purchasing were asked to support the implementation of its SRM toolkit with a number of the client’s key suppliers to demonstrate the scale of improvement available.

Challenge

• Design a pilot SRM programme covering five major suppliers in manufacturing & research.
• Build the competence in the hard skills of SRM, eg relationship analysis and strategy creation.
• Develop soft skills in leadership, working relations and influencing.
• Demonstrate that structured SRM delivers substantial business value.

FP Approach

• Pilot suppliers were selected jointly with stakeholders using the FP segmentation tool and senior business sponsors identified for each.
• Cross-functional teams were trained in the FP SRM toolkit and provided with coaching support to analyse the five prioritised relationships. This involved extensive supplier and internal engagement.
• Relationship strategies detailing the opportunities available were created over a three month timeframe and presented back to the relationships sponsors.
• Suppliers were fully engaged and the strategies and opportunities were implemented in agreed phases. Joint strategies are now refreshed annually.

Benefits Delivered

More than 100 opportunities were identified for each relationship. 25% of these were implemented within three months of starting the assignment. The ROI on the project was 20:1 in year 1.  Key improvement areas were:

• Clarity of relationship roles and responsibilities
• Standardised performance scorecards
• Reduced costs and total cost of ownership
• Superior operational performance
• Clarified and aligned business strategies
• Enhanced working relationship quality
• Modified power & dependency balance
• Increased innovation delivery