Strategic Procurement: Organising Suppliers and Supply Chains for Competitive Advantage

193 Pages·2016·0.66 MB·English

by  Booth C.

i
Strategic
Procurement
ii
For Howard, with love
iii
Strategic
Procurement
Organizing suppliers and supply chains for
competitive advantage
Caroline Booth
iv
Publisher’s note
Every possible effort has been made to ensure that the information contained in this book
is accurate at the time of going to press, and the publishers and author cannot accept
responsibility for any errors or omissions, however caused. No responsibility for loss or
damage occasioned to any person acting, or refraining from action, as a result of the
material in this publication can be accepted by the editor, the publisher or the author.
First published in Great Britain and the United States in 2010 by Kogan Page Limited
Apart from any fair dealing for the purposes of research or private study, or criticism or
review, as permitted under the Copyright, Designs and Patents Act 1988, this publication
may only be reproduced, stored or transmitted, in any form or by any means, with the
prior permission in writing of the publishers, or in the case of reprographic reproduction
in accordance with the terms and licences issued by the CLA. Enquiries concerning repro-
duction outside these terms should be sent to the publishers at the undermentioned
addresses:
120 Pentonville Road 525 South 4th Street, #241 4737/23 Ansari Road
London N1 9JN Philadelphia PA 19147 Daryaganj
United Kingdom USA New Delhi 110002
www.koganpage.com India
© Caroline Booth, 2010
The right of Caroline Booth to be identified as the author of this work has been asserted
by her in accordance with the Copyright, Designs and Patents Act 1988.
ISBN 978 0 7494 6022 8
E-ISBN 978 0 7494 6023 5
British Library Cataloguing-in-Publication Data
A CIP record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Booth, Caroline, 1958–
Strategic procurement : organizing suppliers and supply chains for competitive
advantage / Caroline Booth.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-7494-6022-8 – ISBN 978-0-7494-6023-5 1. Industrial procurement.
2. Business logistics. I. Title.
HD39.5.B66 2010
658.7'2–dc22
2010013870
Typeset by Saxon Graphics Ltd, Derby
Printed and bound in India by Replika Press Pvt Ltd
v
Contents
List of figures and tables ix
Preface x
Acknowledgements xii
1. No company is an island 1
What is third-party spend? 2
Supply chains 3
Supply chain complexity 6
2. Know what your customers value 9
Remember the iceman 10
Your customer value proposition 13
3. Right first time 15
Indirect or back office expenditure 16
Direct expenditure 18
Enabling expenditure 20
4. Know your core 25
Activities in the supply chain 26
Core and non-core 27
Market capability 31
The models in action 35
Consequential supply chains 37
5. Handling the complexity 39
Supply chains across organizations 40
Marching to the same beat 44
vi Contents
6. What’s the issue? We can all do procurement 47
We all love to buy 48
Deserve the suppliers you need 49
Bow ties and diamonds 51
The role of the procurement department 53
7. Executive sponsorship and priorities 55
Fixing the compass 55
Your sponsorship 57
Cascading sponsorship 58
8. Strategy in context 61
Don’t bother me with strategy,I don’t have time 61
The value of strategy: the symphony orchestra 62
The case for strategy 63
Cascading strategies 64
9. Knowing what the business needs 67
It’s never too early to know what you need 67
Articulating the need 68
Who needs blue sky? 69
Bringing suppliers into the mix 71
The complexities of needs statements 73
10. Picking the right suppliers 79
Your supply chain on the maturity curve 80
In practice 82
11. Understanding your spend 87
One size doesn’t fit all 87
Alien tactics 88
Value 90
Category analysis 91
Category mapping 91
What suppliers think of you 96
12. The secrets of sourcing 101
It’s about more than the money 101
Requirements 103
Supply market distortion 108
Contents vii
Cost advantaged supply 109
Size matters, but be careful what you measure 111
13. Sharing the pain in hard times 113
Don’t be a shock absorber 113
When the going gets tough 114
Getting your own house in order 118
14. Avoiding the perils of outsourcing 121
Be careful of getting what you wish for 121
Back to the multinational 122
Getting to a relationship that worked 123
15. Corporate responsibility 125
Good corporate citizenship 125
Defining corporate responsibility 126
Differentiating corporate responsibility 127
Embedding corporate responsibility 127
A supply chain view 129
Health, safety and environment 129
Supplier diversity 130
16. Good procurement across the company 133
Corporate culture and procurement 134
Procurement proficiency 136
17. Becoming important to key suppliers 139
Get your lipstick on 139
Becoming important 140
Good relationships 141
Securing what you need 144
Complexity 146
Supplier management 147
18. Continuous improvement 151
Don’t be fooled by mediocrity 151
Getting the organization on side 153
The same again but on steroids 154
Still on steroids, but this time even more complex 156
The magic ingredients for continuous improvement 157
viii Contents
19. Reducing total cost 159
Shrinking the pie 159
Total cost of ownership 160
Safeguarding value 164
20. Keeping procurement on the agenda 167
Proving the value (again) 167
Demonstrating value 168
Holding the gain 169
Extended enterprise 170
Mobilizing the whole organization 171
Total cost 171
Executive sponsorship 172
Glossary 173
References 177
Index 179
ix
List of figures and tables
Figure 1.1 Example of a simple customer-facing supply chain 5
Figure 1.2 Example of a simple colleague-facing supply chain 5
Figure 3.1 The stages of the life of an asset 23
Figure 4.1 Information technology supply chain 27
Figure 4.2 Organization capability evaluation matrix 28
Figure 4.3 Supply market capability evaluation matrix 32
Figure 4.4 Warehouse outsourcing example 36
Figure 4.5 Consequential supply chain study for oil and gas 37
Figure 5.1 Supply chains flow across organizations 40
Figure 6.1 Cross-disciplinary supply chain 47
Figure 6.2 The bow tie client-supplier relationship 51
Figure 6.3 The diamond client-supplier relationship 52
Figure 9.1 Primary supply chain of the Amazon Kindle 76
Figure 10.1 The market maturity curve 80
Figure 11.1 Category analysis matrix (Kraljic, 1983) 92
Figure 11.2 Category analysis of an innovative good 95
Figure 11.3 Category analysis of a service versus a good 96
Figure 11.4 A supplier’s analysis of your business 97
Figure 12.1 Example of total cost of ownership study 105
Figure 17.1 Supplier relationship strategies 144
Figure 19.1 The client’s supply chain for a pencil 161
Figure 19.2 Cost and value drivers in client supply for pencils 161
Figure 19.3 Cost and value drivers of a stationery provider’s
supply chain 162
Figure 19.4 Basic supply chain for goods and services 164
Figure 19.5 Aircraft supply chai 165
Table 12.1 Product/service cost structure 110
Table 18.1 Gainshare example 153