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Customers and competitors come to mind more frequently than suppliers when planning for competitive advantage. Yet, the ability to select and manage suppliers, using thoughtful 2-3 year spend category sourcing strategies, can set your firm apart. Ask yourself the following:

• Does supply value play into your business strategy and model? Supplies make up at least half a company's costs and handle processes that move products to customers. Understanding supplier impact on your products customer value equation is important. Is an area that represents half your cost structure strategic? If so, it is critical to pick the right suppliers.
• What does the supply market look like? Answering this question requires in-depth, ongoing knowledge of individual suppliers, their industry, supply/demand trends and your attractiveness relative to other buyers. To source for value, not just price, your organization needs a proven systematic approach that sifts and uses this information to make strategic interventions in these markets.
• What supply strategies or specific supplier interventions will create value? Formulating a sourcing strategy combines market knowledge and your position as a potential customer to create and capture value. Supply strategy interventions range from basic market (competitive bidding) or technical (spec change) interventions to complex relationship or supply network redesigns. Supply strategies provide 2-3 year plans focused on stretching (yet achievable) total cost of ownership and value goals that improve your competitive position.
• How will you implement the strategy? Great strategy is useless without implementation. This includes pre-implementation cross functional alignment, clear responsibility mapping, internal collaboration, sourcing approach selection (bid, negotiate, substitute, redesign), timelines and ongoing/interim measurements. I.e., project management skills applied to the supply base.
• How do you make sure the strategy is working? Strategy effectiveness is more than just measuring the results of a single bidding event. 2-3 year strategies require tracking multiple interventions, eliminating value leakage between events and continuously encouraging ongoing supplier value creation. It also includes strategy renewals to deal with changing market conditions and make necessary tactical adjustments.

If you want to improve your sourcing results call CCC to help. CCC consultants were leaders (while still with P&G) in developing and executing successful sourcing strategies. CCC has since used this expertise to help other companies improve their results. Can we help you?

The author, CCC consultant Steve Rogers, was a Purchases Director at P&G, has authored two books (The Supply Based Advantage and On Demand Supply Management) and is an adjunct professor at Xavier University.

Contact Information
Call or e-mail Dick Bruder, CCC President/CEO, at (513) 233-0011 or dbruder@cincconsult.com

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