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Role of a Supplier Manager Role of a Supplier Manager The supplier manager has overall responsibility for a supplier relationship
• “Owns” the relationship on behalf of the customer organisation• Is a catalyst which enables the two organisations to work together• Regularly monitors the contact between the two organisations• Reports to Senior Management
He or she ensures that communications are effective and efficient• Manages initial discussions and assists in drawing up contracts• Is kept fully aware of communications & can be involved in negotiations & deals• Is the conduit and prime contact • Arranges and facilitates meetings and events
Can be dedicated to one strategic partner and/or Product Category • High involvement: one supplier manager for one supplier• Low involvement: One supplier manager for several suppliers
What are the current current Supplier What are the current current Supplier Assessment tools for the Top Suppliers and Assessment tools for the Top Suppliers and what needs to be done to ensure suppliers what needs to be done to ensure suppliers deliver improved Total Value?deliver improved Total Value?
Supplier Performance AssessmentSupplier Performance AssessmentSupplier Performance Assessment is a formal supply side management programme that continuously and quantitatively assesses the performance of suppliers against seven performance elements
1) Risk Management2) Quality, Regulatory and H.S.E.3) Cost (Price)4) Delivery 5) Process and Service6) Innovation7) Business Value and Net Total Value (€).
Its purpose is to provide a channel through which suppliers performance is professionally assessed and their best ideas are captured.
• The assessment is based on the net total value delivered by the supplier in the past;
• Involves a discussion on where performance has improved, declined or remain static versus each total value element.
• Involves a joint definition and agreement to specified future value added goals that are directly part of the business vision, strategy and priority.
The Board, Executive The Board, Executive Committee, Shareholders, Committee, Shareholders, Employees, Customers, Employees, Customers, Suppliers & Competitors Suppliers & Competitors are focused on business are focused on business financial performance financial performance and outlookand outlook
Stakeholders, Management, Stakeholders, Management, Supply Chain, Supply Chain, Procurement and Suppliers Procurement and Suppliers are normally focussed on are normally focussed on AQCSI (Supply Assurance, AQCSI (Supply Assurance, Quality, Costs, Service and Quality, Costs, Service and Innovation), Cash (Assets, Innovation), Cash (Assets, Payment, Inventory) & Payment, Inventory) & Response TimesResponse Times
• Quarterly focus documents should be produced for the complete procurement and supply chain team.
• Focus documents are an excellent way of ensuring team consensus and awareness of the overall business goals, overall functional goals and individual goals – all of which must be aligned.
• All quarterly goals – business, function and individual need to be S.M.A.R.T.
• All team members need to contribute to the quarterly focus followed by a commitment from all team members to write & share their smart goals.
• Key performance indicators show progress or deterioration versus the standard using overall total value, supplier and procurement performance change (i.e. not just price or quality)
• Cost avoidance must be against agreed market and competitor benchmarks.
• Performance and results need to be communicated on a monthly basis.
Date Supplier Name Order Value Product or Service Description
31Dec04 Baseline (Index)
New 2005 Deal (Index) Value Change (%)
Procurement Value Change
(£)
Less Inventory Adjustment (£)
Net Procurement Value Impact (£)
Net Procurement Value Impact (%)
Jan-05 Delos £500,000 Concentration on Delos as a supplier 100.0 95.0 -5.0 £25,000 £0 £25,000 -5.0%Jan-05 Supplier B £40,000 100.0 100.0 0.0 £0 £0 £0 0.0%Jan-05 Supplier C £100,000 100.0 95.0 -5.0 £5,000 £0 £5,000 5.0%Total £640,000 £30,000 £0 £30,000 4.7%
Jan-05 Supplier D £400,000 Price increase of 7% from Supplier D 100.0 107.0 7.0 -£28,000 £14,452 -£13,548 3.4%Jan-05 Supplier E £750,000 Product E Price Increase of 5% incurred from 21Jan04 - No stock 100.0 105.0 5.0 -£12,097 £0 -£12,097 1.6%Jan-05 Supplier F £200,000 Did not deliver Product F OTIF causing production delays 100.0 100.0 0.0 -£20,000 £0 -£20,000 10.0%Total £1,350,000 -£60,097 £14,452 -£45,645 -3.4%