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Supply Market Intelligence : A Managerial Handbook for Building Sourcing Strategies - Robert Handfield

Supply Market Intelligence

A Managerial Handbook for Building Sourcing Strategies

Hardcover Published: 13th January 2006
ISBN: 9780849327896
Number Of Pages: 672

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Supply Market Intelligence: A Managerial Handbook for Building Sourcing Strategies charts the course to success for executives who are seeking to lead their organizations to supply-chain maturity. This volume is intended for supply-chain executives who struggle with the challenges of an uncertain supply market environment and whose supply chain function is constantly buffeted by unexpected changes in customer requirements and commodity prices. The author offers a more effective path, describing an integrated approach to supply chain management based upon solid market intelligence. This path is derived from the authors' multiple engagements with organizations such as Suncor Energy, Bank of America, Shell Oil, Honda of America, General Motors, Boston Scientific, Visteon, Federal Express, Sonoco, Duke Energy, Caterpillar, John Deere, GlaxoSmithKline, and many others. He emphasizes that the elements of a successful plan do not arise from a simple vision, instead they require much hard work and a focused approach backed by solid leadership. This book begins by defining supply market intelligence and discussing opportunities, the establishment of a project team, and conducting an internal business intelligence assessment. The book then examines the development of business and market intelligence, supplier evaluations, and sourcing strategies. It also explores how to execute a sourcing strategy, manage a strategic supplier relationship, and redesign an organization for effective supply-chain intelligence and strategic sourcing. This volume offers a benchmarking maturity model tool that covers all facets of end-to-end supply-chain management.

Introductionp. 1
Chapter Outlinep. 1
What Is Supply Market Intelligence?p. 2
Moving Supply Management from the Tactical to Strategic Approachp. 3
The Importance of Strategic Relationshipsp. 4
Strategic Cost Reductionp. 5
Life-Cycle Stagesp. 7
The Profit-Leverage Effect of Supply Managementp. 10
Share the Wealth - and the Costp. 11
How Mature Is Your Supply Management Function?p. 12
Supply-Chain Maturityp. 12
Translating Corporate Objectives into Supply Management Goalsp. 19
Integrative Strategy Developmentp. 21
Bringing Goals and Objectives Together - the Strategic Sourcing Processp. 23
A Word on Business and Market Intelligencep. 25
Step 1: Teaming, Plan Development, and Market Researchp. 25
Step 2: Strategic Analysis and Resource Commitmentp. 26
Step 3: Strategy Approval and Supplier Selectionp. 26
Step 4: Strategy Implementation and Contract Negotiationp. 27
Step 5: Supplier Performance Measurement and Continuous Improvementp. 27
Summaryp. 28
Intelligence and Opportunityp. 31
Chapter Outlinep. 32
BI and SMI - A Massive Challenge for Enterprises in the Futurep. 33
The Need for a Dedicated BI/MI Centralized Team in Large Enterprisesp. 36
Supply-Chain Design: The Major Consumer of BI and MIp. 40
The Push Approach to BI/MIp. 44
Building a Case for Change: Identifying a Triggerp. 50
Have You Spoken to Your CFO about Supply Management Recently?p. 51
Making the Business Case Argument for Supply Managementp. 53
What Is an Opportunity?p. 54
Detecting an Opportunityp. 56
Consult with Key Suppliersp. 57
Develop Preliminary Demand Profilep. 58
Types of Opportunitiesp. 59
Company-Level Opportunitiesp. 59
Customer Demandp. 59
Department-Level Opportunitiesp. 60
Acting on an Opportunityp. 60
From Opportunity to Prospective Projectp. 61
SS Managersp. 61
Validate the Opportunity and Estimate the Prizep. 62
The Project Proposalp. 63
Statement of Charterp. 63
Department Membersp. 63
The Project Timelinep. 64
Supporting Documentsp. 65
Sourcing Councilsp. 65
Presenting to the Supply-Chain Councilp. 67
Feasibility Reviewp. 68
Intelligence and Opportunity Checklistp. 70
Resultsp. 70
Establishing the Teamp. 75
Chapter Outlinep. 76
Getting the Project Startedp. 78
The CPO and the Project Budgetp. 78
The Project Coordinatorp. 79
Issuing a Project Charterp. 79
Commodity Teamsp. 82
Assess Current and Future Environmental Requirementsp. 83
Identify Skills Requiredp. 83
Recruiting an RMp. 88
Cross-Functional Teamsp. 89
Relevant Members of Commodity Teamsp. 90
Kickoff Meetingp. 94
Writing an SOWp. 96
Creating a Communication Planp. 96
Creating a Work Planp. 97
Developing a Market Research Planp. 98
Distributing Tasksp. 99
Checklistp. 100
Resultsp. 100
As-Is Assessment (Creating Internal Business Intelligence)p. 103
Chapter Outlinep. 104
Getting Started: Defining User Requirementsp. 106
Internal Analysisp. 107
The Local Spend Analysisp. 108
Identifying Historical Cost and Volume Trendsp. 111
Segmenting Spend by User, Type, and Supplierp. 113
Data Warehousesp. 114
Company's Existing Data Warehousep. 115
Data Warehouse Structurep. 115
Supply Management Data Warehouse Reportsp. 117
Need for Commodity Classificationp. 117
The Data Breakdownp. 118
Creating a Spend Analysis Report, Including Unit-Cost Analysisp. 119
The Spend Analysis Reportp. 119
Project Cost and Demand Requirementsp. 120
Analyzing Datap. 121
Analyzing the Spend Datap. 121
Reviewing Paperworkp. 121
Performing Cost Auditp. 121
Grassroots Interviewingp. 122
Checklistp. 123
Resultsp. 123
Developing Business Intelligence and Market Intelligencep. 125
Chapter Outlinep. 126
The Sales and Operating Planp. 128
The Three Laws of Forecasting Accuracyp. 130
Timeliness of Source Datp. 130
Timeline for the Forecastp. 130
The Forecast's Scalep. 131
Market Forecastsp. 132
Forecasting Usesp. 132
Forecasting-Outlook Rangesp. 135
Forecasting Typesp. 135
Demand Forecastsp. 136
Characteristics of a Solid Forecasting Systemp. 138
What Types of Data Do We Need?p. 138
Six Steps of Forecastingp. 141
Step 1: Calculate Forecast Accuracy and Generate Baseline Forecastsp. 141
Step 2: Apply Market Intelligence to 24+ Month Rolling Volume Forecasts with Sales and Marketingp. 143
Step 3: Generate 24+ Month Rolling SKU P&L Value Forecastsp. 145
Step 4: Perform Financial Gap Analysisp. 146
Steps 5 and 6: Approve Team-Based Forecast at Commercial Review Meetingp. 148
Sales and Operations Implementation - Best Practicesp. 151
Linking the Forecast to the Strategic Planp. 152
Conclusionp. 155
Checklistp. 155
Resultsp. 156
Supply Market Intelligencep. 157
Chapter Outlinep. 158
Introductionp. 159
Integrating Market Intelligence with Risk Assessmentp. 159
Types of Forecastsp. 161
Price Forecastsp. 161
Competitor Forecastsp. 165
Capacity Forecastsp. 167
Supply Forecastsp. 167
Technology Forecastsp. 170
Political and Economic Country Forecastsp. 174
Regulatory Policy Forecastsp. 179
Assessing Global Logistics Riskp. 181
Antiterrorism Lawsp. 182
Logistics Vulnerabilitiesp. 184
Tying Together the Elements of Riskp. 186
Eighteen Best Practices for Supply-Chain Risk Management Strategic Sourcingp. 188
How Can Companies Prioritize the Best Practices for Adoption and Integration into Business Processes?p. 191
Conclusionp. 192
Checklistp. 193
Supplier Evaluationp. 195
Chapter Outlinep. 196
Identifying Key Supplier Evaluation Criteriap. 197
Identifying Potential Supply Sources through RFIs and Secondary Market Researchp. 200
Current Suppliersp. 200
Sales Representativesp. 201
Information Databasesp. 201
Experiencep. 202
Trade Journalsp. 202
Trade Directoriesp. 202
Global Suppliersp. 203
Industrial Trade Showsp. 203
Second-Party or Indirect Informationp. 203
Internal Sourcesp. 204
Internet Searchesp. 204
Requests for Informationp. 204
Organizing Data and Determining If Sufficient Information Existsp. 204
Detailed Financial Analysisp. 206
Total Cost/Value Chain Assessmentp. 207
Performing a Detailed Supplier Evaluation through Supplier Visitsp. 212
Key Supplier Evaluation Criteriap. 212
Management Capabilityp. 214
Personnel Capabilitiesp. 215
Cost Structurep. 215
Total Quality Performance, Systems, and Philosophyp. 216
Process and Technological Capabilityp. 216
Environmental Regulation Compliancep. 217
Financial Capability and Stabilityp. 217
Production Scheduling and Control Systemsp. 218
E-Business Capabilityp. 219
Supplier Sourcing Strategies, Policies, and Maturityp. 219
Longer-Term Relationship Potentialp. 220
Developing an Initial Supplier Evaluation and Selection Surveyp. 221
Conclusionp. 226
Checklistp. 227
Resultsp. 227
Develop Sourcing Strategyp. 231
Chapter Outlinep. 232
Commodity Analysisp. 233
Nonstandard Itemsp. 235
Common Itemsp. 236
Leverage Itemsp. 238
Strategic Itemsp. 242
Supplier Preferencingp. 243
Transactional Suppliersp. 243
Partner Suppliersp. 244
Preferred Suppliersp. 244
Strategic Suppliersp. 245
Evaluate Strategiesp. 245
Annual Spendp. 247
Price as Primary Considerationp. 247
Cycle Time from Discovery of Need to Deliveryp. 247
Supply Base Highly Fragmentedp. 247
Requires Detailed Specifications Earlyp. 247
Product Is Highly Standardizedp. 248
Minimized Risk of Supplier Problems during Service Periodp. 248
Minimized Impact of Supplier Problems during Service Periodp. 248
Ability to Leverage Product Purchasesp. 248
Frequent Contract Negotiations or Product Orders in One Yearp. 249
High Switching Costsp. 249
High Rate of Technological Changep. 249
High Market Volatility (Quantity or Price)p. 249
High Service Requirements after Purchasep. 249
Desirability of Building Relationship with Supplierp. 250
Finalize Strategyp. 250
Strategic Commodity-Strategic Supplierp. 250
Common Commodity-Partner Supplierp. 251
Leverage Commodity-Preferred Supplierp. 252
Nonstandard Commodity-Transactional Supplierp. 253
Develop Relationship Strategy and Bargaining Positionp. 254
Determine Your Group's Position Relative to That of the Other Partyp. 254
Develop a Strategy Position Paperp. 255
Strategy Position Paper Outlinep. 255
Obtain Management Approval of Sourcing and Negotiation Strategiesp. 256
Conclusionp. 259
Checklistp. 259
Resultsp. 260
Execute Sourcing Strategy (Nonstrategic Supplier Relationships)p. 261
Chapter Outlinep. 262
Introduction - Managing the Transition to Relationship Managementp. 263
What Type of Relationship Is Appropriate for the Commodity?p. 266
Nonstrategic Transaction (16 Percent of All Relationships)p. 268
Administered Relationship (14 Percent)p. 269
Contractual Relationship (18 Percent)p. 269
Specialty Contract Relationship (6 Percent)p. 272
Partnership (12 Percent)p. 272
Joint Venture (16 Percent)p. 273
Alliance (18 Percent)p. 274
E-Procurement and the Purchasing Processp. 275
Purchase Approvalp. 276
Purchase Orderp. 278
Blanket Purchase Orderp. 279
Material Purchase Releasep. 280
Release and Receive Purchase Requirementsp. 280
Material Packing Slipp. 281
Bill of Ladingp. 281
Receiving Discrepancy Reportp. 282
JIT Purchasingp. 282
What Is the Right Approach to a Negotiation?p. 282
Preparing for the Negotiationp. 285
Conducting the Negotiationp. 286
Implementing the Agreementp. 288
Negotiation Planningp. 288
Developing Specific Objectivesp. 289
Analyzing Each Party's Strengths and Weaknessesp. 289
Gathering Relevant Informationp. 290
Recognizing Your Counterpart's Needsp. 290
Identifying Facts and Issuesp. 290
Establishing a Position on Each Issuep. 291
Developing a Negotiating Strategy and Tacticsp. 292
Briefing Other Personnelp. 294
Practicing the Negotiationp. 294
Power in Negotiationp. 294
Expert Powerp. 295
Referent Powerp. 295
Legitimate Powerp. 295
Legal Legitimate Powerp. 296
Reward Powerp. 296
Coercive Powerp. 296
Other Issues in Negotiationp. 296
Building a Contract That Minimizes Riskp. 298
Types of Contractsp. 298
Conclusionp. 301
Checklistp. 303
Resultsp. 304
Relationship Management (Strategic Supplier Relationships)p. 305
Chapter Outlinep. 306
Introductionp. 307
Why Relationship Management? Ten Reasons Why You Need a Dedicated Relationship Management Functionp. 308
A Single System Never Worksp. 309
People Need to Communicate Betterp. 309
Better Be Nice to People On the Way Up; You Are Going to See Them Again on the Way Downp. 310
Strong-Arm Negotiation Tactics Will Hurt You in the Endp. 310
The Demise of the Reverse Auctionp. 310
Data Means Different Things to Different Peoplep. 311
China: Do You Have a Strategy?p. 311
Channel/Supply Chain Design: Ten Hats Are Better Than Onep. 311
People Are Strange When You Are a Stranger: Geographic Differencesp. 312
Information Becomes Distortedp. 312
Making the Transition from Strategic Sourcing to Relationship Managementp. 312
Organize the Relationship Management Team; Define the Visionp. 313
The Case of Software Development and Proprietary Technologyp. 316
Define the Relationship Management Leader, the Team, and the Change-Management Strategyp. 318
Build Change-Management Strategy and Planp. 318
Operate the Relationshipp. 321
Manage Performance, Monitor Relationshipsp. 323
Making Changesp. 325
Handling Problemsp. 326
Common Problemsp. 326
Cancellation of Orders and Breach of Contractp. 326
Dispute Resolutionp. 331
Collectionsp. 331
Continuous Improvement of the Relationshipp. 331
Strategic versus Reactive Approaches to Supplier Developmentp. 333
Supplier Development: A Strategy for Improvementp. 337
Strategic Supplier Development Processp. 338
CAPS Global Supplier Development Studyp. 340
Key Findingsp. 342
Results of Supplier Developmentp. 348
Supplier Development Efforts That Sometimes Do Not Workp. 348
Overcoming the Barriers to Supplier Developmentp. 349
Can You Trust the Concept of Trust in Supply-Chain Relationships?p. 357
Reliabilityp. 358
Competencep. 359
Goodwillp. 360
Vulnerabilityp. 360
Dependence: Too Much Is Never a Good Thingp. 361
Conclusions: Lessons Learned about Relationship Managementp. 362
Checklistp. 365
Resultsp. 365
Referencesp. 365
Redesigning Your Organization for Supply-Chain Intelligence and Strategic Sourcingp. 369
Chapter Outlinep. 370
Leading Organizational Change for SCMp. 372
What Is the Required Organizational Structure for SCM?p. 373
Senior VP of SCMp. 377
VP of Supply-Chain Operations at Each Business Unitp. 377
VP of Supply-Chain Business Intelligence (Performance Evaluation)p. 379
VP of Supply-Chain Integration (Sustaining Strategy)p. 381
VP of Supply-Chain Strategyp. 382
Corporate Committeep. 383
Skill Sets Requiredp. 383
Definition of Skillsp. 387
SCM Knowledge Definitionsp. 390
Deploying Organizational Changep. 394
What Is Organizational Modularization?p. 395
Organizational Modules: An Examplep. 396
Rollout of Proposed Organizational Changesp. 397
Wave 1 - Establishing the Foundationp. 397
Wave 2 - Piloting Relationship Management Processesp. 400
Wave 3 - Full Deploymentp. 401
The Criticality of Building Consensus in Change Management: The Role of Cross-Functional Teamsp. 401
Rolesp. 402
The Challenges of Partnershipsp. 403
Conclusionp. 405
Checklistp. 405
Resultsp. 405
Benchmarkingp. 407
Chapter Outlinep. 408
Benchmarking Supply Market Intelligence and Organizational Maturityp. 409
The SCM Frameworkp. 413
How Will Organizations Progress through This Framework?p. 415
Foundation - Leadershipp. 416
Measured - Process Controlp. 416
Leveraged - CIp. 417
Optimized - Operational Excellencep. 417
Elements of Leadershipp. 418
Elements of Controlp. 423
Elements of CIp. 425
Elements of Operational Excellencep. 427
Maturity Gridsp. 428
Guiding Principles - Leadership and Organizational Alignmentp. 428
Guiding Principles - Supply Chain Strategyp. 429
Guiding Principles - Risk Managementp. 430
Guiding Principles - Enablersp. 431
Guiding Principles - Performance Managementp. 433
Guiding Principles - Quality Managementp. 434
Guiding Principles - Master Data Managementp. 435
Guiding Principles - Supply Chain Designp. 436
Guiding Principles - Buying Channels' Material Requirementsp. 437
Guiding Principles - Buying Channels' Service Requirementsp. 439
Guiding Principles - Aggregate Planningp. 440
Guiding Principles - Logistics Planning, Scheduling, and Coordinationp. 441
Guiding Principles - Replenishment Planningp. 442
Guiding Principles - Purchasing Transactionsp. 443
Guiding Principles - Perform Strategic Sourcingp. 445
Guiding Principles - Contract Managementp. 446
Guiding Principles - Relationship Managementp. 448
Guiding Principles - Warehouse Managementp. 458
Guiding Principles - Contract Services Managementp. 459
Guiding Principles - Accounts Payablep. 465
Guiding Principles - Continuous Improvementp. 467
Behaviors and Rolesp. 469
Conclusion - Leading Change in Supply Managementp. 471
Checklistp. 472
Resultsp. 472
Appendices
Global Sourcing in Chinap. 473
Low-Cost-Country Sourcing: What about China?p. 473
The Growth of Low-Cost-Country Sourcingp. 473
Barriers to Global Sourcingp. 476
Locating Global Sourcesp. 482
Identifying New Suppliers Globallyp. 483
China's Growing Economic Strengthp. 483
Labor Forcep. 484
Centers of Growth in Chinap. 485
Identifying and Negotiating with Chinese Suppliersp. 489
International Exchange Rate Forecastsp. 492
Conclusionsp. 493
Notesp. 495
Best Practices in Supplier Developmentp. 497
Three Best Practices in Supplier Developmentp. 497
Best Case 1: BMW's Approach to Supplier Developmentp. 497
Best Case 2: Supplier Development at Chryslerp. 505
Best Case 3: Supplier Development at Hondap. 519
Case Studies in Strategic Sourcingp. 539
Suncor Energy: Foothills Drilling - Relationship Management Processp. 539
Packaging Manufacturer - Developing an RFPp. 547
Bank of America: Document Management - Supply Market Intelligencep. 555
FedEx Strategic Sourcing and Supplyp. 564
Coding Systemsp. 581
Most Commonly Used Commodity Classification and Coding Systemsp. 581
Advantages and Disadvantagesp. 585
Industry: Transportationp. 586
Industry: Energy and Utilitiesp. 591
Industry: Information Technologyp. 599
Industry: Plasticsp. 605
Industry: Servicesp. 607
Industry: Steel Manufacturingp. 610
Industry: Textilesp. 611
General Web Sitesp. 615
Paid Servicesp. 615
Financial Ratios Informationp. 616
Supplier Data To Be Collectedp. 616
Purchase Order Data To Be Collectedp. 616
Sourcing Relationshipp. 617
Factors To Be Considered for Strategic Sourcing Processp. 617
References and Resourcesp. 619
Other Resourcesp. 622
Web sitesp. 622
Indexp. 623
Table of Contents provided by Ingram. All Rights Reserved.

ISBN: 9780849327896
ISBN-10: 084932789X
Series: Resource Management
Audience: Professional
Format: Hardcover
Language: English
Number Of Pages: 672
Published: 13th January 2006
Publisher: Taylor & Francis Ltd
Country of Publication: GB
Dimensions (cm): 23.5 x 15.6  x 3.81
Weight (kg): 1.07
Edition Number: 1