Supply Management as a Core Capability (SMCC)
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Transcript of Supply Management as a Core Capability (SMCC)
Supply Management as a Core Competency(SMCC)
Jan 2010 (rev 1)
Welcome to Purchasing Practice
Copyright Corporate Purchasing Practice Inc
We are passionate about helping you realise the powerful benefits to be gained by developing key capabilities in supply management (SM).
So passionate we believe SM must become a core capabilityIn all organisations.
Purchasing Practice is a specialist niche consultancy specialising in procurement -Procurement is all we do.
As a supporter of open innovation in SM we present our thoughts on what is involvedin advancing Supply Management as a core competence and invite interested parties to share their views to develop this theme.
Thanking you in advance,
David HenshallFounderPurchasing PracticeBuilding Capability in Procurement & Supplywww.purchasingpractice.com
Aligning Business & Supply Management (SM) Strategy
Business Strategy
Branding & Reputation
Revenue Growth
Organisation Structure
Product Differentiation
SM Strategy
CSR
CRM & SRM
Cost Optimisation
Innovation
Customers & Stakeholders
Supply Market CapabilitiesSCM
Copyright Corporate Purchasing Practice Inc
Integrating Supply & Demand Side Plans is Critical to Delivery of the Business Plan
Supply Management as a Core Competency(SMCC):SMCC is a key enabler of the management of risk from threats and the exploitation of opportunities in a company’s external environment.
Copyright Corporate Purchasing Practice Inc
PrimaryBusiness
Competency
Primary Value Chain
Organize Resources to
exploit
FinancesStructurePlanning & controlTechnology
Tangible Resource
PeopleInnovationReputation
In -Tangible Resource
Core business competency = strategic capability
Sustain competitive advantage
Sales &Marketing
Source & Procure
Convert(Add Value)
ServiceDelivery
+
+
Supply Management as a Core Competency(SMCC): A core competency must be invested in to build capability
Copyright Corporate Purchasing Practice Inc
PrimaryBusiness
Competency
Build Supply ManagementCapabilities
PlanningCategory ManagementStrategic sourcingOpportunity AssessmentContracts ManagementSupplier relationship MgtP2P
FollowerCapabilities
Leadership Cost Management Collaboration Innovation Risk Management HR & Talent Mgt
Leader Capabilities
Market Making Maximise Opportunity Balance Risk Cost Optimisation Entrepreneurial Core Agility Market Sensing Brand & Reputation Mgt
Innovator Capabilities
Sustain competitive advantage
Sales &Marketing
Source & Procure
Convert(Add Value)
ServiceDelivery
Core business competency = strategic capability
SMCC and Capability MaturityThe more Highly Developed SM Competency is the More Strategic Value is Gained
Copyright Corporate Purchasing Practice Inc
Strategic
Sourcing
Category
Management
Supplier
Relationship
Management
Demand
Management
Value
Management
Cost Down
MarketMaking
Value
Market
Management
Cost Out
Cu
sto
mer
& S
up
plie
r
Fo
cu
s
Pro
cess &
Beh
avio
ur
Fo
cu
s
Cate
go
ry
Fo
cu
s
Sta
ge 1
Sta
ge 2
Sta
ge 3
Cost Optimised –
Differentiated Product
CollaborativeStrategies
LeverageStrategies
Ca
pa
bili
ty
SMCC at the Market Management Level:
Market Making
Opportunities
Drive
Growth
Copyright Corporate Purchasing Practice Inc
SMCC Is at its Optimal State when Procurement Develops its Entrepreneurial Core O
pti
mis
e C
ost
Balance Risk
Maxim
ise O
pp
ortu
nities
Sensing & Responding
Innovate
EntrepreneurialCore
The Entrepreneurial Core Collects & Disseminates External Information to Formulate Strategies to Capture New Business Opportunities
Copyright Corporate Purchasing Practice Inc
8
SMCC Becomes a Primary Business Process in the New Business Value Chain
Business StrategyDelivery
Pri
mar
yB
usi
ne
ss P
roce
sse
sSe
con
dar
y B
usi
ne
ss P
roce
sse
s
Sales & MarketingProcurement & SC
Supply ChainPlanning
Convert(Add Value)
ServiceDelivery
Value Chain Strategy
Information Technology
Finance & Accounting
Human Resources
Strategic Responding
External Sensing
Enab
lers
The Value Chain has evolved - modern businesses are much less vertically integrated and continue to outsource more and more and SM has become a core competency:
SMCC + Entrepreneurial Core = Deep External Market Understanding
Product Strategy
& Marketing
Plan
CategoryPlans
+/-Impacts
+/-Impacts
Demand MarketForces
Supply MarketForces
Opportunities & RiskOpportunities & Risk
Sensing & RespondingSensing & Responding
Procurement& SCM
Sales & Marketing
Knowledge Management
Framework
Copyright: Corporate Purchasing Practice Inc ©
Copyright Corporate Purchasing Practice Inc
External Forces Need to be Monitored, Filtered, Processed & Acted Upon:
The ability to respond to external forces faster and more effectively than competitors delivers a clear competitive advantage – Category & Marketing Plans Provide the Link to Business Strategy Delivery
The New Competency Driven Value Chain Must Evolve & Respond to External Forces
Copyright Corporate Purchasing Practice Inc
CompetitorActivity
Cu
stom
er
Activity
Sup
plie
rA
ctiv
ity
SubstituteProducts
Strategic competencies in this less vertically integrated environment are significantly different:
Po
litic
alA
ctiv
ity
EnvironmentalConcerns &
Events
Social
Tren
ds
TechnologicalDevelopments
Integrating Supply & Demand Side Plans
Copyright Corporate Purchasing Practice Inc
External Sensing is Translated into Responses via Category & Marketing Plans:
Supply Environment Forces+/- Impact on
Extern
al Factors
= Op
po
rtun
ities o
r Thre
ats
Product
Promotion
Price
Place
Maximise Opportunities
OptimiseCost
Balance Risk
Capture Innovation
= Op
po
rtun
ities o
r Thre
ats
Extern
al Factors
CompanyEnvironment
CulturalForces
Internal Factors = Strengths & Weaknesses
Internal Factors = Strengths & Weaknesses
Mic
ro-e
nvir
on
men
tM
icro
-env
iro
nm
ent
Mac
ro-e
nvi
ron
men
t
Demand Environment Forces +/- Impact on
Procurement
CompanySuppliersInnovation
Policy
Sales & Marketing
CompanyCustomersCompetition
Policy
Supply Market
Demand Market
Marketing Plan
Category Plans
Copyright Corporate Purchasing Practice Inc
SMCC Supports Business Strategy OptimisationOrganising and defining what will be done as part of any Strategy Optimisation programme
Strategy Evaluation
Cost Optimisation
ProductDifferentiation
Process Re-engineering
Outsourcing
Strategic Sourcing
Investments
Internal View
Competitor View
Best in Class View
Investor View
Strategy Optimisation
Setting Targets
Prioritising Initiatives
Resources, Governance, Alignment
SupportingOrganisation
Ba
selin
e
Marketing Evaluation
Category Evaluation
Marketing Plan
Category Plans
SMCC Requires World Class Organisation and Capabilities:
Vision & Leadership
Market
Making
Opportunities
Drive
Growth
ProcessesSourcing
Management
Supplier
Relationship
Management
Operational
Purchasing
Management
Standards &
Tools
Performance
Measures
Knowledge
Managemente-enabled
Performance
MeasurementCompliance
Contract &
Supplier
Management
Continuous
Improvement
& Innovation
HR Management
Organizational
AlignmentStructure
Policies &
Procedures
Roles &
Responsibilities
Copyright Corporate Purchasing Practice Inc
Purchasing Practice Model of Procurement Excellence
Source Title Link
Purchasing Practice Group
http://www.linkedin.com/e/gis/771367
Purchasing Practice –Executive Search Link
http://www.linkedin.com/e/gis/866537
The source for thought leadership
http://purchasingpractice.com/information/
on-line forum for procurement professionals
http://purchasingpractice.com/blog/
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Contact us at: [email protected]
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