Supply Market Intelligence: A Managerial Handbook for Building Sourcing Strategies, 1st Edition (Hardback) book cover

Supply Market Intelligence

A Managerial Handbook for Building Sourcing Strategies, 1st Edition

By Robert Handfield

Auerbach Publications

672 pages | 88 B/W Illus.

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pub: 2006-01-13
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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.

Table of Contents


Chapter Outline

What Is Supply Market Intelligence?

Moving Supply Management from the Tactical to Strategic


The Profit-Leverage Effect of Supply Management

How Mature Is Your Supply Management Function?

Translating Corporate Objectives into Supply Management Goals

Bringing Goals and Objectives Together - the Strategic

Sourcing Process

A Word on Business and Market Intelligence


Intelligence and Opportunity

Chapter Outline

BI and SMI - A Massive Challenge for Enterprises in the Future

The Need for a Dedicated BI/MI Centralized Team in Large


The Push Approach to BI/MI

Building a Case for Change: Identifying a Trigger

Have You Spoken to Your CFO about Supply Management


What Is an Opportunity?

Detecting an Opportunity

Types of Opportunities

Acting on an Opportunity

From Opportunity to Prospective Project

Validate the Opportunity and Estimate the Prize

The Project Proposal

Intelligence and Opportunity Checklist


Establishing the Team

Chapter Outline

Getting the Project Started

The CPO and the Project Budget

The Project Coordinator

Issuing a Project Charter

Assess Current and Future Environmental Requirements

Identify Skills Required

Recruiting an RM

Cross-Functional Teams

Kickoff Meeting

Distributing Tasks



As-Is Assessment (Creating Internal Business Intelligence)

Chapter Outline

Getting Started: Defining User Requirements

Internal Analysis

Identifying Historical Cost and Volume Trends

Segmenting Spend by User, Type, and Supplier

Data Warehouse and Data Warehousing

Creating a Spend Analysis Report, Including Unit-Cost Analysis

Project Cost and Demand Requirements

Analyzing Data

Performing Cost Audit

Grassroots Interviewing



Developing Business Intelligence and Market Intelligence

Chapter Outline

The Sales and Operating Plan

The Three Laws of Forecasting Accuracy

Market Forecasts

Forecasting Uses

Forecasting Types

Characteristics of a Solid Forecasting System

Six Steps of Forecasting

Sales and Operations Implementation - Best Practices




Supply Market Intelligence

Chapter Outline


Integrating Market Intelligence with Risk Assessment

Types of Forecasts

Assessing Global Logistics Risk

Tying Together the Elements of Risk

Eighteen Best Practices For Supply-Chain Risk Management

Strategic Sourcing



Supplier Evaluation

Chapter Outline

Identifying Key Supplier Evaluation Criteria

Identifying Potential Supply Sources through RFIs and Secondary

Market Research

Organizing Data and Determining If Sufficient Information


Detailed Financial Analysis

Total Cost/Value Chain Assessment

Performing a Detailed Supplier Evaluation through Supplier





Develop Sourcing Strategy

Chapter Outline

Commodity Analysis

Supplier Preferencing

Evaluate Strategies

Finalize Strategy

Develop Relationship Strategy and Bargaining Position

Developing a Strategy Position Paper

Obtain Management Approval of Sourcing and Negotiation





Execute Sourcing Strategy

(Nonstrategic Supplier Relationships)

Chapter Outline

Introduction - Managing the Transition to Relationship


What Type of Relationship Is Appropriate for the Commodity?

E-Procurement and the Purchasing Process

Purchase Approval

Release and Receive Purchase Requirements

What is the Right Approach to a Negotiation?

Preparing for the Negotiation

Conducting the Negotiation

Implementing the Agreement

Negotiation Planning

Power in Negotiation

Building a Contract that Minimizes Risk




Relationship Management

(Strategic Supplier Relationships)

Chapter Outline


Why Relationship Management? Ten Reasons Why You Need a

Dedicated Relationship Management Function

(Handfield and Nichols, 2003)

Making the Transition from Strategic Sourcing to Relationship


Organize the Relationship Management Team, Define the Vision

The Case of Software Development and Proprietary Technology

Define the Relationship Management Leader, the Team, and the

Change-Management Strategy

Operate the Relationship

Manage Performance, Monitor Relationships

Common Problems

Strategic versus Reactive Approaches to Supplier Development

Supplier Development: A Strategy for Improvement

CAPS Global Supplier Development Study (1997)

Supplier Development Efforts That Sometimes Do Not Work

Can You Trust the Concept of Trust in Supply-Chain

Relationships? What Does It Mean to Trust?

Dependence: Too Much Is Never a Good Thing

Conclusions: Lessons Learned about Relationship Management




Redesigning Your Organization for Supply-Chain

Intelligence and Strategic Sourcing

Chapter Outline

Leading Organizational Change for SCM

What Is the Required Organizational Structure for SCM?

Definition of Skills

SCM Knowledge Definitions

Deploying Organizational Change

What Is Organizational Modularization?

Rollout of Proposed Organizational Changes

The Criticality of Building Consensus in Change Management:

The Role of Cross-Functional Teams

The Challenges of Partnerships





Chapter Outline

Benchmarking Supply Market Intelligence and Organizational


The SCM Framework

How Will Organizations Progress through This Framework?

Maturity Grids

Behaviors and Roles

Conclusion - Leading Change in Supply Management




A Global Sourcing in China

Low-Cost-Country Sourcing: What about China?

The Growth of Low-Cost-Country Sourcing

Barriers to Global Sourcing

Locating Global Sources

Identifying New Suppliers Globally

China's Growing Economic Strength

Labor Force

Centers of Growth in China

Identifying and Negotiating with Chinese Suppliers

International Exchange Rate Forecasts



B Best Practices

Three Best Practices in Supplier Development

Best Case 1: BMW's Approach to Supplier Development

Best Case 2: Supplier Development at Chrysler

Best Case 3: Supplier Development at Honda

C Case Studies

Suncor Energy: Foothills Drilling - Relationship Management


Packaging Manufacturer - Developing an RFP

Bank of America: Document Management - Supply Market


FedEx Strategic Sourcing and Supply

D Coding Systems

Most Commonly Used Commodity Classification and Coding


Advantages and Disadvantages

Industry: Transportation

Industry: Energy and Utilities

Industry: Information Technology

Industry: Plastics

Industry: Services

Industry: Steel Manufacturing

Industry: Textiles

General Web Sites

Paid Services

Supplier Data To Be Collected

Purchase Order Data To Be Collected

Sourcing Relationship

Factors To Be Considered for Strategic Sourcing Process

E References and Resources

Other Resources

Web sites

About the Series

Resource Management

Learn more…

Subject Categories

BISAC Subject Codes/Headings:
BUSINESS & ECONOMICS / Industries / Manufacturing Industries
BUSINESS & ECONOMICS / Purchasing & Buying