1st Edition
Supply Market Intelligence A Managerial Handbook for Building Sourcing Strategies
By Robert Handfield
Copyright 2006
666 Pages
88 B/W Illustrations
by
Auerbach Publications
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.
Introduction
Chapter Outline
What Is Supply Market Intelligence?
Moving Supply Management from the Tactical to Strategic
Approach
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
Summary
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
Enterprises
The Push Approach to BI/MI
Building a Case for Change: Identifying a Trigger
Have You Spoken to Your CFO about Supply Management
Recently?
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
Results
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
Checklist
Results
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
Checklist
Results
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
Conclusion
Checklist
Results
Supply Market Intelligence
Chapter Outline
Introduction
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
Conclusion
Checklist
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
Exists
Detailed Financial Analysis
Total Cost/Value Chain Assessment
Performing a Detailed Supplier Evaluation through Supplier
Visits
Conclusion
Checklist
Results
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
Strategies
Conclusion
Checklist
Results
Execute Sourcing Strategy
(Nonstrategic Supplier Relationships)
Chapter Outline
Introduction - Managing the Transition to Relationship
Management
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
Conclusion
Checklist
Results
Relationship Management
(Strategic Supplier Relationships)
Chapter Outline
Introduction
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
Management
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
Checklist
Results
References
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
Conclusion
Checklist
Results
Benchmarking
Chapter Outline
Benchmarking Supply Market Intelligence and Organizational
Maturity
The SCM Framework
How Will Organizations Progress through This Framework?
Maturity Grids
Behaviors and Roles
Conclusion - Leading Change in Supply Management
Checklist
Results
APPENDICES
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
Conclusions
Notes
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
Process
Packaging Manufacturer - Developing an RFP
Bank of America: Document Management - Supply Market
Intelligence
FedEx Strategic Sourcing and Supply
D Coding Systems
Most Commonly Used Commodity Classification and Coding
Systems
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
Chapter Outline
What Is Supply Market Intelligence?
Moving Supply Management from the Tactical to Strategic
Approach
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
Summary
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
Enterprises
The Push Approach to BI/MI
Building a Case for Change: Identifying a Trigger
Have You Spoken to Your CFO about Supply Management
Recently?
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
Results
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
Checklist
Results
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
Checklist
Results
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
Conclusion
Checklist
Results
Supply Market Intelligence
Chapter Outline
Introduction
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
Conclusion
Checklist
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
Exists
Detailed Financial Analysis
Total Cost/Value Chain Assessment
Performing a Detailed Supplier Evaluation through Supplier
Visits
Conclusion
Checklist
Results
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
Strategies
Conclusion
Checklist
Results
Execute Sourcing Strategy
(Nonstrategic Supplier Relationships)
Chapter Outline
Introduction - Managing the Transition to Relationship
Management
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
Conclusion
Checklist
Results
Relationship Management
(Strategic Supplier Relationships)
Chapter Outline
Introduction
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
Management
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
Checklist
Results
References
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
Conclusion
Checklist
Results
Benchmarking
Chapter Outline
Benchmarking Supply Market Intelligence and Organizational
Maturity
The SCM Framework
How Will Organizations Progress through This Framework?
Maturity Grids
Behaviors and Roles
Conclusion - Leading Change in Supply Management
Checklist
Results
APPENDICES
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
Conclusions
Notes
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
Process
Packaging Manufacturer - Developing an RFP
Bank of America: Document Management - Supply Market
Intelligence
FedEx Strategic Sourcing and Supply
D Coding Systems
Most Commonly Used Commodity Classification and Coding
Systems
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
Biography
Robert Handfield
