麦肯锡—Best practice in direct procurement

1、010411ac-bestpracticeindustryexamples confidential best-practice industry examples for direct material procurement fact pack jrgen laartz, bt-fk georg rau, bt-fk stle svenning, bt-ls stafano vittor, bt-ls june 5th , 2001 this report is solely for the use of client personnel. no part of it may be cir

2、culated, quoted, or reproduced for distribution outside the client organization without prior written approval from mckinsey it is not a complete record of the discussion. 010411ac-bestpracticeindustryexamples 1 findings from best-practice industry examples for direct material procurement source: te

3、am best-practice industry examples show that you need to have a procurement strategy first direct material procurement begins with the early stage of product development and is of strategic importance throughout the product lifecycle oems select, monitor and control suppliers beyond their first tier

4、 suppliers and focus besides contract manufacturers in particular on core component manufacturers throughout the production phase an open exchange of information with suppliers is the key success factor to manage the supply chain most b2b solutions support the procurement process during the producti

5、on phase not during the development phase most b2b solutions help reduce procurement costs, only few support on-time delivery and quality assurance typical marketplace solutions do not address the key issues of direct material procurement many b2b solutions are available key success criteria of dire

6、ct procurement are on-time delivery and high-quality, not low costs to achieve this, close relationships with the suppliers are necessary that need to be built up from the early product development phase onwards however, relationships with direct material suppliers are complex and hence not obvious

7、to handle supplier relationships are key what are the natural roles of the different participants in the value chain? how should the procurement process be optimized and what are the benefits from that? which it tools and structural set-ups would be beneficial? 010411ac-bestpracticeindustryexamples

8、2 focus of this document source: team key focus areas for direct procurement procure- ment consulting services necessity services education is/it capex market communication others systems core components standard components type of goods industry specific highly specialized made to specification ind

9、ustry specific specialized (sometimes commodity) made to specification industry specific (sometimes generic) commodity standardized generic commodity standardized strategic importance high high medium low focus on timely delivery and high quality focus on low costs direct materials indirect material

10、s 010411ac-bestpracticeindustryexamples 3 direct material procurement implies active management of suppliers source: team requirements procurement strategy accurate, up-to-date forecasts to provide suppliers with information on current demand visibility of inventories to provide suppliers with infor

11、mation on current supply transparency of in-bound supply chain to recognize bottlenecks for mission-critical components/systems early careful screening and selection of suppliers detailed design specifications developed in close collaboration with suppliers ongoing evaluation of suppliers broad over

12、view over supply base clear understanding of production costs of standard components efficient procurement processes supplier switching supplier development and integration timely delivery high quality low costs 010411ac-bestpracticeindustryexamples 4 for successful direct material procurement both

13、strategic and operational processes have to be mastered source: team product lifecycle strategic procurement processes key success factors for direct material procurement timely delivery high quality low costs operational procurement processes material specification/change management product develop

14、ment strategic phase design phase prototype phase transition phase mass production forecasting procurement fulfillment strategy design supplier selection supplier development 010411ac-bestpracticeindustryexamples 5 procurement process for direct material spans across both product development and pro

15、duction phase * total cost of ownership source: mckinsey identify new, innovative materials and technologies quantify tco* survey supply markets decide on sourcing set awarding strategy identify and assess suppliers negotiate and award contract jointly design and develop new product specify material

16、 require- ments manage specification changes determine long-term forecasts annually and send to suppliers track incoming orders estimate short- and mid term demand and transmit to suppliers track inventory level and production schedule plan procurement perform ongoing analysis of price and cost tren

17、ds place order/ call-off track order status manage in-bound transport- ation test product initiate payment continuously measure performance of supplier focus on suppliers requiring improvement and help them improve update supplier on latest development within buyer company procurement strategy desig

18、n supplier selection material specifi- cation forecasting procurement fulfillment supplier development product developmentproduction 010411ac-bestpracticeindustryexamples 6 relationships with and among direct material suppliers are typically quite complex source: team physical flow strategic agreeme

19、nt for active supply management a procurement strategy is needed for systems, core components and standard components that defines the procurement process level of interaction between the various participants of the supply chain main direction of value chain original equipment manufacturer systems m

20、anufacturer (contract manufacturer) core component manufacturer standard component manufacturer distributor/ third party logistics provider ? 010411ac-bestpracticeindustryexamples 7 findings from best-practice industry examples for direct material procurement source: team best-practice industry exam

21、ples show that you need to have a procurement strategy first direct material procurement begins with the early stage of product development and is of strategic importance throughout the product lifecycle oems select, monitor and control suppliers beyond their first tier suppliers and focus besides c

22、ontract manufacturers in particular on core component manufacturers throughout the production phase an open exchange of information with suppliers is the key success factor to manage the supply chain most b2b solutions support the procurement process during the production phase not during the develo

23、pment phase most b2b solutions help reduce procurement costs, only few support on-time delivery and quality assurance typical marketplace solutions do not address the key issues of direct material procurement many b2b solutions are available key success criteria of direct procurement are on-time del

24、ivery and high-quality, not low costs to achieve this, close relationships with the suppliers are necessary that need to be built up from the early product development phase onwards however, relationships with direct material suppliers are complex and hence not obvious to handle supplier relationshi

25、ps are key what are the natural roles of the different participants in the value chain? how should the procurement process be optimized and what are the benefits from that? which it tools and structural set-ups would be beneficial? 010411ac-bestpracticeindustryexamples 8 a wide range of tools is ava

26、ilable to support procurement and supply management source: mckinsey online web sites and tools that bring buyers and suppliers together to transact business communities market places/exchanges order-to-payment auto- mation (product selection, purchase order generation, order approval, order trackin

27、g and payments) online procurement catalogues financial risk management tools online networks focused on linking buyers and suppliers through a secure internet connection to facilitate information exchange and cooperation procurement tools description examples market making tools integrated procurem

28、ent solutions intimate supplier networks supplier extranets supply chain collaboration tools supply chain integration tools supply chain optimization tools 010411ac-bestpracticeindustryexamples 9 procurement tools can create value in various ways source: mckinsey lower prices through increased compe

29、tition between suppliers increase transparency of demand and supply access to new suppliers lower transaction cost more efficient communication mechanism reduced lead-times for sourcing through easier supplier identification and selection higher compliance and reduced maverick buying reduced transac

30、tion costs streamlined, more efficient process buyer time freed up for more strategic tasks volume discounts reduced procurement costs sharing of forecast and inventory information improved distribution and logistics reduced returns/order errors sharing of new product development information increas

31、ed reliability of delivery improved quality of components source of value creation main effect procurement tools market making tools integrated procurement solutions intimate supplier networks 010411ac-bestpracticeindustryexamples 10 product offerings and features of market making tools source: mcki

32、nsey information and services capturing the needs and interests of a specific community of individuals, professionals and businesses high-quality editorial content discussion forums news about industry on-line catalogue of products on-line directories of participants, vendors, buyers and key contact

33、s on-line services for companies to seek new partners, exchange information, make purchases (via spot buying, surplus disposition auction) and to do settlements definition product offerings/features need2buy broker forum chip center verticalnet quest link examples auctions (excess inventory spot), f

34、orward and reverse auctions, fulfillment matching buy and sell orders between multiple buyers and suppliers collaboration (product planning, design, sourcing) ariba commerce one free markets virtual chip exchange oracle communities marketplaces/ exchanges 010411ac-bestpracticeindustryexamples 11 pro

35、duct offerings and features of integrated procurement solutions order-to-payment automation tool browser-based electronic catalogues supplier selection item search purchase order generation and approval services to manage the financial part of transaction definition product offerings/features ariba

36、commerce one oracle examples payment enablement escrow services credit insurance purchasing card american express visa i-escrow online procurement catalogues financial risk management tools source: mckinsey 010411ac-bestpracticeindustryexamples 12 product offerings and features of intimate supplier

37、networks (1/2) secure web pages open to selected suppliers for sharing of forecast, ordering and inventory data access to research and development information sharing of forecast ordering, and inventory data monitoring of delivery status software and services to let business automate processes, exch

38、ange and share information both within the enterprise and across the whole value chain definition product offerings/features cisco ford examples tools to communicate information within the organization, across business partners inter-/intra-enterprise business process automation/integration work flo

39、w enablement inter/intra enterprise communication infrastructure agile software datasweep. com viewlocity supplier extranets supply chain collaboration tool source: mckinsey 010411ac-bestpracticeindustryexamples 13 product offerings and features of intimate supplier networks (2/2) intra-company appl

40、ications to manage resource planning, inventory management, logistic planning and tracking resource planning/ optimization inventory planning/ management logistics/shipping/ warehouse management production planning inter-enterprise business intelligence tools to proactively analyze data for multi- e

41、nterprise supply chain effectiveness definition product offerings/ features i2 technologies ibm manugistics group examples data analysis/query across heterogeneous data sources domain-specific metrics, best practices event-based modification, reporting microstrategy ecnet harmony supply chain integr

42、ation tools supply chain optimization tools source: mckinsey 010411ac-bestpracticeindustryexamples 14 findings from best-practice industry examples for direct material procurement source: team best-practice industry examples show that you need to have a procurement strategy first direct material pro

43、curement begins with the early stage of product development and is of strategic importance throughout the product lifecycle oems select, monitor and control suppliers beyond their first tier suppliers and focus besides contract manufacturers in particular on core component manufacturers throughout t

44、he production phase an open exchange of information with suppliers is the key success factor to manage the supply chain most b2b solutions support the procurement process during the production phase not during the development phase most b2b solutions help reduce procurement costs, only few support o

45、n-time delivery and quality assurance typical marketplace solutions do not address the key issues of direct material procurement many b2b solutions are available key success criteria of direct procurement are on-time delivery and high-quality, not low costs to achieve this, close relationships with

46、the suppliers are necessary that need to be built up from the early product development phase onwards however, relationships with direct material suppliers are complex and hence not obvious to handle supplier relationships are key what are the natural roles of the different participants in the value

47、 chain? how should the procurement process be optimized and what are the benefits from that? which it tools and structural set-ups would be beneficial? 010411ac-bestpracticeindustryexamples 15 industry examples for best-in-class procurement demonstrate need for control over second tier suppliers sou

48、rce: team example 1: datacom industry example 2: computer industry example 3: automotive industry production is outsourced to a large extent to 1st tier suppliers (contract manufacturers); thus companies source mainly on system level companies choose strategic 2nd tier suppliers (core component supp

49、liers), negotiate contracts and purchase the strategic components on behalf of first tier suppliers first tier suppliers only choose standard component suppliers companies directly provide core component suppliers with design specifications distributors handle the operations manufacturing supply-sid

50、e logistics and the transportation of parts to assembly line on a just-in-time basis description procurement strategy provides end-to-end networking solutions (e.g., networking devices, operating systems, service and support programs) to enterprises, service providers, small/ medium businesses in 11

51、5 countries provides end-to-end solutions for doing business in the new net economy (e.g., enterprise server, network storage, desktop-systems, etc.) to companies across all industries in more than 170 countries provides passenger cars and commercial vehicles in all segments of the automotive market

52、 to a broad range of private and business customers in 190 countries 010411ac-bestpracticeindustryexamples 16 key player in datacom industry facts source: internet, team to shape the future of internet and networking to create unprecedented value and opportunity for customers, employees, investors a

53、nd ecosystem partners mission products and services customers networking devices (hardware) internetworking operating systems and management software data communication peripherals (cables, transceivers, power supplies, etc.) service and support programs enterprises (large organizations with complex

54、 networking needs) internet and telecommunication service providers (e.g., isps, telecommunication carriers, cable companies) small/medium business 010411ac-bestpracticeindustryexamples 17 key player in datacom industry key figures 12-month revenue growth source: hoovers online percent net profit ma

55、rgin12-month net income growth 55.7 14.1 27.3 8.4 17.1 24.5 average in networking and communication device industry 1999 revenues: $10 billion 1999 headcount: 20,000 010411ac-bestpracticeindustryexamples 18 key features of direct material procurement of datacom manufacturer (1/5) source: harvard bus

56、iness review february 2000, harvard business review april 2000, purchasing magazine may 2000, business wire april 2000, mckinsey overall procurement strategy is designed centrally by global supply management organization which has groups for semiconductors, electrochemical and optical devices procur

57、ement strategy is strongly shaped by outsourcing strategy the company has outsourced most manufacturing activities, such as board stuffing and board testing, to contract manufacturers; five contract manufacturers build boards, two build entire systems; they also handle the order-management process f

58、or the company bonded inventory, auto replenishment and in-plant stores at the contract manufacturers sites, i.e. all material management is outsourced to distributors who pipeline parts like asics and memory the entire operations manufacturing supply-side logistics is outsourced to third-party logi

59、stics provider manufacturing only very few components (such as memory) purchased by the company all procurement activity is done via the contract manufacturer or the distributor; company decides on how to split a bill of material between the various suppliers relationship with suppliers is based on

60、the virtual enterprise approach, i.e., all key suppliers are closely tied into the company through extensive real time sharing of information about demand, inventories and capacities procurement strategy design supplier selection material specfi- cation forecasting procure- ment fulfillment supplier