Strategic Supply Management: A Comprehensive Approach

SB1: Supply Framework Strategy

• The Framework Strategy connects Supply Strategy with Corporate Strategy.
• It ensures a common strategic orientation in Supply Management.
• Market and Supplier Strategies are coordinated.

SB2: Supply Market Strategy (Material Group Strategy)

• Formulates the strategy for one single supply market.

SB3: Supplier Strategy

• Relates to the Supply Market Strategy and Supplier Evaluation.
• Together with the most important suppliers, strategies for the development of the cooperation are formulated and implemented.

SB4: Supply Strategy Controlling

• The Supply Strategy is monitored and operationalized via Balanced Score Card.

M1: Develop Basis Strategy

• Definition of normative and strategic requirements for Supply Management
• Consequences of corporate and competitive strategy
  • The corporate strategy predefines the framework conditions for the supply strategy.
  • The supply strategy must be derived from the corporate strategy.
• Consequences of the corporate Value System (e.g.: working conditions at suppliers)
• Supply Vision for Alignment of Supply Management:
  • Develop a common vision for the purchasing department (e.g.: how do we want to work? How do we want to be seen by other departments? How do we measure our internal performance?)

M2: Supply Goals

• Formulate Supply Goals in the following categories:
• Object (e.g. raw materials)
• Business Process
• Cost
  • Object costs (e.g. reduction of material costs,…)
  • Process costs (e.g. reduction of transport costs, warehousing costs,..)
• Quality
  • Object quality (e.g. better raw material quality, more innovative products from suppliers,…)
  • Process quality (e.g. reduction of errors, availability of products, better/additional services to other business functions; JIT deliveries,…)
• Required Assets
  • Fixed Assets (e.g.: warehouses, transport vehicles, IT systems)
  • Working Capital (less inventory, better payment terms, consignment stocks,..)

M3: Strategy Map Introduction

• Develop Strategy Map
• DECISIONS are required:
  • Priorities of conflicting strategic goals (e.g. innovation versus costs)
  • Priorities of importance and urgency; not everything can be done at the same time
• Operationalization of the strategic goals (how do we achieve our goals?)
• Categories of the balanced scorecard
  • Learning and Growth
  • Processes and Suppliers
  • External & internal customers
  • Financials

M4: Material/Supply Market Grouping Criteria

• Materials/Supply Markets can be grouped by different criteria: