Beyond the Transaction
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Transcript of Beyond the Transaction
Beyond the Transaction:
Enabling Knowledge Based Services in your Procurement
Captive
Philip Ideson
Procurement & outsourcing experience as a client and
provider across multiple industries. Lived and worked in UK,
US & India.
Key Points
• Background: Offshore Shared Services Procurement Office
• Approach: Identifying Knowledge Based Processes
• Enablement & Engagement: Building Offshore Capabilities
• Creating Value: Knowledge Based Services Examples
• Capture the Benefit: Conditioning Home Country Colleagues
Quick Poll: ABOUT YOU
1
2Captive Shared Service or
Outsourced?
Who has offshored part of their
procurement function ?
3Do they perform any knowledge
based services?
OUR PROCUREMENT SHARED SERVICES JOURNEY
Initial Vision: Offshore team to provide tactical procurement activities
5 Years In: 170 FTE’s across multiple verticals
We then challenged ourselves:
“Move beyond labor arbitrage and create value for our home
office through the provision of knowledge based services”
“Work flow platforms are enabling us to
do for the service industry what Henry
Ford did for manufacturing.
We are taking apart each task and
sending it around to whomever can do it
the best, and because we are doing it in
a virtual environment, people need not
be physically adjacent to each other, and
then we are reassembling the pieces
back at headquarters…24/7/365.”
Approach: WORK FLOW PLATFORMS
- Thomas Friedman; The World is Flat
We plotted the process steps for every job type based on the complexity and the
strategic nature of the process
We then allocated each process step to either our home office colleagues or an analyst
in our offshore shared service center, and rebuilt the process flow and R&R’s
Approach: Filling the Gaps
We identified gaps in the capabilities of our resource
constrained home office procurement teams
Approach: FILLING THE GAPS
We considered how we could leverage the
masses of data we accumulated during our
transactional activities
Approach: LEVERAGING DATA
We identified three key areas where we could
create value through knowledge based services:
1. Strategic Sourcing (support Direct & Indirect spend categories)
2. Analytics (market intelligence, cost modeling, negotiation support)
3. Category Management (low value, “ignored” categories)
To enable the implementation, we built a holistic
framework to grow the entire organization…
1. Talent
2. Performance
3. Governance
4. Transitions
5. Structure
6. Branding
To enable the implementation, we built a holistic
framework to grow the entire organization…
1. Talent
2. Performance
3. Governance
4. Transitions
5. Structure
6. Branding
TALENT:Develop, Measure, Incent & Grow
Example / Success Factor:
Voluntary Attrition of 12%
1. Talent
2. Performance
3. Governance
4. Transitions
5. Structure
6. Branding
PERFORMANCE:Create a performance driven culture
Example / Success Factor:
Performance metrics across 100% of our processes
To enable the implementation, we built a holistic
framework to grow the entire organization…
1. Talent
2. Performance
3. Governance
4. Transitions
5. Structure
6. Branding
GOVERNANCE:SOW’s & Business Operating Reviews
Example / Success Factor:
Only group within Global Purchasing to commit KPI’s to internal clients
To enable the implementation, we built a holistic
framework to grow the entire organization…
1. Talent
2. Performance
3. Governance
4. Transitions
5. Structure
6. Branding
TRANSITIONS:Consistency of Approach
Example / Success Factor:
Implemented formal project management process for all transitions
To enable the implementation, we built a holistic
framework to grow the entire organization…
1. Talent
2. Performance
3. Governance
4. Transitions
5. Structure
6. Branding
STRUCTUREBuild a locally managed business
Example / Success Factor:
In-country chain of command ensures accountability of local leadership
To enable the implementation, we built a holistic
framework to grow the entire organization…
1. Talent
2. Performance
3. Governance
4. Transitions
5. Structure
6. Branding
BRANDINGBrand as an external service provider
Example / Success Factor:
Focus on brand helped facilitate 100% growth within 12 months
To enable the implementation, we built a holistic
framework to grow the entire organization…
We identified an internal client
and advocate who would help
build and pilot new knowledge
based services
Pilot: PHONE-A-FRIEND
While for other activities, clients were
not able to visualize the possibilities, so
we built services and then demonstrated
the value they could create
Enablement Route 2: Built it and they will comePilot: BUILD AND THEY WILL COME
Enablement Route 2: Built it and they will comeExample: BUYER/CAPTIVE R&R SPLIT
Market Intelligence
Amortization Tracking
Supplier contact database
Performance Information Gathering
Category Info Gathering
Populate RFQ
1. Global Commodity Strategies
Regional Commodity Buyer Activities
Captive Purchasing Support Activities
Governance
Regional Commodity Buyer Activities
Captive Purchasing Support Activities
Outsourcing Visteon Manufacturing
Budgeted Parts Reconciliation
Supplier Legal Issues
Make/Buy Participation
Commodity Strategy
EST Cost Models & Targets
Escalated Service Pricing Issues
Escalated Payment Issues
Obsolescence Mgmt.
Supplier Management and RelationsManage Supplier Location Changes
(SCR)
Claim Verification and Processing
Directed Supplier Purchases
On-line bidding events
Raw Material Surcharge analysis
Populate RFQ
Information Gathering
On-line bidding events
Info Gathering (CMMS, SAP)
Populate RFQ
2. Sourcing
Regional Commodity Buyer Activities
Captive Purchasing Support Activities
Recommend Source
Selection (auction or eRFQ)
Information Gathering
3, Negotiations & Supply Base Performance
Regional Commodity Buyer Activities
Captive Purchasing Support Activities
Non-Design Price Changes
Negotiate Service Price Ups
Supplier Charge back
Supplier Resourcing
Supplier Resourcing
Productivity Negotiations
Supplier Assessment
Strategic Sourcing – Source Selection
Warranty negotiations
Supplier Management and Relations
For our Commodity Buyer’s, we split all roles
and responsibilities between the home office
Buyer and our Captive Team
Enablement Route 2: Built it and they will comeExample: SOURCING PROCESS
STEP 2 STEP 3 STEP 4 STEP 5 STEP 6 STEP 7
Build Sourcing Strategy
RFQ Preparation and issuance
Supplier response collection & analysis
Evaluation, negotiation and sourcing award
Implement Sourcing
Performance Management
STEP 1
Identify Sourcing Requirement
We divided the work flows across the sourcing process between colleagues
in our home offices and our offshore captive center:
Strategy & Needs Id ● RFQ Requirements ● RFQ Analysis ● Negotiation ● Implement ● Supplier Management
Build & Issue RFQ ● RFQ Q&A ● RFQ Collection ● Negotiation Data Analysis ● Issue PO ● Track Performance
Value Creation Activities
Time Consuming Activities
Example: COST ANALYTICS
� Analyzing cost breakdowns� Cost elements (FOREX, Material, Labor, Markups)
� Supplier costs for similar products & services
� Gather market intelligence� Commodity prices, price trends, price forecasts)
� “Should Cost” Models
� Negotiation Support Reports
OUTPUT:
Our Captive took a lead role in
capturing, analyzing and
reporting intelligence
CAPTURE THE BENEFIT
Conditioning of home office colleagues
� Cultural awareness
� Understanding of captive shared services capabilities
�Ability to reassemble work flow platforms
Key Takeaways
� Identify the processes you want to
target
� Build the organizational foundation
that will enable you to make the leap
to knowledge based services
� Pilot your services with an internal
advocate
� Use early successes and advocates to facilitate growth
� For maximum benefit, ensure your team members providing the
knowledge based services are fully integrated into your home office
teams
KEY TAKEAWAYS
Continue the Conversation
+1 313 670 1333
www.linkedin.com/pub/philip-
ideson/1/552/618
CONTINUE THE CONVERSATION
Title Name URL
Thomas Friedman Charles Haynes http://www.flickr.com/photos/americanprogress/3077771442/sizes/m/in/photostream/
Euros Username 1suisse http://www.flickr.com/photos/1suisse/3752554593/sizes/l/in/photostream/
Mind the Gap Username limaocarjuliet http://www.flickr.com/photos/limaoscarjuliet/3305886294/sizes/l/in/photostream/
Fish & Chips Box Username livepine http://www.flickr.com/photos/livepine/4550549518/sizes/z/in/photostream/
With Thanks: PHOTO CREDITS
With Thanks: OUR TEAM IN INDIA!