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Value of Consulting - Paul Winter

Institute of Consulting
Institute of Consulting

This document discusses strategic partnerships in procurement. It identifies key determinants for successful strategic partnerships: 1) market attractiveness with mutual benefits and common goals, 2) synergistic capabilities with complementary skills and overlapping functions, and 3) clear control and management with defined responsibilities, decision-making processes, and flexibility to evolve with changing needs. Strategic procurement is described as a holistic approach focusing on long-term benefits through supplier performance management, collaboration, and networking compared to a purely tactical cost-focused process. Fundamental changes are needed in organizational culture and leadership to fully realize the benefits of strategic procurement partnerships.

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Procurement Strategic Partnerships 12 May 2011
Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Determinants for strategic partnerships 1. Market 3. Control and attractiveness Management Flexibility 2. Synergic Capabilities - Page 2 -
Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Market Attractiveness Both partners should. Determinants for strategic partnerships Deeply understand the market Have mutual benefits. Clear opportunities of enlarging 1. Market 3. Control and attractiveness Management the size of their own pies Flexibility Determine the strategic purpose common goal Try as hard as possible to aim their fire at outside rivals, 2. Synergic Capabilities not at each other - Page 3 -
Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Synergic Capabilities Both partners should. Determinants for strategic partnerships Have a proven record of constant incremental improvement 1. Market 3. Control and attractiveness Management Present clear overlapping / complementary capabilities. Flexibility Each partner will have something the other one lacks. 2. Synergic Capabilities - Page 4 -
Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Synergic Capabilities Overlap is also essential because it. Determinants for strategic partnerships Acts as a regulator valve on the continuity of supply. It helps partners weather any unforeseen storms. 3. Control and 1. Market attractiveness Management Boosts information and knowledge sharing. Flexibility Helps to develop trust among the parties. It boosts commitment and cooperation. 2. Synergic Capabilities - Page 5 -
Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Control and Management Clear scope and division of responsibility among partners. Determinants for strategic partnerships Good fences make good neighbours. Allocate tasks and responsibilities in a way that enables 3. Control and 1. Market each party to do what they do best. attractiveness Management Flexibility Agree on commercialisation strategies Define the type of relationship up, down, and across the 2. Synergic organisations (contact points, decision making and Capabilities information transfer processes, etc.) - Page 6 -
Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Flexibility By nature, all partnerships are different , each with its own Determinants for strategic partnerships unique advantages and disadvantages. However, they should all share one principle: change 1. Market 3. Control and Any partnership should be an open-ended and dynamic attractiveness Management relationship; therefore, the design and management of the Flexibility alliance should evolve continually in response to competitive challenges and changing capabilities of both 2. Synergic partners. Capabilities Follow principles not rules - Page 7 -
Procurement Strategic Partnerships- MCA event Strategic Part Strategic Procurement Key concepts Strategic Objective: Value sourcing Strategic procurement is Internal collaboration: High more than just squeezing Skill set: suppliers, but it is Strong emphasis on soft skills Detailed visibility (leaders role instead an overall is key) Focus on longer term benefits Management of suppliers change in the purchase performance Process Networking approach from a process Focus focus to a more holistic Collaboration Objective: Cost Focus and strategic approach. Internal collaboration: Low Skill set: tactical Market analysis Suppliers selection Negotiation Tactical sourcing - Page 8 -
Procurement Strategic Partnerships- MCA event Strategic Part The journey towards collaborative partnerships Fundamental changes The introduction of strategic procurement requires a radical change in the culture of the organisation (the buyer). To maximise its benefit it is essential to introduce these changes: Simple and action oriented Leaders People policies and Accountability processes Emphasis on soft skills Tailored to meet the Service provided by the Promote constant interaction Procurement team needs of customers, procurement activity between Procurement Manager empowered and suppliers and other analysed to assess the and Business Leaders. encouraged to develop the stakeholders customers experience Act as role models and facilitators of relationship behaviours inherent in high Focus on STANDARDS building. performance teamworking rather than RULES Actively involved with customers, and cross functional working partners, suppliers and other stakeholders in understanding and anticipating their needs
Procurement Strategic Partnerships- MCA event Strategic Part The journey towards collaborative partnerships Value Strategic partner Supplier Supplier Supplier Type C Type C Type B Time Organisational Segregated subcultures Collaborative environment culture Reactive Procurement Proactive Not standardised and inconsistent processes Unified , corporate vision of what Cost driven services the company requires Rules more important than success Your Supplier perceived as good to Supplier perceived as a trusted advisor relationship with have and partner the supplier

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Value of Consulting - Paul Winter

  • 2. Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Determinants for strategic partnerships 1. Market 3. Control and attractiveness Management Flexibility 2. Synergic Capabilities - Page 2 -
  • 3. Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Market Attractiveness Both partners should. Determinants for strategic partnerships Deeply understand the market Have mutual benefits. Clear opportunities of enlarging 1. Market 3. Control and attractiveness Management the size of their own pies Flexibility Determine the strategic purpose common goal Try as hard as possible to aim their fire at outside rivals, 2. Synergic Capabilities not at each other - Page 3 -
  • 4. Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Synergic Capabilities Both partners should. Determinants for strategic partnerships Have a proven record of constant incremental improvement 1. Market 3. Control and attractiveness Management Present clear overlapping / complementary capabilities. Flexibility Each partner will have something the other one lacks. 2. Synergic Capabilities - Page 4 -
  • 5. Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Synergic Capabilities Overlap is also essential because it. Determinants for strategic partnerships Acts as a regulator valve on the continuity of supply. It helps partners weather any unforeseen storms. 3. Control and 1. Market attractiveness Management Boosts information and knowledge sharing. Flexibility Helps to develop trust among the parties. It boosts commitment and cooperation. 2. Synergic Capabilities - Page 5 -
  • 6. Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Control and Management Clear scope and division of responsibility among partners. Determinants for strategic partnerships Good fences make good neighbours. Allocate tasks and responsibilities in a way that enables 3. Control and 1. Market each party to do what they do best. attractiveness Management Flexibility Agree on commercialisation strategies Define the type of relationship up, down, and across the 2. Synergic organisations (contact points, decision making and Capabilities information transfer processes, etc.) - Page 6 -
  • 7. Procurement Strategic Partnerships- MCA event Strategic Part Determinants for Strategic Alliances & Partnerships Flexibility By nature, all partnerships are different , each with its own Determinants for strategic partnerships unique advantages and disadvantages. However, they should all share one principle: change 1. Market 3. Control and Any partnership should be an open-ended and dynamic attractiveness Management relationship; therefore, the design and management of the Flexibility alliance should evolve continually in response to competitive challenges and changing capabilities of both 2. Synergic partners. Capabilities Follow principles not rules - Page 7 -
  • 8. Procurement Strategic Partnerships- MCA event Strategic Part Strategic Procurement Key concepts Strategic Objective: Value sourcing Strategic procurement is Internal collaboration: High more than just squeezing Skill set: suppliers, but it is Strong emphasis on soft skills Detailed visibility (leaders role instead an overall is key) Focus on longer term benefits Management of suppliers change in the purchase performance Process Networking approach from a process Focus focus to a more holistic Collaboration Objective: Cost Focus and strategic approach. Internal collaboration: Low Skill set: tactical Market analysis Suppliers selection Negotiation Tactical sourcing - Page 8 -
  • 9. Procurement Strategic Partnerships- MCA event Strategic Part The journey towards collaborative partnerships Fundamental changes The introduction of strategic procurement requires a radical change in the culture of the organisation (the buyer). To maximise its benefit it is essential to introduce these changes: Simple and action oriented Leaders People policies and Accountability processes Emphasis on soft skills Tailored to meet the Service provided by the Promote constant interaction Procurement team needs of customers, procurement activity between Procurement Manager empowered and suppliers and other analysed to assess the and Business Leaders. encouraged to develop the stakeholders customers experience Act as role models and facilitators of relationship behaviours inherent in high Focus on STANDARDS building. performance teamworking rather than RULES Actively involved with customers, and cross functional working partners, suppliers and other stakeholders in understanding and anticipating their needs
  • 10. Procurement Strategic Partnerships- MCA event Strategic Part The journey towards collaborative partnerships Value Strategic partner Supplier Supplier Supplier Type C Type C Type B Time Organisational Segregated subcultures Collaborative environment culture Reactive Procurement Proactive Not standardised and inconsistent processes Unified , corporate vision of what Cost driven services the company requires Rules more important than success Your Supplier perceived as good to Supplier perceived as a trusted advisor relationship with have and partner the supplier