1 © The Delos Partnership 2005

Procurement MasterclassProcurement Masterclass

Prerequisites

2 © The Delos Partnership 2005

PrerequisitesPrerequisites

Suppliers want

• Long Term Visibility if they are strategic suppliers

• Stability when commitments are made

• Realistic performance Measures

• Accurate data as a foundation

3 © The Delos Partnership 2005

The Delos ModelThe Delos ModelFor Business Integration For Business Integration

InnovationInnovation

VisionVision

StrategyStrategy

PrioritisationPrioritisation

DemandDemand

SupportSupport

SupplySupply

4 © The Delos Partnership 2005

Objectives for Integrated Objectives for Integrated Enterprise LeadershipEnterprise Leadership

• One set of numbers at all times• Integrated Plans• Realistic Plans• Teamwork• Communication of goals and objectives• Decisions made in timely fashion• Consistent performance measures• Delivery of the Strategy

5 © The Delos Partnership 2005

Vision and StrategyVision and Strategy

• Vision– Clear statement of direction– Understood by all

• Strategy– Means of getting there– Requires clear focus

• Operational Excellence• Customer Intimacy• Product Leadership

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Supporting ProcessesSupporting Processes

There are three supporting processes– Innovation

• New products• New processes

– Customer Relationship management• Sales linkage• Marketing linkage

– Supplier Relationship management

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Management of InnovationManagement of Innovation

Needs Management across all the projects

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Forecasting Needs a Forecasting Needs a Simple ProcessSimple Process

FilterDemand

Execute Forecast

CaptureActual

C O N S E N S U S C O N S E N S U S F O R E C A S TF O R E C A S T

Review Commercial Plans

Review ExceptionalDemand

Hold Demand Review

Assumptions written down and agreed

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Master SchedulerMaster Scheduler

Strategy

Master Scheduler

Sales Forecasts

CustomerOrders

ManufacturingPlan

PurchasingPlan

PurchasingPlan

MRPSystem

Balanced PlanBalanced Plan

10 © The Delos Partnership 2005

Basic EquationsBasic Equations

Item DataBOM’s

And Routes

StockAnd

Capacity

Master Schedule

Forecasts Orders

Suppliers Factories

What do theyWant ?

What haveWe got ?

Whatdoes it need ?

What do we need to do ?

11 © The Delos Partnership 2005

Vertical Functional Vertical Functional OrganisationOrganisation

MDMD

SalesSales MarketingMarketing TechnicalTechnical OperationsOperations FinanceFinance HRHR

R& D

R& D

MKTG

MKTG

SALES

SALES

OPS

OPS

ACCTS

ACCTS

HR

HR

Directors

Managers

Supervisors/Team Leaders

12 © The Delos Partnership 2005

Vertical Functional Vertical Functional OrganisationOrganisation

MDMD

SalesSales MarketingMarketing TechnicalTechnical OperationsOperations FinanceFinance HRHR

R& D

R& D

MKTG

MKTG

SALES

SALES

OPS

OPS

ACCTS

ACCTS

HR

HR

Directors

Managers

Supervisors/Team Leaders

Demand Process

Innovation Process

Supply Process

13 © The Delos Partnership 2005

Velocity MeasureVelocity Measure

STORE

STORE

INSPECT

INSPECT

RECEIVE

RECEIVE

PICK

PICK

RUN

RUN

INSPECT

INSPECT

STORE

STORE

RUN

RUN

INSPECT

INSPECT

STORE

STORE

Elapsed Time

VAVA VAVA

Velocity % = sum of Value Added Time [VA]-------------------------------------

Total Elapsed Time

14 © The Delos Partnership 2005

People ValuesPeople Values

TraditionalTraditional NowNow FutureFutureProcess Process problemsproblems

Not my job Ownership Accountability

Management Management StyleStyle

Supervise Facilitator/

Team Leader

Coach

Working StyleWorking Style Individual Team Empowered

Teams

Training and Training and

EducationEducation

Non-existent Luxury Necessity

KnowledgeKnowledge Ignorant Understands Expert

Attitude to Attitude to PeoplePeople

Liability Cost Asset

15 © The Delos Partnership 2005

ResultsResults

Suppliers want•Long Term Visibility if they are strategic suppliers•Stability when commitments are made•Realistic performance Measures•Accurate data as a foundation

Integration provides:•IEP plus Forecast

•Master Schedule provides stability

•The core measures are not biassed•Data accuracy essential

16 © The Delos Partnership 2005

Successful negotiation is Successful negotiation is based on partnershipbased on partnership

Once the partnership is established for critical and strategic suppliers, we

should look to improve their processes thereby leveraging the total value of

their business

Once the partnership is established for critical and strategic suppliers, we

should look to improve their processes thereby leveraging the total value of

their business

17 © The Delos Partnership 2005

Change Minds not just Change Minds not just systemssystems

Successful change

Successful change

CULTURECULTURE

TEAMWORKSHARED VISION

COMMUNICATIONWAYS OF WORKING

ACCURACY AND DISCIPLINEPOLICIES AND PROCEDURE

HARDWARESOFTWARE

ACCURATE DATAVALID SCHEDULES

SYSTEMSYSTEM

18 © The Delos Partnership 2005

Real challengeReal challenge

• Acceptance of common sense

• Avoid initiativitis

• Make the routine really routine

• Free up time to think and behave strategically

19 © The Delos Partnership 2005

Delos Change JourneyDelos Change Journey

MobiliseMobilise DesignDesign CommunicateCommunicate ReviewReviewUnderstandUnderstand

AASSSSEESSSS

AASSSSEESSSS

EDUCATIONSTRATEGY & DESIGN

DEFINE & MEASURE BENEFITS

ORGANISATIONSYSTEMS