Creative Supply Management: Part 2

Published on 2014-11-26 11:31:01, author Kenneth G. Sullivan

It's 7:30 AM and I'm rushing to prepare everything. In less than an hour I have to present to a group of Senior Executives the final ESI (Early Supplier Involvement) recommendation for the commodity of flexible circuitry. My mind drifts as I think back upon all of the work incurred over the past few weeks that has led to this moment.

It started with individual reviews to the three major suppliers of flexible circuitry technology. The Cross-Functional Team (CFT) had rehearsed days prior to the initiation of the trip to ensure that all of the necessary questions were included in the Supplier Capability Review package. The topics included a diverse range including management leadership and direction, product/service quality, purchased material control human resources and many others. At the conclusion of the supplier reviews, the CFT had collected vast amounts of valuable data and information, many of the details of which were previously unknown to us. Besides the commodity-specific information, I learned that there are special skill requirements to conduct a meaningful, objective supplier review.

The Commodity Strategy for flexible circuitry needed to be updated, especially a main section with the Technology Roadmap. The roadmap identified all of the features, enhancements and other intricacies that would be considered for later product improvements. It categorized those features so that they were easily identifiable by a designator such as quality improvement or cost reductions. The completed Commodity Strategy provided a snapshot of the current status of flexible circuitry. A Commodity Strategy was one of Supply Management's most valuable tools.

The specific flexible circuitry TCO (Total Cost of Ownership) Model also needed some adjustments, especially after the Supplier Capability analysis was completed. A multi-tiered analysis was developed that detailed the TCO of each supplier. This insight was proving to be invaluable to the decision process.

In terms of Supplier Quality Control and Improvement, only two of the suppliers agreed to use AQP (Advanced Quality Planning) as a developmental condition. This immediately eliminated one of the potential suppliers. In fact, there are very few instances whereby a sourcing decision would award business on a critical commodity to a supplier without validation and verification of quality.

I know that the ESI review with the company's executives will be successful. The CFT has reviewed many details, quantified the risk in a Supplier Risk Assessment, determined causes of failure with an FMEA (Failure Mode Effects Analysis), and drew up our final conclusions and recommendation. We are ready.

Yes, so much detail went into the life of a Strategic Commodity Specialist…back in the early 1980's! So what advancements have you made since then?



Next Up: Why Creative Supply Management is less work than Tactical Purchasing?