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BravoSolution UK Open Positions

Savings: Looking Beyond Cost Reduction

Strategic cost management is a comprehensive, cross-enterprise initiative to systematically identify sources of waste in the supply chain, spanning new product development, purchasing, materials management, logistics, and customer-defined product attributes.

It requires that organizations think systematically about the sources of cost, identify non-value added costs, and establish targets for continuous cost reduction that create incentives for supply chain partners to mutually benefit in these efforts. It assumes that costs are driven by “friction” that exists between buying companies and their suppliers, and that an open approach to sharing cost drivers can result in lower prices, improved customer value, and higher margins for all involved.

Dr Robert Handfield will be hosting a webinar on the topic, Strategic Cost Management, where he will cover many of the principles associated with creating a firm-wide initiative in strategic cost management based on studies of 13 leading Fortune 100 companies. Register now!

It is crucial to “establish the foundation”, through a focus on getting back to the basics of spend analysis, data cleansing, and to establish simple governance structures for cost management. In the webinar I will also discuss the importance of other factors that impact costs, including the following actions.

  • Governance – Establish a Demand Management program to drive business unit leaders to create realistic budgets for spending, new product introductions, and forecasting of requirements to enforce a discipline of cost budgeting.
  • Systems – Initiate a corporate-wide cost systems effort focused on data cleansing of all historical pricing, spend AP data, and labor rates to establish the backbone of a cost management support system.
  • Supply Base Management – Establish a program for supply base consolidation, with specific targets defined by business, by category, and by platform.
  • Leadership and Planning – Establish a corporate champion for cost leadership as a priority for competitive success across all key functional lines of business, with a governance committee to drive oversight and support.
  • Metrics – Establish Key Performance Indicators for cost management alignments with financial projections, profit targets, line of business NPI projects, and market growth targets.
  • Talent – Establish a network of key subject matter experts from across the organization with the requisite talent, skills, to build a cost management organization to provide decision-support to NPI, sourcing, and make or buy projects.
New Product Introduction – Conduct a major audit of NPI processes to ensure that cost targets are tied product design outcomes, with accountability for cost established for the NPI team.

Geopolitical Risk: North Korea Threatens the Global Electronics Supply Chain

By Jim Wetekamp, Chief Executive Officer of BravoSolution

On September 3rd, North Korea made its sixth nuclear test, the first of a thermonuclear variety and just the latest data point in a timeline of incidents that have significantly escalated tension with the United States. North Korea’s fourth nuclear test in 2016 set off mounting concerns of crippling geopolitical risks and sanctions and the tension has only increased over the past year.

Placing the humanitarian impact of a possible conflict involving North Korea to the side for the moment, as beyond measure and discussion, the economic impacts are rampant and worth watching closely. With South Korea a major producer of semiconductors, liquid crystal displays, cars, and even ships – the potential risk of a global supply chain disruption from conflict with North Korea is high, and the impact could be severe for many organizations.

Is procurement ready?

This risk isn’t new to the major industrial companies that buy these electronic goods. The CPOs of these companies are hyper-aware of the situation, mindful of the potential impacts and well-prepared. By design, the procurement teams’ risk management practices are well-defined, operationalized, and embedded throughout these organizations’ sourcing processes and approach. The procurement team knows where the risk could have the largest impact – they’ve documented and modeled the various likely scenarios — and they have evaluated, secured and quantified the various mitigation options available and compared the costs and timelines to their baseline.

Procurement is ready. It’s their job to anticipate and be prepared. The question is, are they already acting? Have they responded to the increasing likelihood of the risk?

Market insights: What we can gather

In looking at market trends, we can decipher the activity level of various procurement mitigation strategies. So far, the South Korean stock market has been negatively impacted by any kind of decreased consumer confidence.

While there have been losses as of late, the 2017 trajectory remains high — in July, the market hit an all-time high just over 2,400. Exports however tell a slightly different story. While similarly high for 2017 overall, they have shown a meaningful decline from June to August, dropping in value from $51,373 to $47,116.

This is not necessarily an indicator that procurement has started to diversify their sources of supply to lower risk markets. The trend could be a seasonal consequence. The South Korean jobless rate remains generally flat, inflation rates were at a five year high in August, and the trade surplus has continued at elevated rates compared to a year ago, when it was $40,124 in August of 2016. This could indicate a balancing out of trade, rather than companies pulling out of the region.

In looking at some of the major global electronics players – Samsung and LG – there’s no clear sustained impact yet. LG seems to be rebounding. And as of April 2017, it doesn’t appear that China has been called upon to fill the demand of traditional South Korean exports such as integrated circuits, with export figures for the nation at an all-time low.

From a macro-metric standpoint, signs of any large-scale activation of procurement risk-mitigation strategies to avoid possible disruptions from the North Korean conflict are not yet completely evident, at least to the external observer. This doesn’t mean mitigation efforts won’t take place, and this dynamic will be an interesting trend to watch over the next few months.

What kind of impact does this situation have on your supply chain? What risk mitigation strategies do you have in place and how are your various threat indicators reacting to the increasing tension? We’d love to hear from you.

If you’re interested in learning more about how our experienced procurement experts can assist you in applying efficient and scalable risk mitigation processes across your procurement landscape, please visit our website.

The 3 Core Skill Sets of Supplier Relationship & Value Management

By Molly Reppen, Field Marketing Specialist at BravoSolution

Procurement departments are increasingly challenged to expand and better understand their supplier communities. The ability to improve strategic decision-making by assessing supplier lifetime value is important at every stage of the strategic procurement process.

Managing suppliers and deriving value from those relationships is one of the critical strategies required in every procurement organisation. This includes managing risk, improving compliance and increasing visibility into the entire supply base throughout the entire procurement process. Supplier relationships affect not only the ones in procurement, but everyone in our organisations.

During our recent webinar “Supplier Relationship and Value Management: Does Your Organisation Have What It Takes?”, procurement expert, David Atkinson, founder and Managing Director of Four Pillars, provided critical insights for developing and implementing an effective Supplier Relationship Management (SRM) strategy that delivers real value to a procurement organisation.

“There’s no point designing an SRM program if your organization lacks the competency and capacity to deliver it,” said David Atkinson. “Simply training people in supplier management without an agreed SRM method or strategy is a route to wasting your precious training budget.”

Does your procurement organization have an SRM strategy in place to ensure you are gaining the lifetime value from your organization’s key supplier relationships? Here is a recap on David Atkinson’s three core skill sets that are essential to supplier relationship and value management.

Skill Set #1: Strategic Competence

The first core skill set for SRM is the ability to strategize. “What I’m suggesting with strategic competence are the technical skills related to strategy and change,” said David Atkinson. “It is not as well understood, nor as easy as some may think. Strategic competence will be essential for creating better category and relationship strategies, and managing implementation.”

During the live webinar, David Atkinson asked the audience: “On a scale from 1 to 5 (the highest), how would you rate your procurement organisation’s strategic competence?”

  • 60% of attendees ranked their company’s strategic competence only at a 3.
  • 21% of attendees said they would rank at a 4
  • 2% of attendees ranked themselves at 5

These poll results showed that a sizable amount of procurement professionals see room for improvement in strategic procurement competence.

When reflecting back on this initial question, what can be done to improve your strategic competence and bring your procurement leader’s assessments to higher levels?

Some of the improvement methods according to David Atkinson include knowledge of strategy development methods, such as strategy mapping and policy deployment.

Another area of focus is customer-centricity, such as developing your consulting skills to deeply understand the needs of stakeholder groups, and aligning SRM inputs to meet those needs. Among many other skills, organizations should also assess competency within teams: what are you and your people good at? How will you identify gaps in skills and knowledge?

Skill Set #2: Developing Relationship Strategies

The next skill set is focusing on specific supplier relationships, where the SRM team analyzes the relationship and then determines the plan for how the organization will get the best value from the supplier. “You need to excel at developing relationship strategies, as procurement pros usually take the lead in facilitating SRM’s deployment,” said David Atkinson.

The first phase of this skill set is implementing the five enablers: the foundations of any good SRM program. These enablers are project management skills, method and tools, performance indicators, negotiation competence, and supply base segmentation. [Learn more about the 5 SRM Enablers in his webinar from July 2017.]

The next phase is developing the relationship strategies. “This phase involves working with stakeholders, creating an SRM team, analyzing the relationship, and deciding on a relationship strategy,” said David Atkinson. “Going the ‘extra mile’ and documenting the strategy is a worthwhile step, and mirrors the professionalism of many suppliers, who have their own documented strategies for their customer engagement, otherwise known as the ‘account plan.’”

Learn even more about developing relationship strategies by viewing the webinar recording.

Skill Set #3: Successfully Engaging Suppliers

Successfully engaging suppliers is the final core skill set of SRM. “This skill set is about making it happen,” said David Atkinson. “Effective supplier engagement is about protecting value, developing value, and transforming value. Your ability to persuade others to help you achieve your goals is crucial.”

Understanding and using value protection and value development is key to successfully engaging suppliers. When those two keys are successfully implemented, value transformation can occur.

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When analyzing the three core skill sets of supplier relationship and value measurement, how do you measure up? Further assess your organisation’s SRM readiness by viewing the entire webinar here.

Implementing SRM: Does your organisation have what it takes?

By David Atkinson

My interest in SRM goes back many years, in particular my experiences in aerospace and automotive. A specific feature of those two sectors is that suppliers are usually selected very carefully, because switching mid-programme can be expensive, hugely time-consuming, and sometimes feels close to impossible (regulation and custom and practice in safety-critical industries can be a challenge for those procurement folks who are wed to a strategy of volume concentration and competitive tendering).

In aerospace and automotive, businesses therefore have often have little option than to work proactively with suppliers to improve performance and value, and do so without the ‘luxury’ of being able to threaten to re-source to an alternative supplier. In these environments, getting the best out of suppliers can be very demanding as, from a negotiating perspective, suppliers are often well aware of the limited options the buyer has at his or her disposal.

Register for David’s upcoming webinar ‘Supplier Relationship and Value Management: Does your organisation have what it takes?’ with a live Q&A with him.

Nevertheless, I believe that a pragmatic, demanding, and systematic approach to Supplier Relationship Management (SRM) can yield huge benefits for buying organisations, despite some practitioners’ rather optimistic reliance on fostering goodwill and currying favour as the means of achieving harmonious relationships, with savings and other benefits hopefully following.

My earlier webinar in July The Five Programme Killers, and How to Overcome Them (you can watch the on-demand version here) addressed the question of how best to develop a strategy for an SRM programme, and provided an overview of the SRM methodology. Here, I aim to launch a discussion on how competent and ready our organisations are in giving us a fighting chance of being successful in implementing SRM.

The upcoming webinar on the subject of SRM readiness will enable subscribers to benchmark their organisation’s current level of SRM competence, and help them identify their future development needs.

For the sake of clarity, I will restate my definition of SRM:

“SRM is the deliberate pursuit and systematic management of post-contract value from the organisation’s key supplier relationships.”

It’s deliberate, it’s systematic, and the focus is mainly about what happens after the contract has been signed.

How important is SRM, and where do I see it going? 

I believe that SRM is going to become one of the genuinely true core competencies in our organisations, potentially affecting everyone – not only in those in a procurement role. That procurement role will become one of educator and coach to colleagues, stakeholders and cross-functional teams who jointly manage key supplier relationships (for the record, I don’t believe this will be limited to SRM, but will involve the wider agenda of procurement, but that discussion is for another day). Strategic competence is going to be essential to practitioners responsible for creating better category and relationship strategies, and managing implementation; all the while taking everyone with them. And of course, Engaging suppliers is about that implementation: getting things done, and creating value. You and your team’s ability to persuade suppliers to help you achieve your aims is fundamental to ensuring your SRM endeavours bear fruit.

But what competencies should CPOs develop in their people?

There is a range of skills that SRM practitioners will either possess, or will need to access, if they’re going to be successful. I have grouped these skills (or competencies) into three themes:

(1): Strategic Competence – the ability to ‘strategise’. I considered labelling this theme ‘leadership’, but I believe that is too generic. What I’m suggesting here are the technical skills related to strategy and change. Not as well understood, nor as easy as some may think.

(2): Developing relationship strategies – the focus on a specific supplier relationship, where the SRM team analyses the relationship and determines the plan of how the organisation will get the best value from the supplier.

(3): Successfully engaging suppliers – making it happen. Securing that value through effective governance, clear performance indicators, and ensuring contract and risk compliance as a minimum.

In the upcoming webinar, at various points I will ask be asking participants to rate their organisation’s current level of capability across thirty-one specific skill sets in each of these theme areas, so it’s an opportunity for people to benchmark their current set-up and gain insight on their team’s development needs.

And, of course, there will be time for a Q&A session.

Click here to save your seat!

The Petroleum Institute

The Petroleum Institute is a world-class engineering University which has become a leading teaching and research centre supporting the oil and gas industry in the Middle East. Located in Abu Dhabi, it is funded by a consortium of national and international oil companies, is home to more than 2000 students and 200 faculties, and as an associate company of ADNOC Group, boasts the internationally renowned Research and Innovation Center (ADRIC), focused on developing innovative solutions for the energy sector and beyond.

Challenge: to transform a manual, time-consuming procurement process into a fully implemented, fully automated system, linked to the existing ERP solution, for greater efficiency and effectiveness.

“As you would expect,” explained by Mohammed Zakir, Senior Procurement Officer within Supply Chain Department, “the ERP integration threw up some challenges in terms of compatibility issues, particularly around supplier registration and classification. It was a mammoth task involving the upload and master data synchronization of more than 2000 suppliers, both those on the existing system and those potential, or approved ones. But BravoSolution Tejari has a good work ethic; its specialists came on site and invested time and resource to understand our needs and work with us as a team to resolve those issues and find workarounds. This close working relationship led to what was in fact a very fast and effective implementation.”

Having everything automated and centrally stored has made not just tendering, but especially any necessary retendering, much faster. Once the government sector procurement process has been followed, all activities must be documented.

With reduced cycle times, savings in efficiency and more value for money from using a wider selection of suppliers, the department has seen increased savings year on year. Where once it accounted for about 7% to 8% contribution to the business bottom line, it has now reached 19% savings from its estimated budget. And, operationally, it has grown its yearly number of RFQs substantially.

Becoming the first department in the organisation to automate its processes fully has raised the profile of the Supply Chain Department significantly within the organisation, and indeed, the reputation of the Institute within the region.

Download the full case study to discover how The Petroleum Institute are using BravoAdvantage  to transform a manual procurement process into a fully automated system.

CLICK HERE TO DOWNLOAD