As a Supply Management leader the content of this section asks you to look at managing strategic change in the supply management function. With 18 pages , 7 questions, bridge exam topic and a daunting title in the 2008 version of the CPSM Study guide (The title of this section in the 2008 study guide is " TASK 3-C-4 : Leverage spend through identification,prioritization,development and execution of strategies) you need to look for the unifying theme across this section and break it down to some key concepts.
The section is all about trying to change how your supply management department does things- and change is tough as any leader in any field will tell you. So where do you start?
- Opportunity Assessment : First figure out from past data how you might be able to make significant positive change without a whole lot of pressure on and of your stakeholders including buyers,suppliers,finance. If you keep in mind that what a supply management department buys is intended for eventual conversion and delivery to your organizations customer, you will start well. Let us say that that your user is manufacturing and they want raw material - try to see any inputs that quality control, your marketing has on the raw materials. Then working backwards reach out to suppliers and work through carefully managed changes.
- The section also covers stakeholder management so that you are able to get buy in.
- As you try to execute change the section asks you to review Michael Porter's five forces model and how it might impact what you are trying to change.
- On the prioritizing end of what to change the section covers some factors like savings for a particular commodity. Before deciding which savings challenges to attack you can make a 2X2 sourcing priority chart where savings potential is on one axis and ease of implementation is on another axis. Thus you need to look at your organization's capacity ( say too many paper based systems ) and organizational culture. For the latter, a great example is trying to implement a centralized purchasing system when everything is de-centralized. Better in such situations is to perhaps have an approved vendor list and rates at least for the top 20% items by volume and savings potential.
- The section ends with a discussion of constraints like exclusive contracts and agreements, lack of viable alternative suppliers etc. However, in the new year 2012, let us not think about constraints and instead think of opportunities of change for the better. For example, if you find problems in a long term contract can you ask the supplier to re-negotiate better terms perhaps for more volume?
A Very Happy and Prosperous New Year 2012 to all blog readers!
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