Strategic Suppliers

1
Strategic Suppliers
Action Plan
The recommended approach for Strategic suppliers
is to actively manage the relationship

• Consider long-term contracts or service-life
  agreements
• Work closely with suppliers in product innovation
  and process
• Joint product/process design and planning
• Integrated systems
• Supplier manages product/service
• Consider on-site representation
• Contingency planning

Leverage
Strategic
High
High
Manage Supply
Bottleneck
Routine
Business Impact
Difficult
Easy
Low
Supply Market Opportunity
Difficult
Easy
Low
e.g. typically most direct commodities fall into
this category
Strategic relationships must be partnerships with
mutual benefits
2
Bottleneck Suppliers
Action Plan
The recommended approach for Bottleneck suppliers
is to ensure supply of critical items

• Long-term contracts
• Ensure supplier is motivated to provide quality
  service
• Look at developing new suppliers
• Consider buffer stocks for additional security
• Measure supplier performance to identify
  potential interruptions to supply
• Move to generic specifications where appropriate
• Manage the entire Supply Chain

High
Strategic
Leverage
High
Bottleneck
Routine
Business Impact
Ensure Supply
Difficult
Easy
Low
Supply Market Opportunity
e.g. complex specification products
Bottleneck suppliers should ultimately be
transitioned into another quadrant
3
Leverage Suppliers
Action Plan
The recommended approach for Leverage suppliers
is to cut cost using innovation and competition

• Short-term contracts
• Focus on price
• Pursue a very active sourcing policy
• Look for continued cost-reduction
• Reduce stockholding
• Consider the use of eAuctions
• Pursue value add services from supplier which
  reduce total cost
• Manage transportation costs separately

High
Strategic
Leverage
Reduce Total Cost
Business Impact
Bottleneck
Routine
Easy
Difficult
Low
Supply Market Opportunity
e.g. commodities
Leverage relationships are built solely around
price
4
Routine Suppliers
Action Plan
The recommended approach for Routine suppliers is
to minimise management attention and investment

• Mid-term contracts
• Utilise supplier own specifications
• Offer supplier incentives to substitute
• Reduce inventory supplier managed
• Relationship owned by budget holder/end-user
• Simple performance measurement process with focus
  on reliability
• Monitor internal time spent resolving problems

Strategic
Leverage
High
Bottleneck
Routine
Business Impact
Minimise Effort
Difficult
Low
Easy
Supply Market Opportunity
e.g. Office Supplies, Desktops, Laptops etc.
Routine relationships should take up minimal time
and effort