Achieving Contracting Excellence the Toyota Way

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• Achieving Contracting Excellence the Toyota Way
• 2004

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Recent Press Toyotas Strengths

• World-class Speed Flexibility
• Increased Productivity
• Market Responsiveness
• Product Quality
• Market Leadership

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Recent Press Toyotas Strengths

• KaizenContinuous Improvement
• PDCA Plan, Do, Check, Act
• Pokayoke Mistake Proofing
• Obeya Big Room Brainstorming

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Toyota Traditions Basis for Success
The Toyota Way
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• IS Transformation Part I
• The Initial Turnaround
• 1997

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Imperative for Change

• Growing vehicle sales impact operations and
  technology

Units In Operation
Total Vehicle Sales
Vehicles (Million)
Vehicles (Million)
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Imperative for Change (cont)

• Increased need for IT infrastructure to support
  growing business

TMS vs. IS Resources
IT Spending
Million
Resources
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Turnaround Objectives
Running for Office
Skills Assessment
Systems Audit
Financial Condition
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Turnaround Objectives (cont)
Project Pipeline
Governance
First Key Action
Skunk Works
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Turnaround Challenges

• Limited expertise and support from key
  departments
• IT management lacked expertise in critical areas
• Vendor Management philosophy misaligned
• Contracts inventory One
• Y2K Project forced turnaround timeline

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Foundational Strategies

• People
• Processes
• Tools
• Change Readiness
• Training
• PREDICTABLE RESULTS

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Foundational Strategies People

• Relationship Managers

Project Managers
Contract Managers
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Foundational Strategies Processes


1. Project Approval Process / IT
Governance
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Foundational Strategies Processes

• Project Approval Process / IT Governance

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Foundational Strategies Processes
Project Approval Process Rigor
Discovery
Inception
Elaboration
Construction
Transition
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Foundational Strategies Processes


1. Project Approval Process / IT
Governance

• 2. Project Portfolio Management Process

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Foundational Strategies Processes


1. Project Approval Process / IT
Governance

• 2. Project Portfolio Management Process

3. Purchasing / Managed Acquisition Process
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Foundational Strategies Processes

• Purchasing / Managed Acquisition Process

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1
2
3
Define Requirements
Purchasing/IS Contracts
Form Acquisition Team
Refine Prioritize Requirements
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6
7
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Determine Contractual Relationship
Obtain Management Approval
Develop the Contract/ SOW
Issue the RFP
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10
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Conduct Bidders Conference
Evaluate Potential Suppliers
Down Select Vendors
Manage the Contract / Vendor
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Foundational Strategies Processes


1. Project Approval Process / IT
Governance

• 2. Project Portfolio Management Process

3. Purchasing / Managed Acquisition Process
4. Vendor Management
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Foundational Strategies Processes

• Vendor Management Philosophy

• Treat vendors with respect
• Maintain business-only relationship
• Expect vendors to do their own homework
• Establish balanced scorecard for key
  relationships
• GOAL is maximum value and spirit of relationship
• KEY is guilt-free flexibility

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Foundational Strategies Processes


1. Project Approval Process / IT
Governance

• 2. Project Portfolio Management Process

3. Purchasing / Managed Acquisition Process
5. Contract Compliance
4. Vendor Management
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Foundational Strategies Tools

• Program Management Rational Niku

• Contract Lifecycle Management Enterprise
  Contract Management System

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Foundational Strategies Readiness
Organization
Technology
Operations
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Foundational Strategies Training

• Concepts
• Components
• Audience

Costs vs. Benefits
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Achievements in Excellence

• Facilitation of Best Practices in Vendor /
  Contract Management across IS
• Better Warranties
• Better Licensing and Services Terms
• Better Pricing
• Invoice to Contract Audit
• Eliminated Unauthorized Vendor Contact
• Cost Avoidance / Savings gt 14MM in 5 Yrs

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• IS Transformation Part II
• The New Operating Model
• 2004

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Transformation Methodology
The Toyota Way
Kaizen
Sustainable Change
Structured Process
PDCA Process


Change Management
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Imperative for Change
Current Focus
New Focus

• IT Foundation
• Infrastructure
• Capabilities

Operations Kaizen Strategy Business Alignment
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Transformation Objectives
Streamline Workforce
Cost Savings
Core Competencies
Business Flexibility
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Transformation Implications

• Relationship Management

Project Management
Contract Management
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• Achieving Contracting Excellence the Toyota Way
• 2004