Regardless of how formal a commodity strategy is, or is not, there is always thought and decision making on how the contract or agreement will be set up, who the potential supply base is and what the desired outcome is. A straightforward way of assessing the potential level of C&SM required is to consider the: value (both monetary and importance to the organisation) and; risk (also considering diversity of supply base and reputation) of the contract/agreement. Please find attached a link to the Segmentation Tool. The purpose of this exercise segments the contract portfolio into four categories (Leverage, Strategic, Bottleneck, Routine), which will allow an organisation to estimate the extent of work involved in managing each category. This information can be used to populate the segmentation-based Resource Calculator Tool. This tool will provide an estimated resource calculation. There is a natural tendency to over-estimate the work required, and it is important to avoid this trap by being as pragmatic as possible. Where possible, it would be worthwhile comparing/collaborating with a similar organisation which has a more mature C&SM operation, especially where an organisation lacks the experienced managerial staff required to make informed judgements. This collaboration will allow the organisation to benefit from the experience of the more mature organisation and to factor in distortions such as the learning curve they will experience on the journey toward maturity. Roles and Responsibilities Category A, B & C Ownership and Workflow / Senior Management Team Organisation’s Board Board / Senior Management sponsorship is a critical element to facilitate the success of the Contract and Supplier Management Initiative. The Board / Senior Management Team should take the ultimate strategic ownership of business critical, strategic supplier(s), and be fully committed to improving the contract performance collaboratively with those suppliers.
Regardless of how formal a commodity strategy is, or is not, there is always thought and decision making on how the contract or agreement will be set up, who the potential supply base is and what the desired outcome is. A straightforward way of assessing the potential level of C&SM required is to consider the: value (both monetary and importance to the organisation) and; risk (also considering diversity of supply base and reputation) of the contract/agreement. Please find attached a link to the Segmentation Tool. The purpose of this exercise segments the contract portfolio into four categories (Leverage, Strategic, Bottleneck, Routine), which will allow an organisation to estimate the extent of work involved in managing each category. This information can be used to populate the segmentation-based Resource Calculator Tool. This tool will provide an estimated resource calculation. There is a natural tendency to over-estimate the work required, and it is important to avoid this trap by being as pragmatic as possible. Where possible, it would be worthwhile comparing/collaborating with a similar organisation which has a more mature C&SM operation, especially where an organisation lacks the experienced managerial staff required to make informed judgements. This collaboration will allow the organisation to benefit from the experience of the more mature organisation and to factor in distortions such as the learning curve they will experience on the journey toward maturity. Roles and Responsibilities Category A, B & C Ownership and Workflow Organisation’s Board / Senior Management Team Board / Senior Management sponsorship is a critical element to facilitate the success of the Contract and Supplier Management Initiative. The Board / Senior Management Team should take the ultimate strategic ownership of business critical, strategic supplier(s), and be fully committed to improving the contract performance collaboratively with those suppliers.
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