Академический Документы
Профессиональный Документы
Культура Документы
27/01/2012
IDRAC 2012
IDRAC - 2012
27/01/2012
--- Contents
Purchasing / Procurement Function & Process
Negotiation
(Fundamentals)
Legal: Incoterms
Everything you allways wanted toknow about Purchasing but you never dared to ask
Are there specific trainings ? What are the specific roles and responsibilities of buyers ?
IDRAC - Procurement Training - 2012 - J-C TRAN
Is it a well-paid job ? Is it a nice job ? Is there a professional life before and after this job ?
Interesting previous experience
IDRAC - 2012
27/01/2012
The big change in economy (Indicative figures for manufacturing sector) Production driven or regulated economy (protected markets) Selling Price = Cost + Margin
Margin Overheads
IDRAC - Procurement Training - 2012 - J-C TRAN
Market driven economy or globalized economy (free trade) Cost = Market Price - Margin
Labour
Materials
Purchasing expenses Turnover
= 25 %
Purchasing
Internal savings :
Cost of product
Labour Overheads
Productivity
IDRAC - 2012
27/01/2012
10% saving 25% higher on purchases turnover 1000 450 (-10%) 300 100 150 1250 (+25%) 625 (+50%) 375 (30%) 100 150
%
7
Strategy
Projects
Execution (Operations)
IDRAC - Procurement Training - 2012 - J-C TRAN
Supply Management
IDRAC - 2012
27/01/2012
Data admin
IDRAC - Procurement Training - 2012- J-C TRAN
SRM
Items Prices Suppliers Intranet PO management and stock/reorder Follow-up, reminder, supply plans, Reception (goods, services) Invoice management
The separation between Purchasing and Supply Management value chains is a necessity to make the 2 functions more efficient and professional The Purchasing / Procurement Value Chain answers to the following questions : What need ? Why ? For whom ? From Whom (Which supplier) ? At what price ? What Costs (Total cost) ?
Need analysis Sourcing RFQ/RFP Negotiation Contracting Internal promotion Performance measurement
The Supply Management Value Chain answers to questions : When ? How much ? Where ?
P.R. Approval P. Order creation P. Order dispatch Supplier / Delivery Follow up and Reception Invoice Control
* (In small structures the same person sometimes may perform the 2 functions)
10
IDRAC - 2012
27/01/2012
Quality + Cost + Lead-Times. What has the buyer to offer to his internal clients ?
IDRAC - Procurement Training - 2012 - J-C TRAN
Knowledge of the supplier market Globalisation of similar expenses to leverage volumes Decentralized and simplified Supply Management, as close as possible to the end users Efficient, professional procedures to organize competition between suppliers in order to :
Save time, Save money (optimize the company financial results) Improve quality level
What the buyers needs and demands from his internal customers (requesters) :
Be involved early in the procurement process : at the stage of the expression of the need
11
Involvement of Purchasing as early as possible ! The earlier you intervene (at the initial stage of
definition of the need), the more levers you have at your disposal to optimise the purchase :
Potential savings
Redefine the need of the user in order to make use of standard goods and services Sort out suppliers which are capable of answering the need and stimulate competition Etc.
12
IDRAC - 2012
27/01/2012
--- Contents
Purchasing / Procurement Function & Process
Negotiation
(Fundamentals)
Legal: Incoterms
The purchasing process will be adapted depending on the nature of the purchased goods
Different situations : examples
power differentiel (offer vs demand), simple need vs complex need, standard product (off the shelf) vs specific service or solution.
14
IDRAC - 2012
27/01/2012
Ex : segment 180 : IT services Ex : segment 330 : hardware Ex : segment 355 : pumps Ex : segment 727 : specific metallurgy process equipment
D. Industrial services
E. Energy
16
IDRAC - 2012
27/01/2012
EN1 Water EN2 Gas EN3 Electricity INFORMATION FLOW FI1 Real time financial Information (Market Data) FI2 Financial and Marketing Databases OFFICE SUPPLIES FB1 Paper FB2 Computer and printer supplies FB3 Stationary TRAVEL FD1 Travel Agencies FD2 Airlines FD3 Railway FD4 Car manufacturer (and Long Term Car Rental) FD5 Short Term Car Rental FD6 Hotels and restaurants
IT TEC1 IT Hardware and related maintenance TEC2 Cash Dispensers and Automats TEC3 Software TEC4 IT Services
TELECOM TEL1 VOIP TEL2 Wire Telephony TEL3 Mobile (Wireless) Telephony TEL4 Special Numbers and Interactive Vocal Servers TEL5 Data (Networks) TEL6 Pabx
17
100 000
80 000
60 000
40 000
IDRAC - Procurement Training - 2012 - J-C TRAN
20 000
C N AS D EN BP C A BP M C C M M Au tre s BP PC BP I-B FO P N C IA BP R I BF BP BP V BP F BF BP C SU BP D O C C BP LC C C O O P BP AT BP L AL BP P AL S C AZ O SO 2L BP BP BP BP D
BR E
en K HT
BP
18
IDRAC - 2012
27/01/2012
Rpartition des dpenses par grandes familles d'achats (Primtre Groupe Banque Populaire - donnes 2005)
Mutualisable Non Mutualisable
350 000 300 000 250 000 200 000 150 000 100 000 50 000
tra va ux ,. .) ex pl oi ta tio n) AR C H IV AG E C O U D R O R IE C U R M EN TA TI O N FL EN U ER X FO D G 'IN IE U FO R N R IT M U AT R E IO FR S N D A PR E IS B ES D U E R TA E D A EP TI U O LA N S C E IN R M E TE E PR N LL T O E G C R TU A P EL H IE LE S et IM P R IM ES SE C U TE R IT C E H N O LO G IE B S AC TE K LE O M C FF A O R IC M K ET E S B IN A G N C C AI O R M E M U N IC A TI O N (E nt re tie n,
En K HT
IL IE R IM M O B LO G IS
TI Q
U E
(L oy er s,
19
Prices and contracts Prices by unit Prices by supplier Prices by location Prices fluctuation Payment terms Frame contracts Product & Service specification Technical and functional specs Design and Quality specs Specification ownership Logistic agreement : transport, packaging, incoterms, delivery lead time, inventory management, EDI, e.procurement .
Average stock level by units Forecast Current suppliers Name, Group dependency Location, countries, zones Turnover Current market shares Expertise and service level assessment
The Spend Analysis Check-list : Quick quantitative and qualitative analysis of the product or service purchased 20
10
IDRAC - 2012
27/01/2012
Forecast :
Budgets, strategic plans, interviews.
21
% of total value
100% 95% 80%
A
20%
B
50%
C
100%
% of total events
Sup 1
M M M M M M M M M M M M M M M
Quantitative analysis
22
11
IDRAC - 2012
27/01/2012
Why ? Method
Pareto spend analysis of current supply base (ranking supplier per turnover)
Rank all data in a table from highest to lowest Calculate cumulative percentage for each line Split the table in three classes (A / B / C) representing respectively : 80%, 95% and 5% of the cumulative percentage
70 80%
A
20%
B
50%
C
100%
% of all suppliers
Output
Pareto analysis can be applied to supplier turnover, to turnover per sub-segment of the category, to turnover per plant or company
60
57,93
50 60% 40 50%
Suppliers Spend
30,03
30
40% 30%
20
14,78
13%
20% 10% 1% 0%
10
6,1
6%
0
TO > 0,76 M 0,15 < TO < 0,76 M 0,015 < TO < 0,15 M TO < 0,015 M
23
Sup 1 Sup 1
Sup
Sup2 2
M M M M M M
M M M
Method :
Identify for each supplier its turnover per plant, The analysis should combine the spend breakdown by sub-segment E-sourcing can be used to organize an internal RFIs and get datas from different companies buyers.
M M M
Output :
Is there a potential for leveraving volumes (LINK and LEVERAGE) ? Are there different needs explaining the current supply base profile ? Are there already different prices and costs (for one same supplier depending on sites or between the different suppliers) Are there geographical constraints ? Are there suppliers operating at a global level ? Is the market structure only a local one ?
24
12
IDRAC - 2012
27/01/2012
9 7,9 8 7 6 5 4,0 4 3 3,2 3,1 3,0 3,0 2,9 2,6 2,6 2,0 2,0 2,0 1,8 1,8 1,5 1,4 0,9 1 0 BRED Alpes Sud Ouest Ouest Sud Rives de Paris Cote Azur Alsace Nord Loire et Lyonnais Toulouse Pyrnes Provence Corse Massif Central Atlantique Occitane Bourgogne Franche Comt Lorraine Champagne Centre Atlantique Crdit Maritime
(1)
100% 90% 80% 5,7 70% 60% 50% 40% 30% 20% 0,8 0,6 10% 0% Val de France
(1) Les dpenses des caisses maritimes de Littoral de la manche, littoral du sud ouest et Morbihan - Loire Atlantique sont extrapoles partir des rponses des autres caisses du Crdit Maritime Source Questionnaire BP Banque Fdrale et Collecte dinformations fournisseurs - 2006
25
La rpartition des dpenses gestion des espces est proche de la moyenne observe dans les banques mutualistes
Rpartition des dpenses Transport de Fonds, Comptage et Gestion des automates 2006 - M HT
Gestion DAB/GAB - 5,8 M 11%
10% 1/3
Comptage - 20,1 M
38%
30%
1/3
51%
60%
1/3
Banques Populaires
26
Source Questionnaire BP Banque Fdrale et Collecte dinformations fournisseurs 2006 - Analyse Mercuris
13
IDRAC - 2012
27/01/2012
2
2.99 M
La rpartition des dpenses gestion et transport des fonds reste trs htrogne au sein des Banques Populaires
Dpenses Transport de Fonds, Comptage et Gestion des automates par banque, 2006 - M HT
1.80 M 1.78 M 1.54 M 1.38 M 0.75 M 2.04 M 4.03 M 3.19 M 0.94 M 1.99 M 2.00 M 3.04 M 2.63 M 3.10 M 2.60 M 2.91 M
7.92 M
0.32
5.68 M
53 M
100%
100%
0.1 0.2
0.18
0.1
0.14 0.23
0.24
0.3 0.2
0.21
0.25 0.66
5,8
1.66 0.82
80%
0.2
0.67
0.6
1.44
80%
0.5 0.3 0.3
0.72
3.58
1.80 1.68
20,1
60%
2.04 1.07 1.31
60%
2.98
40%
1.3 0.6
40%
1.31
1.0
2.41
0.9 0.8
0.4 1.09
4.01
1.58
0.94 1.21
27
1.30 1.10 2.00 0.87 0.78
Transport de fonds
20%
20%
0% Nord Sud Ouest Bourgogne Fr. Comt Centre Atlant. Alsace Rives de Paris(1)
Ouest
Alpes
Bred
BRED
Val de France
Sud
GLOBAL
27
(1) Donnes confirmer Source Questionnaire BP Banque Fdrale et Collecte dinformations fournisseurs - 2006
Securitas/Loomis et Brinks reprsentent 60% du march des BP, march comportant 16 acteurs
France Scurit CORSTRANS TAS - NIT ITEMS - CD
GARANCE
Est Valeur
Solymatic
Securitas
Prosegur
SAZIAS
VALTIS
Brink's
ESSE
Total
Asdf
CPR
G4S
GSI
Dpenses 2006
x x x x x x x x x x
x x x x x x x x x x x x x x
x x
x x x x x x x x x x x x x x x x x x x x x x
x x x x x
x x x x x x
x x
x x x 17 15 6
4 4 3 3 2 5 5 1 6 6 3 3 1 2 2 3 3 3 2 1 2 1 1
5 1,7 0,4
5 1,0 0,2
3 6,6 2,2
3 2,4 0,8
2 0,1 0,1
2 1,8 0,9
2 1,6 0,8
1 -
1 0,3 0,3
1 0,4 0,4
1 0,3 0,3
1 1,5 1,5
1 2,2 2,2
28
(1) Hors Crdit Maritime Source Analyse Mercuris
14
IDRAC - 2012
27/01/2012
16.32 M 100%
0.98
15.02 M
6.55 M
0.28
2.29
0.51
80%
6.41 2.62 0.55 0.89 0.76 0.33
1.30 M 0.98 M
1.63 M
0.44
5.98
1.13
Dpenses Transport de Fonds, Gestion de Fonds et Gestion des automates par prestataire 2006 - M HT
Gestion des automates bancaires (6M - 11%)
60%
1.30
40%
1.73 1.08 8.93 6.75 3.65 0.91 1.17 0.93 0.55 Transport de fonds (27M - 51%)
20%
0.50
0% Est Valeur VALTIS SAZIAS G4S GSI Solymatic Prosegur(1) CPR(1) Securitas Brink's TAS - NIT ITEMS - CD
(1) Ces fournisseurs nont pas de CA gestion des automates avec le groupe des Banques Populaires, mais ils proposent nanmoins cette prestation Source Questionnaire BP Banque Fdrale et Collecte dinformations fournisseurs - 2006
29
1 000 0
593
559
1219
576
1176
270
914
460
136
500
273
214
135
80
(1) Hors Caisses maritimes Nord, Finistre, Littoral de la manche, Littoral du sud ouest et Morbihan - Loire Atlantique pour lesquelles le dtail des dpenses par prestation nest pas connus (2) Le dtail des dpenses de Securitas ntant pas connu, la part des dpenses correspondant au transport de fonds a t estime partir du % observ pour les autres prestataires de la BRED BP (3) Hors Crdit Maritime Source Questionnaire BP Banque Fdrale et Collecte dinformations fournisseurs - 2006
30
15
IDRAC - 2012
27/01/2012
Set up a frame for the answer which will facilitate evaluation by the buyer
Establish the reference for the future business relationship between both partners
Need
Responsible : Requester Support: Buyer
Enquiry
Responsible: Buyer Support: Buyer
Contract
Responsible: Buyer Validation :Legal counsel
31
Technical specification
It is a document in which all properties are described which enable to define the product from a technical point of view. The key elements are, for example : For a cleaning service : cleaning frequency, materials and equipments, staff qualification, .... This technical specification is used to :
IDRAC - Procurement Training - 2012 - J-C TRAN
Subcontract, i.e. let a supplier carry out tasks which are defined in a technical document Buy catalogue goods or services
32
16
IDRAC - 2012
27/01/2012
Functional specification
(it is intended for)
It is a document in which the requester describes his need as a set of service functions and constraints. Assessment criteria and levels are defined for each function or constraint. Each level has a flexibility margin. EXAMPLE :
IDRAC - Procurement Training - 2012 - J-C TRAN
Functional specification for the internal lighting of a building : an number of lux , and a quality of colour of the light. (service function)
Technical specification : drafted by a design office : number of lamps, power in watt, fluorescent light A41 (technical function)
A technical function is a set of features of an existing product chosen by a designer to fulfil service functions.
33
Functional analysis :
Without NEED Preliminary functional analysis : USEFUL FUNCTIONS UNUSEFUL FUNCTIONS
PRODUCT
With NEED
34
17
IDRAC - 2012
27/01/2012
4. Describe assessment criteria for each function 5. Define performance level for each criterion (measurement scale) 6. Define flexibility for each criterion ; this enables to decide whether the criterion is satisfied or not
35
To buy means to compare To compare, one needs choice The flexible functional specification permits the buyer to formulate his demands in a way which directs suppliers towards several solutions or variants
FUNCTIONAL
FLEXIBLE
Favours innovation
Increases competition
18
IDRAC - 2012
27/01/2012
F4
Cleaning products
Cleaning
F4 F2
Buyer Requester
Windows
Cleaning Company
37
Flexibility +/- 2%
Service Function
IDRAC - Procurement Training - 2012 - J-C TRAN
F2 Clean Windows F4 Follow-up between supplier and buyer F3 Safety (non toxic)
Poll Visual
+/- 2%
Service Function
Constraint
+/- 1 No
Official certification
No
38
19
IDRAC - 2012
27/01/2012
--- Contents
Purchasing & Procurement Function - Stakes
Negotiation
Legal: Incoterms
Market Knowledge
39
Suppliers
A lot Perfect competition Some Oligopoly
(risk of cartels)
Very few
A lot
Monopoly
Customers
What is the average market share of the suppliers ? 2- Are there many Buyers who can purchase from the supply market ? What is the average market size of the buyers ?
Some
Buyers market
Narrow market
Sellers market
Very few
Purchasing Monopoly
Buyers market
Bilateral Monopoly
Risk of false monopoly : Determine the difference between real monopoly / oligopoly and technological monopoly based on your needs specification
40
20
IDRAC - 2012
27/01/2012
Market knowledge
Supply
Demand
41
Supplier side
Life stage of products ? Power of the supplier market ? Relative size of our supplier ? Motivation of current suppliers for this product ? ...
42
21
IDRAC - 2012
27/01/2012
Buyers side
Market research :
Is the market concentrated split in many small unit ? Number, size, age of customer companies ? Market share of the leaders ? Are there new competitors ? What is our power on the total buyer market ?
IDRAC - Procurement Training - 2012 - J-C TRAN
43
New Entrants
Upstream Market
Supply Market
Demand
Substitutes
44
22
IDRAC - 2012
27/01/2012
New Entrants
Upstream Market
The Bargaining Power of Suppliers
Supply Market
Demand
A Buyer Group is powerful if : Purchase volumes are large or concentrated Purchased products are standard The switching costs are low Capital investment is low to enter the market The buyer has full information about the supply market levers
Substitutes
45
A Supplier Group is powerful if : A few companies dominate Suppliers are more concentrated than buyers
IDRAC - Procurement Training - 2012 - J-C TRAN
Upstream Market
The Bargaining Power of Suppliers
Supply Market
Demand
No viable substitutes exist The supplier market industry is not an important customer of the supplier group Switching costs have been developed through product differentiation Forward integration is feasible
Government action as disturbing flow
Substitutes
46
23
IDRAC - 2012
27/01/2012
New entrants
New entrants are players not present in this market today. They are a disturbing influence as they do not abide to the existing rules of the main market. Their strategies can be completely different :
New Entrants
Upstream Market
The Bargaining Power of Suppliers
Supply Market
Demand
Quick market share via a pricing strategy below the market Takeover of existing players Target existing buyers to work with via strategic partnerships
Substitutes
47
Substitutes
New Entrants
For example via innovation : this could mean that there are new materials which can satisfy the existing needs at a commercial advantage
Upstream Market
The Bargaining Power of Suppliers Internal rivalry among players
Supply Market
Demand
Substitute solutions disturb the current market offering new competitive advantage :
Lower costs Improved quality or reliability Improved service levels and easier service Removing the risks of shortages of supply by offering new sources to satisfy the same needs
Substitutes
48
24
IDRAC - 2012
27/01/2012
Supply Market
Demand
The internal rivalry amongst players on the main market The market trends : growing, reducing The actions of the 4 other forces The existence of Barriers to exit & Barriers to entry*
Substitutes
The level of competition on the market could be affected by Government action as a disturbing flow
Regulation : production quotas, WTO agreements Custom duties State Tax policies State Labor laws
49
New Entrants
Supply Market
Demand
Substitutes
50
25
IDRAC - 2012
27/01/2012
Number of players within a specified geographical scope Market share as a % Turnover Average size of production unit(s) Global capacity and average utilization rate Concentration rates Average profitability Group dependency Backward integration ? Barriers to exit
Who are the Low Cost Producers ? Where ? Where are the new entrants with product differentiation ? What is current and forecasted market share of new entrants ? What are the entry barriers ?
What are the different upstream markets ? For each main upstream market :
Number of buyers
Concentration rate Average profitability Barriers to entry or exit Average capacity and utilization rate New entrants ? Substitutes ? Government action ? Forward integration ?
Upstream Market
Demand
direct competitors from same industry indirect competitors from different businesses
Relative Market share, Purchasing Turnover Demand profile : simple, complex, season effect Profitability, Price policies, Purchasing strategies
Substitutes
Government action
Evolution of technology Market share of substitutes on the supply market,or on other advanced markets Reliability of substitutes
Evolution of regulations Trends on custom duties or imports & exports limitation Impact of regulations price & cost
51
Purchasing Power
Purchasing power =
And :
Turnover Bought by Buyer Purchasing power = Turnover of entire market
52
26
IDRAC - 2012
27/01/2012
--- Contents
Purchasing & Procurement Function - Process
Negotiation
Legal: Incoterms
Market Knowledge
53
Reverse Marketing
54
27
IDRAC - 2012
27/01/2012
Purchase Constraints
55
Internal Technical :
Tight specification, over engineering Quality assurance No value analysis The company cannot follow the technical speed of change on the market Certification is difficult
56
28
IDRAC - 2012
27/01/2012
Monopoly or oligopoly Collusions on the market Narrow supplier market Rigid distribution system
External Technical :
Rapidly changing technology Technical monopoly Many possible technical solutions Short product life
57
Constraints Matrix
Internal Purchase
Complex Purchase
Every product is represented by a disk whose diameter is proportional to the purchased volume
Simple Purchase
29
IDRAC - 2012
27/01/2012
Strategy directions
IC
IC
EC
EC
Actions
IDRAC - Procurement Training - 2012- J-C TRAN
People
IC
IC
EC
EC
Negotiation types
59
Potential risks
Technical risks
Capacity of the chosen solution to answer the need No history of the chosen solution Quality level of the chosen solution
Logistical risks
Geographical distance Environment during transportation Communication means
Financial risks
Currency Financial covers Delivery guaranties
Supplier risks
Internal organisation Financial health Technical and/or R&D ability Supplier interest
Legal risks
Previous court cases Mastering of the legal environment Pressure means
Country risks
Social environment Political environment Economic environment International relationships
60
30
IDRAC - 2012
27/01/2012
High
PURCHASING
A
IDRAC - Procurement Training - 2012 - J-C TRAN
Average
B
Low
P R I O R I TY
A
Savings
61
C C B
BOTTLENECK
CRITICAL
2 types of Risks
RISKS
LINKS TO EXTERNAL CONSTRAINTS (technical and commercial) Our bargaining power with the supplier is low The market is evolving in a not favorable way for us We are dependant on a supplier : our purchasing amount is too high compared to our suppliers turnover
Low
TACTICAL
Low
62
31
IDRAC - 2012
27/01/2012
5M
BOTTLENECK CRITICAL
CHOCOLATES
CEREALS EGGS FATS FRUITS & NUTS CORRUGATED FLAVOURS COMPACT BOARD FLEXIBLES FLEXIBLES
0.5M
TRAYS
MILK INGREDIENT
SUGARS
TACTICAL
LEVERAGE
OTHERS RAWS
OTHER PACKS
20 M
100 M
63
Purchased SPEND/categories
Innovate
Save costs
64
32
IDRAC - 2012
27/01/2012
Cost Optimization
Cost model : In depth and detailed price and cost analysis TCO : all incurred costs analysis and optimization e-supply :e-procurement, e-supply. Make or buy : trade-off analysis between make, team and buy models Rent or Buy : rent or invest analysis. Facilities management with SLA. Coverage : Prices fluctuation and currency rate risk coverage.
Needs Optimization
Redesign to cost : functional and value analysis and product or service re-engineering Off the Shelf : Standardization of the specification Substitute : Develop alternative solution like product reformulation, ingredient or material substitution, SLA : develop SL requirements, including logistics agreement
Joint processes
Anticipate : optimize forecast models, improve reliability and frequency of forecast orders. SMI : supplier managed inventory No stock : consignment stock, Value chain re-engineering : redesign of the whole value chain. From upstream market to the final customer in order to optimize service level and maximize profit
Supplier Development
Identify and Develop suppliers : preferred, key or partner suppliers Co-business : alliances, partnership, risks, investment and benefits and shared wall to wall : supplier integration
65
Level of impact
++
Cost optimization
IDRAC - Procurement Training - 2012 - J-C TRAN
Needs optimization
-Joint processes
SR Development
66
33
IDRAC - 2012
27/01/2012
The ranking of suppliers after the pre-selection process The level of competition we want to keep in the supply base The level of risks we are willing to take with our supplier
At the end, each supplier will have a specific role & profile in your portfolio :
Platinum suppliers Gold suppliers Silver suppliers Iron suppliers
Number of suppliers
67
Fit between the supplier and your Category Buying Strategy (5 axes)
Meets your strategy 100%
Partner suppliers
Good almost everywhere Challenge on one axis but not on the others Achieve minimum requirements
Key suppliers
Preferred suppliers
Commercial suppliers
Relationship level
68
34
IDRAC - 2012
27/01/2012
--- Contents
Purchasing & Procurement Function - Process
Negotiation
Legal: Incoterms
Market Knowledge
69
1 - Price
Price :
Play an active role :
Know the cost elements Be able to assess the price before negotiation : calculate target price Use productivity and learning curve to lower the purchasing price Make a difference between price, total acquisition cost and cost of ownership
IDRAC - Procurement Training - 2012 - J-C TRAN
70
35
IDRAC - 2012
27/01/2012
Base 100
Negotiation margin 3 different services Service 1: Desk cleaning
IDRAC - Procurement Training - 2012 - J-C TRAN
92 88 76
Service 2: Floor cleaning Service 3: Windows cleaning The labour content is different according to the different services because techniques and frequencies are different.
65
Labour 1
48 20
Purchases
Overheads
71
Profit
R&D
Management, financial costs Scrap, rework, warranty claims, Production equipment Transport + duties, customs, Labour direct Energy, Raw material, components Value Industrial Added
Must know
72
36
IDRAC - 2012
27/01/2012
73
74
37
IDRAC - 2012
27/01/2012
Global cost
Total cost
IDRAC - Procurement Training - 2012 - J-C TRAN
Complementary costs
-Transport - Packing
Landed cost
The enquiry
The enquiry:
Before sending the enquiry make a market preselection :
Eliminate all suppliers which do not comply with the purchasing policy / strategy Optimise ones efforts in concentrating on a limited number of suppliers The preselection is made through definition of the criteria to be fulifilled by suppliers
76
38
IDRAC - 2012
27/01/2012
The enquiry
Preselection criteria :
Staff size Membership of a group Geographic distance Turnover
IDRAC - Procurement Training - 2012 - J-C TRAN
Every supplier is assessed accordig to the criteria The enquiry is sent to the best ones
77
The enquiry
78
39
IDRAC - 2012
27/01/2012
The enquiry
Assessment of offers :
List of criteria (price, delivery, quality...) Weight the criteria : priorities for the choice of a supplier Set up a comparison table with criteria and weights Fill in the table with a note for each criterion
IDRAC - Procurement Training - 2012 - J-C TRAN
79
The enquiry
Weight 20 25 30 15 90
Supplier 1 20 15 30 9 74
Supplier 2 15 25 15 10 65
Supplier 3 10 15 25 15 65
80
40
IDRAC - 2012
27/01/2012
The enquiry
81
Communication agencies competition for one of our retail banking network Competition for a multiple usage booth for fairs and exhibitions for one of our retail banking network Archive storage and handling services : selection of group preferred suppliers, negotiation of frame agreements.
82
41
IDRAC - 2012
27/01/2012
--- Contents
Purchasing & Procurement Function - Process
Negotiation
Market Knowledge
83
Negotiation
Bargaining vs. Negotiation Sellers tricks Negotiate as a team with designers or users Application: Internal negotiation and communication Quality of Argument
84
Value of Argument
42
IDRAC - 2012
27/01/2012
Negotiation or Bargaining ?
NEGOTIATION BARGAINING Relationship between parties Midterm or long term Short term Negotiation = Game Positive sum game Zero sum game
Winner
IDRAC - Procurement Training - 2012 - J-C TRAN
Winner
Winner
Loser
Partnership
Stratagems - tricks
Negotiation vs; bargaining : Same or greater - gain and The relationship is protected Negotiation demands Methodology Psychology
Know how (50%) Success Behaviour (50%)
85
Negotiation Options
Negotiation Offensive
Weak
Bargaining Shared
Negotiation Prepared
Short
Long
Duration of relation
86
43
IDRAC - 2012
27/01/2012
SELLER
Offer Convince
Clause Agreement zone Buyer movement zone Ceiling Only the boss of the buyer can lift the ceiling
87
BUYER
Contact
IDRAC - Procurement Training - 2012 - J-C TRAN
Convince
Conclude
88
44
IDRAC - 2012
27/01/2012
Negotiation: Know
Know : preparation is 80% of the negotiation effort
The supplier company, the supplier markets... The needs to fulfil, functions, specifications, quantities, schedules The history of the product, of the relationship The personality of the sales(wo)man : style, objectives...) The target : the stakes and objectives of the negotiation
The file:
List all clauses to negotiate Identify needs for help from others, and make use of it Set objectives to reach for each criterion of the comparison table Decide the venue : In-house to feel at home : boosts the confidence of the buyer - but never negotiate in your office ! At the suppliers premises : show my determination Build the negotiation strategy and the negotiation chart ( = arguments, parades) and the chessboard strategy
89
Negotiation :
6 levers
Weight Choice Information Influence Sanction Time
IDRAC - Procurement Training - 2012 - J-C TRAN
Clauses
Price After sales service Quality Logistics Packaging Commissioning Payment terms Order to delivery Currency Spare parts
90
45
IDRAC - 2012
27/01/2012
Negotiation Arguments
Possible arguments :
General :
Financial health of my company Image of my company Viability of my company ...
Specific :
Scheduling of needs Learning curve Interest of learning from the needs of a demanding customer
Constraints :
Poor performance of the supplier Price structure description lacks accuracy Competition between suppliers...
91
Negotiation Chart
Offer Objective
Offer from the seller The objective the buyer w ants to reach
Argument
Objection
Reply
The arguments The The to reach the objections parades to objective w hich can the A good be expected sellers argument must from the objections be of seller advantage for the supplier or for the customer
92
46
IDRAC - 2012
27/01/2012
1: I wont give in
IDRAC - Procurement Training - 2012 - J-C TRAN
S 1 2 3
1 d c e
b a
93
Negotiation: Contact
Contact:
Welcome the supplier
Establish a climate of trust Dont make the seller wait
Civilities Presentation
Let the supplier present his company Present ones company
IDRAC - Procurement Training - 2012 - J-C TRAN
94
47
IDRAC - 2012
27/01/2012
Negotiation: Convince
Convince:
Explain Listen Reformulate Propose Argue State / remind your needs to the supplier Negotiate more simple clauses first Conclude agreement point in reformulating Then negotiate more complex criteria : use arguments and parades of the negotiation chart In case of blockade on an important clause switch to a lower stake clause Conclude final agreement in reformulating it
95
Negotiation in Team
A leader is nominated Define roles and power Complete solidarity is mandatory Prepare together Allocate sequences to team members
IDRAC - Procurement Training - 2012 - J-C TRAN
96
48
IDRAC - 2012
27/01/2012
Aim high to reach a good final result If one asks a concession from you, reply first with an argument Give a concession only against an other one If you have to go backwards make small steps Orient your customer towards conclusion
IDRAC - Procurement Training - 2012 - J-C TRAN
97
98
49
IDRAC - 2012
27/01/2012
Negotiation: Conclude
Conclude:
Make an inventory of all agreements which were reached and reformulate them Propose to write a negotiation report, write and send it quickly:
To the supplier To internal correspondents design, production, logistics, with appropriate comments
IDRAC - Procurement Training - 2012 - J-C TRAN
99
50