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Components of scm

The term Supply Chain Management is a very familiar term in today's business world. It refers to the processes which involves from the acquiring of the raw material stage to the production stage to the distribution until it finally reaches the customer in an efficient and effective manner. It involves activities like sourcing, procurement, production along with the logistics activities. With globalization having a great impact on the supply chain management, it has become very important for the organizations to have global networking. A lot of changes are seen in the corporates in terms of procurement, production and distribution. With the organizations becoming more and more focused on the efficiency and the effectiveness of the various core competencies stated earlier the companies have relatively opted to outsource the other activities to a much effective destination. The main focus here is to satisfy the existing and the new customers by matching or bettering the demands of the customers. This in turn will ensure the smooth functioning of the supply chain partners thus giving way for better and competitive edge to the work flow. Strategic planning, operative planning, product planning, production planning, supplier management,logistics management, sales forecasting and order fulfillment play a very vital role in the success of the smooth work flow. SCM has to go through a lot of complexities both internally and externally ranging from product designs to the price configurations till the delivery of them to the customers. The key components of Supply Chain Management includes : 1.Strategic planning: Quality planning has to be done for the implementation and optimization of the necessary tools for determining the location, size and the kind of facilities opted in order to meet the customer service goals. 2.Demand Planning: Based on the customer demand predictions the demand planning is done thus, ensuring better and accurate customer demand. 3.Distribution Planning: There are a lot of recent changes in the corporate world due to globalization. The planning for distribution is done to determine which demands can be fulfilled by the existing supply elements. 4.Manufacturing Planning: The manufacturing division is usually confronted with a lot of complexities when compared to other divisions. Meeting the demands in terms of maximization of the assets like people, materials, equipment and capital and planning has to be done accordingly in

terms of planning related to engineering, assemble and the manufacturing environments. It would help in delivering advanced capabilities that would help the organization make the best use of the production resources, improve efficiencies, increase output and lower costs. 5.Production Planning: Under production planning detailed scheduling is done with proper planning for procurement. The comparison of the capacity requirements from the production orders with the available production capacity is done through detailed scheduling. 6.Transportation and logistics planning: The planning is done in terms of route, management is done in terms of transportation and the planning for the billing and delivery of the products are done accordingly. Further the end to end fulfillment would be done giving ways for the benefits mentioned below: * With the adaptability and visibility in the supply chain management there is better and almost immediate response to the existing and new supply and demand. Opportunities are more quickly capitalized on. * The level of customer satisfaction is relatively more and hence boosts each and every aspect of the supply chain management. * Monitoring and tracking of the compliance can be done. * Better planning for procurement, management and transportation can be done because of relatively lower operational expenditure. * The business relationship gets strengthened more paving way for the achievement of goals with excellence. transportation Transport or transportation is the movement of people, animals and goods from one location to another. Modes of transport include air,rail, road, water, cable, pipeline, and space. The field can be divided into infrastructure, vehicles, and operations. Transport is important since it enables trade between peoples, which in turn establishes civilizations. Transport infrastructure consists of the fixed installations necessary for transport, and may be roads, railways, airways, waterways,canals and pipelines, and terminals such as airports, railway stations, bus stations, warehouses, trucking terminals, refueling depots (including fueling docks and fuel stations), and seaports. Terminals may be used both for interchange of passengers and cargo and for maintenance. Vehicles traveling on these networks may include automobiles, bicycles, buses, trains, trucks, people, helicopters, and aircraft. Operations deal with the way the vehicles are operated, and the procedures set for this purpose including financing, legalities and policies. In the transport industry, operations and ownership of infrastructure can be either public or private, depending on the country and mode.

A Diversity of ModesTransport modes are the means by which people and freight achieve mobility. They fall into one of three basic types, depending on over what surface they travel land (road, rail and pipelines), water (shipping), and air. Each mode is characterized by a set of technical, operational and commercial characteristics:

Road transportation (Concept 2). Road infrastructures are large consumers of space with the lowest level of physical constraints among transportation modes. However, physiographical constraints are significant in road construction with substantial additional costs to overcome features such as rivers or rugged terrain. While historically road transportation was developed to support non-motorized forms of transportation (walking, domestication of animals and cycling at the end of the 19th century), it is motorization that has shaped the most its development since the beginning of the 20th century. Road transportation has an average operational flexibility as vehicles can serve several purposes but are rarely able to move outside roads. Road transport systems have high maintenance costs, both for the vehicles and infrastructures. They are mainly linked to light industries where rapid movements of freight in small batches are the norm. Yet, with containerization, road transportation has become a crucial link in freight distribution. Rail transportation (Concept 3). Railways are composed of a traced path on which are bound vehicles. They have an average level of physical constrains linked to the types of locomotives and a low gradient is required, particularly for freight. Heavy industries are traditionally linked with rail transport systems, although containerization has improved the flexibility of rail transportation by linking it with road and maritime modes. Rail is by far the land transportation mode offering the highest capacity with a 23,000 tons fully loaded coal unit train being the heaviest load ever carried. Gauges, however, vary around the world, often complicating the integration of rail systems. Pipelines (Concept 3). Pipeline routes are practically unlimited as they can be laid on land or under water. The longest gas pipeline links Alberta to Sarnia (Canada), which is 2,911 km in length. The longest oil pipeline is the Transiberian, extending over 9,344 km from the Russian arctic oilfields in eastern Siberia to Western Europe. Physical constraints are low and include the landscape and pergelisol in arctic or subarctic environments. Pipeline construction costs vary according to the diameter and increase proportionally with the distance and with the viscosity of fluids (from gas, low viscosity, to oil, high viscosity). The Trans Alaskan pipeline, which is 1,300 km long, was built under difficult conditions and has to be above ground for most of its path. Pipeline terminals are very important since they correspond to refineries and harbors. Maritime transportation (Concept 4). Because of the physical properties of water conferring buoyancy and limited friction, maritime transportation is the most effective mode to move large quantities of cargo over long distances. Main maritime routes are composed of oceans, coasts, seas, lakes, rivers and channels. However, due to the location of economic activitiesmaritime circulation takes place on specific parts of the maritime space, particularly over the North Atlantic and the North Pacific. The construction of channels, locks and dredging are attempts to facilitate maritime circulation by reducing discontinuity. Comprehensive inland waterway systems include Western Europe, the Volga / Don system, St. Lawrence / Great Lakes system, the Mississippi and its tributaries, the Amazon, the Panama / Paraguay and the interior of China. Maritime transportation has

high terminal costs, since port infrastructures are among the most expensive to build, maintain and improve. High inventory costs also characterize maritime transportation. More than any other mode, maritime transportation is linked to heavy industries, such as steel and petrochemical facilities adjacent to port sites. Air transportation (Concept 5). Air routes are practically unlimited, but they are denser over the North Atlantic, inside North America and Europe and over the North Pacific. Air transport constraints are multidimensional and include the site (a commercial plane needs about 3,300 meters of runway for landing and take off), the climate, fog and aerial currents. Air activities are linked to the tertiary and quaternary sectors, notably finance and tourism, which lean on the long distance mobility of people. More recently, air transportation has been accommodating growing quantities of high value freight and is playing a growing role in global logistics. Intermodal transportation (Concept 6). Concerns a variety of modes used in combination so that the respective advantages of each mode are better exploited. Although intermodal transportation applies for passenger movements, such as the usage of the different, but interconnected modes of a public transit system, it is over freight transportation that the most significant impacts have been observed. Containerization has been a powerful vector of intermodal integration, enabling maritime and land transportation modes to more effectively interconnect. Telecommunications. Cover a grey area in terms of if they can be considered as a transport mode since unlike true transportation, telecommunications often does not have a physicality. Yet, they are structured as networks with a practically unlimited capacity with very low constraints, which may include the physiography and oceanic masses that may impair the setting of cables. They provide for the instantaneous movement of information (speed of light in theory). Wave transmissions, because of their limited coverage, often require substations, such as for cellular phone networks. Satellites are often using a geostationary orbit which is getting crowded. High network costs and low distribution costs characterize many telecommunication networks, which are linked to the tertiary and quaternary sectors (stock markets, business to business information networks, etc). Telecommunications can provide a substitution for personal movements in some economic sectors.

2. Modal CompetitionA general analysis of transport modes reveals that each has key operational and commercial advantages and properties. However, contemporary demand is influenced by integrated transportation systems that require maximum flexibility. As a result, modal competition exists at various degrees and takes several dimensions. Modes can compete or complement one another in terms of cost, speed, accessibility, frequency, safety, comfort, etc. There are three main conditions that insure that some modes are complementing one another:

Different geographical markets. It is clear that if different markets are involved, modes will permit a continuity within the transport system, particularly if different scales are concerned, such as between national and international transportation. This requires an interconnection, commonly known as a gateway, where it is possible to transfer from one mode to the other. Intermodal transportation has been particularly relevant to improve the complementarity of different geographical markets.

Different transport markets. The nature of what is being transported, such as passengers or freight, often indicates a level of complementarity. Even if the same market area is serviced, it may not be equally accessible depending of the mode used. Thus, in some markets rail and road transportation can be complementary as one may be focusing on passengers and the other on freight. Different levels of service. For a similar market and accessibility, two modes that offer a different level of service will tend to complement another. The most prevailing complementarity concerns costs versus time.

Transportation decisions in supply chain Transportation plays a central role in seamless supply chain operations, moving inbound materials from supply sites to manufacturing facilities, repositioning inventory among different plants and distribution centers, and delivering finished products to customers. Benefits that should result from world-class operations at the points of supply, production, and customer locations will never be realized without the accompaniment of excellent transportation planning and execution. Having inventory positioned and available for delivery is not enough if it cannot be cost effectively delivered when and where needed. This article addresses the key decision levels that need to be addressed for transportation to make its greatest impact in the integrated supply chain. These levels address long-term decisions, lane operations, choice of mode or carrier, and dock level operations. Long-Term Decisions At the highest strategic decision level, transportation managers must fully understand total supply chain freight flows and have input into network design. At this level, long-term decisions related to the appropriateness and availability of transportation modes for freight movement are be made. Managers need to decide, for example, which primary mode of transportation is appropriate for each general flow (i.e., inbound, interfacility, outbound) by product and/or location, paying careful attention to consolidation opportunities where feasible. Plans should indicate the general nature of product flows, including volume, frequency, seasonality, physical characteristics, and special handling requirements. Strategic mode and carrier-sourcing decisions should be considered part of a long-term network design, identifying core carriers in each relevant mode to enhance service quality commitments and increase bargaining power. Additionally, managers need to make decisions regarding the level of outsourcing desired for each major product flowranging from providing the transportation through the companys own assets (e.g., private fleets) to latch-key turnover of transportation operations to third-party providers. Network and lane design decisions at the strategic level should examine tradeoffs with other operational cost areas such as inventory and distribution center costs. In conducting this analysis, companies should keep in mind that networks need not be fixed or constant. Rather, substantial service improvements and cost reductions can be achieved by critically examining existing networks and associated flows. For instance, it may become apparent that stock locations can be centralized by using contract transportation providers to move volume freight to regional crossdock facilities for sorting, packaging, and brokering small loads to individual customers.

Lane Operation Decisions The second level of decision-making regards lane operation decisions. Where network design decisions are concerned with long-term planning, these decisions focus on daily operational freight transactions. At this level, transportation managers armed with real-time information on product needs at various system nodes must coordinate product movements along inbound, interfacility, and outbound shipping lanes to meet service requirements at lowest total costs. Decision-makers who are adept at managing information can take advantage of consolidation opportunities, while ensuring that products arrive where they are needed in the quantities they are needed just in time to facilitate other value-added activities. At the same time, they are realizing transportation cost savings. The primary opportunities associated with lane operation decisions include inbound/outbound consolidation, temporal consolidation, vehicle consolidation, and carrier consolidation. If managers have access to inbound and outbound freight movement plans, they can identify opportunities to combine freight to build volume shipments. An inbound shipment may arrive from a supplier located in Philadelphia, for example, on the same day that a production order destined for a customer in Wilmington, Del., becomes available for movement. If this information is known to transportation planners far enough in advance, arrangements could be made for the inbound carrier to haul the outbound load back to Wilmington. In many cases the inbound carrier would be willing to negotiate lower roundtrip rates to avoid deadhead miles on the backhaul. This is particularly true if the carrier and/or driver are headquartered in the Philadelphia area. If this happens to be a heavy traffic lane, the firm may consider strategically sourcing a core carrier in this geographic region to capitalize on this opportunity. Similarly, less-than-volume-load (LVL) shipments moving to the same geographic region on consecutive days may be detained until sufficient volumes exists to justify a full load on one carrier with multiple stops (temporal consolidation). By avoiding the LVL terminal system, the detained freight often arrives at the same time or earlier than the original LVL shipmentand at a lower cost. Multiple, small shipments inbound from suppliers or outbound to customers in the same geographic region scheduled for delivery on the same day may also be combined on one vehicle at full-volume rates, paying stop-off charges but saving on multiple LVL rates (vehicle consolidation). Another consolidation opportunity springs from the core carrier concept. Assigning greater shipping volumes to fewer carriers should result in lower per-unit transportation costs and higher priority assigned to the shippers increased freight. In addition to consolidating the carrier base, the shipper can identify reliable carriers in need of backhaul miles. For instance, a plastics distributor identifies carriers that operate a high percentage of deadhead miles in lanes over which the firm regularly moves freight. The firm negotiates advantageous rates with these carriers in exchange for guaranteed backhaul revenue miles. If the plastics firm plans to move significant amounts of product from Texas to Florida, the transportation manager will find a Florida carrier that moves a large volume of product from Florida to Texas. Given sufficient planning information, the transportation manager can use guaranteed volumes on the backhaul to negotiate attractive rates. Choice of Mode and Carrier A third level of transportation decision-making involves the choice of mode and carrierfor a

particular freight transaction. Due to the blurring of service capabilities among traditional transportation modes, options that in the past would not be considered feasible may now emerge as the preferred choice. For example, rail container service may offer a cost-effective alternative to longhaul motor transport while yielding equivalent service. Similarly, package delivery carriers are competing with traditional LTL operators. Truckload carriers, on the other hand, are increasingly bidding for low-volume shipments as well as for overnight freight movements. For the shipper seeking 24-hour delivery, truckload carriers may offer an alternative to air carriers at significantly lower ratesand, quite possibly, higher reliability. In an integrated mode/carrier decision-making scenario, each shipment would be evaluated based upon the service criteria that must be met, (for example, delivery date/time or special handling requirements) as well as the movements cost constraints. All core carriers, regardless of mode, that could possibly meet the service and cost criteria would be pulled from the database. Managers would then choose the carrier from this multi-modal set based on availability and existing rates. Dock Level Operations The final set of transportation decisions involves dock level operations, such as load planning, routing, and scheduling. These activities encompass the operational execution of the higher-level planning decisions. While the fundamental purpose of shipping docks may not have changed much over the years, the manner in which work is done certainly has. One obvious change is the common usage of advanced IT and decision support systems. These tools help the dock personnel to make better use of the transportation vehicle space; to identify the most efficient routes; and to better schedule equipment, facilities and drivers on a given day. Transportation departments that avail themselves of better and more timely information can derive significant benefits from more efficient and effective load planning, routing, and scheduling. For example, if a vehicle is being loaded with multiple customer orders, dock-level managers must ensure that the driver is informed of the most efficient route and that loads are placed in the order of the planned stops. Transportation managers, even at the dock level, must develop expertise in using the information tools available to aid in these decisions. Successful managers today require a broad view of transportation managements role and responsibilities in an integrated supply chain. Managers will continue to encounter significant challenges as their firms proceed down the road toward supply chain integration, particularly as external environmental characteristics such as fuel costs and the overall economy wax and wane. Regardless of external conditions, however, managers must encourage their firms to avoid the temptation of making transportation decisions with an eye toward short-term gain. Rather, they need to view the total cost and total value provided by the function not only in relation to operating expenses but also in terms of the impact on customer service and inventory reduction. The influence on total economic value added is significant.

sourcing guidelines The Group wants to collaborate with suppliers that

respect their employees right to organise themselves and negotiate collective wage agreements; employee representatives must be able to perform their work without being hindered or discriminated against maintain a good working environment and prevent accidents and injuries related to the physical and mental environment do not discriminate on the basis of ethnicity, religion, age, disability, gender, sexual orientation, membership of trade unions or political views give their employees a wage that ensures a fair standard of living in relation to the national level and do not withhold wages as a disciplinary sanction are not associated with any type of forced labour are not associated with exploitative forms of child labour such as labour that destroys childrens physical or mental health or prevents them from going to school ensure that children in cases where children of school age are employed have access to education work continually to comply with local environmental law in a systematic manner have established an environmental management system that includes at least a written environmental policy are not associated with bribery or any type of corruption By setting these guidelines, the Danske Bank Group wants to help create enduring social, ethical and environmental improvements for its suppliers.

Sourcing stratifiesA growing trend in business today has been foreign sourcing. Generally, this sourcing involves allowing a foreign company to handle elements of a company's production and/or service process. Most companies simply view foreign sourcing as a way to save money because these countries charge considerably less in labor costs than American, Canadian, or even European firms for the same work. However, simply looking at the cost-savings when considering using foreign sourcing is somewhat shortsighted. Companies thinking of engaging in this type of sourcing should look carefully at the big picture to identify some of the other potential advantages that can go with foreign sourcing in addition to lower costs. Instead of being viewed as a separate cost-saving measure, foreign sourcing needs to be thought of as part of the overall supply chain strategy of the company. To that end, the decision needs to be evaluated in a number of different ways. The following sections will outline these items in additional detail. First, companies must look at the technology differences between their current country of production and the lower cost alternative. Obviously, not all countries are functioning at the same technological level. If a company's production involves proprietary information or processes that need to be protected, such as a pharmaceutical firm's creation of a specific drug, then foreign sourcing may pose problems because many countries have lax laws regarding the protection of intellectual property. Furthermore, if the production requires either a high level of technology or

has a need for frequent technology updates, then those lower labor costs may be negated by the added expense of bringing and keeping technology up-to-date in the area. Another issue is the company's overall marketing strategy. Manufacturing a product in a low-cost country may save money if it is sold overseas but if the company has plans to also sell that product in the area around the manufacturing facility, then further consideration may be needed. Decisionmakers will need to evaluate their competition, not only now but also in the future since what may be true today may change dramatically in the next 2 to 5 years. Besides these two issues, the company must also keep in mind other possible changes that could save them money. Many companies mistakenly turn to foreign sourcing as their only means of lowering production costs, but it is most effective as part of a comprehensive expense reduction process. Companies need to carefully review all areas of production-related spending if companies are to receive the maximum benefits possible from foreign sourcing. Finally, the company must create a supply management strategy that will govern the methods of securing a supply of the goods and services needed to continue a steady production after foreign sourcing has been set in action. For example, if a U. S. based company can only supply certain raw materials, then the strategy must factor in the additional costs of bringing those materials to the foreign plant. Likewise, the strategy needs to evaluate vendors that would be local to the foreign area since using nearby suppliers could save further costs on shipping if the quality remains high. The bottom line when it comes to foreign sourcing is that it is not simply a stand-alone, quick-fix to lower production costs, to improve competitiveness in the global market, and to increase profits. Instead, foreign-sourcing needs to be a carefully thought out decision that is evaluated in terms of the company's existing goals and strategic, long-term business model. A failure to think of foreign sourcing in these terms generally results in disappointing results. Even if foreign sourcing is implemented, companies need to continually evaluate their decision and analyze whether or not it is helping them meet their overall objectives. Because market environments are increasingly unstable than ever before and because responding to changes in those environments is critical to a business's success, manufacturers cannot afford to continue a foreign sourcing policy without regularly tracking its benefits for the firm's profit margin. Step One Fully understand the spend category This step, along with the next two, is conducted by the sourcing team. At this stage, the team needs to ensure it understands everything about the spend category itself. For example, if the category is corrugated packaging at a consumer products company, the team will need to understand the definition of the category, usage patterns and why the particular types and grades were specified. Stakeholders at all operating units and physical locations would need to be identified. For example logistics, which may need to know about shipping specifications, or marketing, which may need to understand certain quality or environmental characteristics, where applicable. The five key areas of analysis are:

Total historic expenditure and volumes; Expenditure categorised by commodity and sub-commodity; Expenditure by division, department or user; Expenditure by supplier; Future demand projections or budgets. Step Two Supplier market assessment

Concurrently run supplier market assessment for seeking alternative suppliers to existing incumbents. Understand the key supplier marketplace dynamics and current trends. Prepare should-cost information from the major components of the key products. Take a view on the key suppliers sub-tier marketplace, and analyse for any risks as well as opportunities. Should-cost analysis is not appropriate for every item. In many cases, traditional strategic sourcing techniques work well. But in those cases where strategic sourcing cannot be applied, should-cost analysis provides a valuable tool that can drive cost reductions and supplier continuous improvement efforts. Step Three Prepare a supplier survey Next, develop a supplier survey for both incumbent and potential alternative suppliers. This survey will help evaluate the supplier capabilities. At this point, consider verifying spend information using data that incumbent suppliers have from their sales systems. The survey is to assess the capability and capacity of the market to meet your requirements. It enables you to assess at an early stage whether your proposed project is feasible and can be delivered by the identified supply base. It also provides an early warning of your requirements to the market, and enables suppliers to think about how they will respond. The key aim here is to encourage the right suppliers with the right structure to respond to you. Look to gather knowledge in these key areas: feasibility capability maturity capacity Step Four Building the strategy This step involves developing the sourcing strategy. The combination of the first three steps provides the essential ingredients for the sourcing strategy. However, for each area or category it

will depend on: 1. How competitive the supplier marketplace is Armed with the supplier information, you can build the competitive landscape in the supply marketplace. This can help demonstrate the size of the prize to alternative suppliers, and communicates the seriousness of a potential sourcing exercise to incumbent suppliers. 2. How supportive your organisations users are to testing incumbent supplier relationships A sourcing team has two sets of internal stakeholders: the people who use the things that are bought, and the executives who manage overall costs. The people who consume the spend category will accept cost reductions as long as the process is: started in another department; doesnt mean a change in suppliers; and doesnt jeopardise a good relationship with the supply base, generate complaints or affect issues such as delivery reliability, service or payments. For executives, cost and service competitiveness is a key objective, but they too are users of various corporate services, so are often caught between the pursuit of cost improvement and a user mentality of resisting change. To mobilise users and executives support for the category sourcing strategy, it is vital to communicate all the benefits and overcome any potential risks. 3. What alternatives exist to competitive assessment If the supply base is competitive, you can harness those forces to leverage better pricing or terms owing to increased volume of a streamlined product specification. Once the result of the competitive sourcing effort is determined, it will be useful to set up a collaborative programme that will run until the next competitive sourcing event takes place. If a competitive approach to sourcing isnt a viable option, its worth considering what the alternatives are, such as collaborating with suppliers: to reduce complexity and in turn increase productivity; to create corroborative process improvements that reduce the cost of doing business; to change the way the relationship is structured. For example, firms may invest in supplier operations to guarantee access to supply, new technology or process improvements. These alternatives are pursued typically when a buying company has little leverage over its supply base. They will be relying on good faith that suppliers will share the benefits of a new approach. The sourcing strategy is an accumulation of all the drivers thus far mentioned. Step Five RFx Request for

Where a competitive approach is used, which is the general case for most spend categories, a request for proposal or bid will need to be prepared (RFP, RFQs, eRFQs, ITTs). This will define and make clear the requirements to all prequalified suppliers. It should include product or service specifications, delivery and service requirements, evaluation criteria, pricing structure, and financial terms and conditions. A communication plan should also be implemented at this stage to attract maximum supplier interest. Ensure that every supplier is aware they are competing on a level playing field. Once the RFP is sent out to all suppliers, make sure they are given enough time to respond. Follow-up messages should also be sent out to encourage a greater response. Step Six Selection This is about selecting and negotiating with suppliers. The sourcing team should apply its evaluation criteria to the supplier responses. If extra information beyond the RFP response is required, dont be afraid to ask for it. If carried out manually, the negotiation process is conducted first with a larger set of suppliers, then narrowed to a few finalists. If the sourcing team uses an electronic negotiation tool, a greater number of suppliers may be kept in the process for longer, giving more diverse suppliers a better chance at winning the business. Compare outcomes in terms of total value or implementation cost differences. Departments directly affected can be brought into the final selection process. Senior executives should be briefed on the final selection, to gain their approval and also be given the rationale behind the decision, to prepare them for any calls they receive from disappointed suppliers. Step Seven Communicate with your new suppliers Once the winning supplier(s) are notified they should be invited to participate in implementing recommendations. Implementation plans vary depending on the degree of supplier switches. For incumbents, there will be a communication plan that will include any changes in specifications, improvements in delivery, and service or pricing models. These ought to be communicated to users as well. Since the company may have significantly benefited from this entire process, its important that this be recognised by both company and supplier. For new suppliers, a communication plan has to be developed that manages the transition from old to new at every point in the process that is touched by the spend category. Department, finance and customer service are affected by this change, and their risk antennae will be particularly sensitive during this period. It is particularly important to measure closely the new suppliers performance during the first weeks of performance.

Being able to demonstrate that performance matches, or is superior to, that of the former supplier will be vital during this sensitive time. It is also important to capture the intellectual capital your sourcing team has developed during the seven-step process so it can be used the next time that category is sourced.