Strategic Suppliers

Business Impact

High

Low

Manage Supply

Bottleneck

Strategic

Routine

Leverage

Action PlanAction Plan

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

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

e.g. typically most direct commodities fall into this categorye.g. typically most direct commodities fall into this category

Strategic relationships must be partnerships with mutual benefitsStrategic relationships must be partnerships with mutual benefits

DifficultSupply Market OpportunityEasy

The recommended approach for Strategic suppliers is to actively manage the relationship

Difficult

High

Low

Easy

Bottleneck Suppliers

Action PlanAction Plan

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

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

Difficult

Ensure Supply

Bottleneck

Strategic

Routine

Leverage

Supply Market Opportunity

Business Impact

e.g. complex specification productse.g. complex specification products

Bottleneck suppliers should ultimately be transitioned into another quadrantBottleneck suppliers should ultimately be transitioned into another quadrant

The recommended approach for Bottleneck suppliers is to ensure supply of critical items

High

LowEasy

Leverage Suppliers

Action PlanAction Plan

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

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

LowEasy Difficult

Reduce Total Cost

Bottleneck

Strategic

Routine

Leverage

Supply Market Opportunity

Business Impact

e.g. commodities…e.g. commodities…

Leverage relationships are built solely around priceLeverage relationships are built solely around price

The recommended approach for Leverage suppliers is to cut cost using innovation and competition

Routine Suppliers

Action PlanAction Plan

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

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

High

Low Easy Difficult

Minimise Effort

Bottleneck

Strategic

Routine

Leverage

Supply Market Opportunity

e.g. Office Supplies, Desktops, Laptops etc.e.g. Office Supplies, Desktops, Laptops etc.

Routine relationships should take up minimal time and effortRoutine relationships should take up minimal time and effort

The recommended approach for Routine suppliers is to minimise management attention and investment

Business Impact