IT Services - Sourcing strategy by Pon Karthikeyan
1. IT Services - Sourcing Strategy
Strategic management of suppliers
2. Agenda
1
Author - Introduction
2
Customer – Supplier matrix
3
Supplier management process
4
Strategic view of procurement
5
Value proposition (Supplier view)
6
Supplier Development
7
Supplier Relationships
Pon Karthikeyan
3. Author
16+ years of consultancy & senior
management experience
Experienced in owning global
customer relationship
Academic credentials include masters
in business management, PMP &
Professional level certifications in SAP
LinkedIn contact:
de.linkedin.com/pub/pon-karthikeyanm-b-a-pmp/14/186/998
The views expressed in this presentation are strictly the author ´s personal opinion/point of view and should not
be interpreted in any way as those of his employers past or present
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4. Customer – Supplier matrix
RISK
Critical
•High risk, high spend services
•Customer approach: “Collaborate - form
closer relationships”
•Customer-Supplier relationship: Strategic
•Differentiator: “cost & value leadership”
•Supplier approach: “key account”
Routine
Leverage
•Low risk, low spend services
•Customer approach: “Organize & let go”
•Customer-Supplier relationship: Tactical
•Differentiator: “cost optimization”
•Supplier approach: “move up the value
chain”
Low
Bottleneck
•High risk, low spend services
•Customer approach: “Secure supply, then
diversify ”
•Customer-Supplier relationship: Strategic
•Differentiator: “product or service
leadership”
•Supplier approach: “customer of choice”
High
•Low risk, high spend services
•Customer approach: “Play the market”
•Customer-Supplier relationship: Tactical
•Differentiator: “cost leadership”
•Supplier approach: “increase the footprint”
REWARDS & RETURNS
High 4
5. Supplier management process
Business
requirement/needs
Sourcing strategy
Supplier management
objectives
Supplier management
activities
Gap closure
Requirements –
Assets, competencies
& delivery model
Continuous
improvement
Desired relationships
Relationship
management/
Performance
measurement/
Quality & Risk
management
5
7. Value Proposition (Supplier view)
“The secret of staying afloat in business is to create
something people will pay for“ – Thomas Edison
1. Value Proposition – set of resulting experiences for the
customer
2. Quality, Price & Service
3. Moments of Truth
4. Zero defects to zero defections
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9. Supplier Relationships
Mature
Partnerships
Long term business outlook, focus on co-creation & joint
innovation, high level of relationship, total cost of ownership
approach
Developing
Partnerships
Long term contracts, focus on cost, quality & service, minimum
business revenue commitments, Balanced score card approach
Preferred
Suppliers
Competitive
Suppliers
Mid term contracts, benchmarking of cost, mutually agreed SLAs &
penalty clauses, output based pricing model
Short term contracts, frequent negotiations & price change
measurement
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