Understand key reasons for failure in Procurement Projects with a continuum exercise to rate your risk of failure How to include suppliers a vision of the future How to create a comprehensive strategy How to develop an action plan that won’t kill you or your suppliers

1. Why Do Procurement Projects Fail?
Next Level Purchasing Association
August 29, 2019
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Presented by:
Ron Crabtree
CPIM, CIRM, CSCP, MLSSBB, SCOR-P, CSCTA
© 2019 - MetaOps, Inc.

2. 2
Agenda
© 2019 - MetaOps, Inc.
• Understand key reasons for failure in
Procurement Projects with a continuum
exercise to rate your risk of failure
• How to include suppliers a vision of the
future
• How to create a comprehensive strategy
• How to develop an action plan that
won’t kill you or your suppliers
• Q&A Forum

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Let’s get a sense for your knowledge
Polling Question
–How you rank your skill set in
this subject matter?
Range of 1 to 5, 1 = Novice and
5 = Guru
-- insert picture of polling image
here ----

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Let’s note a couple things…
• Copies of this
presentation’s
content upon
request. . .
• Rules of the road:
questions are good –
Use questions tool

5. Distinguishing features of best-in-class
procurement / supply organizations
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Adoption of best
practices in supply
management &
sourcing along with
CI best practices
Best-in-class
companies excel in
developing people –
and not just inside
your own
organization
Supply, procurement
and sourcing is a
“top five” strategic
focus
Focus on
competitive
advantage gained
from strategic supply
/ procurement
relationships

6. Typical Problems Experienced
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Procurement
& SCM
function –
people wear
multiple hats
Hiring and
retaining
high-powered
procurement
professionals
is difficult
Paradigm:
“we have no
leverage with
suppliers –
efforts to
develop
suppliers
would be
wasted”
Unable to
understand
the true total
costs of
ownership for
products and
services
Focusing only
on price =
‘careful what
you ask for’

7. Typical
Problems
Experienced
• Tend to find their current
supply base is characterized
by the following conditions:
– Many suppliers for each
commodity or material
type
– Frequent bidding for best
price with multiple
suppliers is the norm
– Need suppliers to finance
inventories
– An adversarial relationship

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– A low level of trust
– Perceived low levels of service
– Little or no exchange of ideas for product /
service design and continuous improvement
– Must perform incoming inspection - up to 100%
– Visits to the suppliers seldom, if ever, occur
– Suppliers do not have their performance
tracked and reported
– “Push” of ordering communications for each
purchase with 3 or even 4-way matching (and the
associated waste) vs. pull-based upon
consumption with little communication required
Typical Problems Experienced by World Class
Practitioners – esp. Small to Mid-Sized FirmsTypical Problems Experienced

9. A Continuum – Rank Your
Organization’s Procurement Risk
Factors
• We will use polling questions to get a
composite score for the overall
audience.
• Track your personal responses for a
personal assessment at the end of the
exercise
• Then we will do an analysis of your
scores individually and the group
composite results
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11. On-line polling
• Point 1 score – Quantity of Suppliers
• Point 2 score – Partnering relationship level
• Point 3 score – Formal Procurement Structure
• Point 4 score – Fulfillment Technology and Pull
Adoption
• Point 5 score – Total Cost Of Ownership
Knowledge
• Point 6 score – Supplier engagement in New
Product / Service Development
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Interpretation of Scores
10 or
less:
Low risk of failure. You chances to succeed in major
procurement projects is very high.
11 to 15: Some risk of failure. There is some value for your
organization in pursing an aggressive quality and supplier
development initiative for certain business lines that need
attention.
16 to 20 Medium risk of failure. There is a strong business case to
aggressively start a supplier development initiative that gets
at TCO, CI and shared product / service development.
21 to 25: High potential for Procurement Project Failure. The firm
must start doing something serious to develop relationships
with suppliers to improve total performance now.
26 or
More:
Extreme risk of Procurement Project Failure. Supplier
relationship development is mission critical to your future if
driving TCO is important.

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How to include suppliers in
Making a Vision of the Future

14. To get started, work to
improve relationships
and expectations
• Suppliers as partners, not adversaries:
– Share: Your joint competitiveness
vision, a willingness to try new and
different approaches, and share in the
risks and rewards
– Supplier personnel will be required to
come to your location periodically to
work directly with the users of their
materials/services
– The organization’s people – preferably
the ones who use the materials –
should visit the supplier’s operation to
understand total cost of ownership
© 2019 - MetaOps, Inc. 14

15. To get started, work to
improve relationships and
expectations
• Suppliers as partners, not adversaries:
– Information and planning must be
transparently shared with suppliers
– Continuous quality improvement and
elimination of waste is encouraged
continually with zero-based
improvement targets
– There should be continuous efforts to
co-design better products and
processes; develop alternatives to
achieve the desired value
© 2019 - MetaOps, Inc. 15

16. Set initial goals for your VSM
activities – begin with the end
in mind. . .• TACTICS:
– Set “Big Hairy Audacious Goals” (BHAGs) for
supplier performance in the near term:
• A 25 percent lead-time reduction in one
year
• A 50 percent year-over-year
improvement in quality
• Move to pull systems (Kanbans) for
materials w/suitable demand patterns
• Cost-down target of 10% for total supply
• Go to returnable/recyclable packaging
25% year-over-year until 100 percent is
achieved – zero landfill
– What is important is the message: These
goals cannot be achieved without big
changes
© 2019 - MetaOps, Inc. 16

17. Plan your
initial
efforts –
and start
VSMs and
Total Cost of
Ownership
(TCO)
• Select a high-impact initial value
stream
• Select the right team
– Marketing/Sales/Engineering
– Accounting
– Procurement/Materials
Management/SC VP
– Production/Operations
– Lean Sensei, LSS/SS BBs (to
facilitate)
– Sponsoring executives
• Schedule adequate time initially
and on-going
• Commit to scorecards and regular
process reviews

18. How to create a
comprehensive supplier
and supply chain
development strategy
© 2019 - MetaOps, Inc. 18

19. Recommendations
• Make it clear suppliers are to
help identify ways to improve
results while reducing costs
• Direct costs are all costs (incl.
quality) that accrue to using a
material or service –
– Working to reduce trim and
off-fall with supplier
materials
– Investigate/develop
alternative materials and
technologies
– Suppliers help improve the
capability of your processes
– Reduce disposal costs &
increase recycling
– Requiring suppliers to
provide evidence of CI
– Requiring suppliers
participate in joint CI
activities
© 2019 - MetaOps, Inc. 19

20. Recommendations
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Institute supplier
measurements and
feedback on the usual
suspects – quality,
OTD, customer service
Create a supply chain
measurement
scorecard system with
“stretch goals” (VSM’s
can provide the right
metrics)
Institute regular
review of performance
to targeted
improvements in the
supply chain’s
performance
Charter joint projects
to drive specific
outcomes – tracked to
scorecards

21. Cross-Organization Value Stream Maps W/Data
Artifacts
Understand functionally, with data to measure time, cost and
quality, by stakeholder / function across the value chain.
Capture systems, procedures, inputs & outputs in play.
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22. Recommendations
• Meet with the most senior
official of the supplier’s
organization and ask for help
– This can yield surprising results
– the cost? Asking
• Refuse to accept that you
have no leverage with a large
supplier
– Top officials with suppliers hate
to get complaints from their
customers – even their small
ones
© 2019 - MetaOps, Inc. 22

23. Recommendations
• Find out how other organizations
develop their supply chains
• Network, network, network
(build one):
– Join and become active in your
industry’s trade groups
– Find out why they use their
current suppliers
– Find out how others overcome
their problems
© 2019 - MetaOps, Inc. 23

24. Recommendations
• Look into creative approaches
with your suppliers to remove
barriers to performance
– Ask them to consider
vendor-managed inventory
(VMI) of commodities
– Consider a “pay-as-built”
strategy
– Consider setting up
suppliers inside your facility
to complete value-added
tasks
© 2019 - MetaOps, Inc. 24

25. Case Studies
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Alternative
Materials – Replace
woven with non-
woven textiles
Supplier Operations
Co-Located

26. How to develop an implementation
action plan that won’t kill you or your
suppliers
© 2019 - MetaOps, Inc. 26

27. Getting started
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DO A PARETO
ANALYSIS ON
YOUR SPEND
IDENTIFY HIGH
IMPACT, LOW
RISK SUPPLY
CHAIN
PARTNERSHIPS –
CREATE A SINGLE
“CHAIN”
WIN EXECUTIVE
SPONSORSHIP
AND SET INITIAL
OBJECTIVES
START WITH
MUTUAL VSM
PROJECTS TO
IDENTIFY “LOW
HANGING
FRUIT”

28. Getting started
© 2019 - MetaOps, Inc. 28
COMMENCE
IMPLEMENTATION,
SHARING IN BENEFITS,
AND BUILD ON
LESSONS LEARNED
BUILD THE SCORECARD
SYSTEM AND REVIEW
CYCLE, CHARTERING OF
NEW PROJECTS
REPEAT AND EXPAND
AS SKILLS BUILD

29. Oh, by-the-way. . .
“Barriers” and “Problems” to be aware of. .
.
© 2019 - MetaOps, Inc. 29

30. Traditional
Accounting
and Metrics
Paradigms-
Counter-
measures
• What gets measured gets done
– Good news
– Bad news: Be careful what you
ask for, you might get it
• Do your homework – Activity-Based
Cost Management: An Executive’s
Guide by Gary Cokins and
Throughput Accounting by Thomas
Corbett
• The low-ball supplier is not
necessarily the cheapest in the long
run
• Use Value Stream Mapping to
Uncover “Hidden Wastes and
Opportunities”
• Build a convincing business case for
change

31. Lack of
Urgency for
Change –
Counter-
measures
• Without Urgency and Top-Down
Commitment, you’re going to fail .
. . Benchmarking, managing
upward
• Align your metrics and goals – and
keep the list short (3 to 5)
• Do a pilot project for “quick hits”
– help others understand why
not changing culture prevents
system-wide success
• Buffer your people from un-
enlightened management

32. Additional Content Sources
NLPA – Std. COT & Custom Training, Expert-led procurement projects
ASCM / APICS libraries and repositories
Supply Chain Management Associations
ISM (NAPM)
Consortiums/special interest groups
Web Searches
Supply Chain Management Certification Programs

33. If you are an organization
looking to:
• Plan a new Procurement Project
• Reduce risks of failure in
Procurement Projects
• Develop skills – leaders and
procurement workforce
• Drive enterprise value through
best practices in Supply
Management
• Then…
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34. Two Ways to Engage - #1
One (1) Day Appraisal
• One Expert for a day will provide
– Strategy review or Strategy Execution
Plan
– Identify top 3 to 5 opportunities/gaps to
increase your execution plan
– Roadmap to close the gaps to superior
strategy execution
– Estimates of value/ROI results to expect
Value $4000
Expenses Only*
When scheduled by September 27, 2019
for a time by September 6, 2019
(*Travel/Food/Lodging)
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35. Two Ways to Engage - #2
Two (2) hr. Think Tank Session- Remote Council of
Experts
– 1 to 2 Experts meet with you online
– Help your Leadership team get clear on the
measures of effective strategy execution
– Or any other pressing matter you are grappling
with
– Develop a go forward plan
Value $600 to $1200 ($300/hr./Expert)
FREE
When scheduled by September 26, 2019
for a time by September 6, 2019
35

36. Choose One
1. 1 Day Appraisal (Expenses Only) (Value $4000)
– 1 MetaExpert in 1 day
– Cost is Expenses Only – Travel/Food/Lodging
2. 2 hr. Think Tank Session (RCoE) (Free)- Value $600-$1200
– 1 to 2 MetaExperts
– Gather online to help your Leadership team get clear on
strategy performance gaps and develop a go forward plan to
remedy.
Take the first step:
Bit.ly/ExecutiveChat (Ron Crabtree)
Offer good till September 6, 2019
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37. 37
What we covered today
© 2019 - MetaOps, Inc.
• Understand key reasons for failure in
Procurement Projects – self assessment
• How to include suppliers a vision of the
future
• How to create a comprehensive strategy
• How to develop an action plan that
won’t kill you or your suppliers
• Q&A Forum

38. Questions
38

39. Thank You
For More information:
Ron Crabtree, CPIM, CIRM, CSCP, MLSSBB, SCOR-P
CEO and Master Architect
p. 248-568-6484
rcrabtree@MetaOps.com
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© 2019 - MetaOps, Inc.