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©2009 Clarity Management Consulting Inc.
HOW TO SELECT INNOVATIVE SUPPLIER PARTNERS USING A 5-STEP PROJECT
MANAGEMENT APPROACH
Monica D. JohnsPresident and CEO
Clarity Management Consulting
©2009 Clarity Management Consulting Inc.
ContentsIntroduction
The need for innovative suppliersThe need for a project management approach
The 5-Step Project Management Approach to Selecting Innovative Suppliers, including:
Tools for identifying forward-thinking supplier partnersAn approach for capturing the requirements of a diverse group of stakeholdersTools for evaluating potential partners
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©2009 Clarity Management Consulting Inc.
Introduction
The need for innovative suppliersNeed to reduce cost and advance innovationNeed strategic partnerships with innovative suppliers who can accelerate desired improvements
Step change improvements versus incremental change
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©2009 Clarity Management Consulting Inc.
Desired State (your goal)
Current State
Innovative Suppliers Dramatically Influence Progress Toward Strategic Goals
Incremental change
Step change
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©2009 Clarity Management Consulting Inc.
Introduction
The need for innovative suppliersStrategic partners are truly innovativeThey provide systems needed to compete on quality and customer satisfactionThey have industry-leading capabilities and can achieve greater efficiencies
Technology is a key driverPartners typically have a progressive business model
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©2009 Clarity Management Consulting Inc.
Introduction
The need for a project management approach
Organizations have business activities that span functional/organizational lines
Multiple end-user groups with different needsGoals and objectives vary
Scarce resources spread across a number of activitiesMinimal documentation of business requirements in many cases
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©2009 Clarity Management Consulting Inc.
Introduction
The need for a project management approach
Pressure to find a supplier means choices are driven by current state, not future stateSelection decisions affect the organization for years
Decisions either facilitate progress or impede itSo what is a project management approach to finding innovative suppliers?
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©2009 Clarity Management Consulting Inc.
Use PMI® Process Groups as a Framework for Structuring the Selection Process
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Identify Team and Stakeholders, Gain Approval
Initiating Planning Executing
Closing
ScopeTimelineRequirementsDesired StateMetrics
RisksCriteriaExpectationsProspects
RFPEvaluation ToolsSolicit ProposalsEvaluateNegotiate
Controlling (ongoing)SelectionCommunicationDocumentation
ScopeScheduleRequirementsCost
FeedbackDocumentationCommunication
©2009 Clarity Management Consulting Inc.
Initiating
©2009 Clarity Management Consulting Inc.
Initiating
Identify core team, sponsor, and champion
Sponsor is executive-level stakeholderChampion is mid-level manager with authority over resourcesCore team is a subset of those affected by change
Can commit time to selection processCan ensure buy-in, influence othersIncludes key subject matter experts like IT
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©2009 Clarity Management Consulting Inc.
Initiating
Identify and engage stakeholdersReview contracts with existing supplierIdentify all business units that use the contractsRank by volume of business under contractDefine high, medium, and low volume levels
Group business units accordinglyIdentify communication protocol and determine level of engagement for each
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©2009 Clarity Management Consulting Inc.
Initiating
Identify and engage stakeholdersEngage business units using the protocol
Adjust approach as needed for unique situationsConduct kick-off meeting with stakeholders
Find out how they want things to look in the future Communicate regularly with all groups
Essential to successful sourcing activity“Pay me now or pay me later”
Gain approval to go forward
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©2009 Clarity Management Consulting Inc.
Planning
©2009 Clarity Management Consulting Inc.
PlanningDefine scope
Business units, customers, other affected groupsPhased approach might be more cost-effective, easier to get buy-in
Define timelineStart with contract expiration and work backwardsIdentify major milestones affected by new contractDefine selection activities and timing of resourcesInclude areas of schedule risk, such as sourcing approvals, availability of technology, system changes
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©2009 Clarity Management Consulting Inc.
PlanningCommunicate scope and timeline to stakeholders
Create opportunities to get feedbackUse engagement protocols to your advantage
Incorporate stakeholder feedback as appropriate and finalize
People will be concerned about changeRegroup or reboot if necessary to get them onboardCreate revised scope and/or timeline as needed
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©2009 Clarity Management Consulting Inc.
Planning
Brainstorm about desired state and goals for new supplier
Get a picture of where you want to be in 2-3 yearsDecide how new supplier must create valueDetermine which features and benefits are missing with current supplier/solutionWant to move from having suppliers who just sit on the sidelinesWant real value partners who support the vision
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©2009 Clarity Management Consulting Inc.
PlanningDefine business goals and requirements
Gather informationConduct ‘desired state’ brainstorming sessionsOrganization’s vision and strategic plan documentsExisting contracts and metricsStakeholders and functional groupsCustomers, partners, and other suppliers if applicableResearch the industry to identify standards, trendsCompare current supplier’s performance and capabilities to industry trends
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©2009 Clarity Management Consulting Inc.
Planning
Define cost parametersCurrent costPotential efficienciesTargets for new contract
Incorporate targets set by senior managementInclude improvements over the life of the contractUse information from industry research
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©2009 Clarity Management Consulting Inc.
Planning
Use requirements to create templates for identifying potential partners/bidders
Define characteristics of ideal supplier partner including capabilities, vision, expertise, technologyDefine and weight appropriatelyUse templates to rank
Invite prospects to give a presentationUse templates to create interview questions
Evaluate, rate, and rank presenters to create bid list
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©2009 Clarity Management Consulting Inc.
Sample Interview Template
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©2009 Clarity Management Consulting Inc.
Planning
Define risk management strategiesIdentify risks
Changes to scheduleModifications to requirements or business modelChanges in cost targetsAvailability of resourcesTechnology upgradesChanges in other suppliersNew requirements from customers, government
Develop mitigation plans and contingencies
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©2009 Clarity Management Consulting Inc.
Planning
CautionAllow adequate time for planningDon’t underestimate time needed for implementation, especially with multiple stakeholdersChange is not always welcomeLong-term supplier relationships hard to breakCritical to have stakeholders on boardCommunicate benefits of change on a regular basisTreat current supplier as you would any prospect
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©2009 Clarity Management Consulting Inc.
Executing
©2009 Clarity Management Consulting Inc.
ExecutingConstruct RFP based on stakeholder requirements
Goals and objectivesTimeline for bid process and implementationBusiness description and scopeRequirements for key elements of the businessPricing matrixHistorical data, Service level requirements
Create response template for bidders to useProvides a standard formatFacilitates evaluation of responsesFollows structure of RFP
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Executing
Review, finalize, distribute RFPProvide additional information and clarifications at bidders’ conference
Review program basics, expectations, visionReview RFP, contract implementation timelineSolicit feedback concerning requirements or information providedExplain response template, pricing matrixEstablish ground rules for communication (e.g. questions to be submitted in writing)Address general questions
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©2009 Clarity Management Consulting Inc.
Executing
Create tool for evaluating RFP responsesDevelop weighting and rating templateShould follow RFP response template
Evaluate and rate responses, pricingCompile questions to clarify responsesDiscuss questions in person with individual bidders
Responses to questions should also be rated using similar evaluation tool
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©2009 Clarity Management Consulting Inc.
Sam
ple
RFP
Res
pons
e Ev
alua
tion
Tem
plat
e
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©2009 Clarity Management Consulting Inc.
Executing
Identify top contenders for next roundUtilize other evaluation tools to get additional insights
Site visits and reference checkingResults should corroborate quality of RFP responses
Select final set of bidders for negotiationsIncorporate any new information and review impactReview with championEliminate non-contendersFinal recommendations and approvals
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©2009 Clarity Management Consulting Inc.
Controlling
©2009 Clarity Management Consulting Inc.
Controlling
Controlling is ongoingAllows for incorporation of new informationForces the team to reevaluate as needed
Evaluate potential changes to scope, etc.Ensure involvement of key team members
Regular core team discussionsUtilize communications protocolEngage leadership when new information surfaces
Ensure consistency of RFP documentationAll documents must reflect the latest information
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©2009 Clarity Management Consulting Inc.
Closing
©2009 Clarity Management Consulting Inc.
Closing
Select supplier partnerNotify bidders of decisionSchedule contract award
Finalize communications on contract awardDevelop plan for transition from current supplierDevelop contract documents
Statement of Work (SOW)Project PlanService Level Agreements
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©2009 Clarity Management Consulting Inc.
SummaryThis 5-step project management approach provides:
Tools for identifying strategic supplier partnersAn approach for capturing the requirements of a diverse group of stakeholdersTools for evaluating potential partners
This approach will enable you to:Find innovative partners with world-class capabilitiesMove toward a sustainable, scalable solutionAccelerate achievement of strategic goalsGain a competitive advantage with your customers
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