Managing Business Marketing & Sales 7

1. Managing Business Marketing & Sales 7 Professor Waldemar A. Pfoertsch弗沃德 Term 4/MBA 2006 Oct. 8 -28, 2007

2. Strategic Procurement & Key Account Management • From short term profit and transaction behavior to relationship behavior • Leads to positive effects on firm’s financial performance and customer relationships

3. Strategic Procurement & Key Account Management • Everyone is a winner! • Measurement and risk affects both suppliers and customers • What happens when?? • Earth Quake in Japan • Strike at Supplier

4. Stronger customer relationships Extended customer relationships Stronger supplier relationships Stronger supplier relationships Key Account Management (KAM) Effects Firm A Firm B

5. Key Account Management (KAM) Issues • Supplier performance measurement • Risk Assessment of supplier relationship • Developments: • Supplier reduction • Supplier development Tier 1 2 3 4 System Module Components Parts

6. Trucks Cars Buses Strategic Purchasing System Supplier 1 2 n Module Supplier Strategic Procurement & Key Account Management Example Factories 18 000 suppliers

7. Drivers of supplier’s selection

8. Supplier performance measurement • It is need, but not always done • Metrics are needed • Move to shared supplier performance measurements

9. Supplier Performance Measurements (SPM) • “Value for Money” (transactional element): • Price • Quality conformance • Delivery reliability • Service (per relationship) • Response flexibility • Technical support • Solution selling • To joint shared performance measures

10. Order size Repeatability Standardization Timeliness of order Pricing terms Pricing structure Accuracy of specifications Schedule of delivery Fulfillment for profitability Joint shared performance measures

11. Fulfillment for profitability Example: Electrical components company

13. New Paradigm shift • From: We win, the other side loses • To: Win – Win • For: Easy to do business with fair relationships

14. ABB Fred Kindle CEO Dan Ahern KAM for CAT Dinesh Paliwal Senior Executive Team Greg Scheu Senior Executive Team Frank Duggan Group KAM Oliver Riemenschneider Baden Plant Rolf Schweizer GM Turbo Sales CAT Jim Owens CEO Dan Murphey VP Global Purchasing Paul Wroblewski Kiel Plant Tom Sandborg Purchasing Turbo Systems ABB / CAT Case: The Players

15. ABB with $ 20,7b sales in 2004 Utilities Industrial & Automation

16. The Turbocharger • Improves efficiencies and performance

17. The partner

18. ABB Sales Management

19. ABB Key Account ManagementNew Frank Duggan Dan Ahern for CAT

20. The ABB CAT Account • 2004 Total $ 67m • Turbo $ 40m • 30% of total sales • 10 % of profit • For CAT Lafayette,IN & Kile, germany • Supplied from Baden Germany • Oliver Riemenschneider VP Turbo Marketing • Rolf Schweizer GM Turbo Sales

21. The CAT Supplier ABB • 3 suppliers + own Air- Systems • “ABB were holding them hostage” • Develop new source • Issues • Service approach of ABB • Intellectual property • Tom Sandborg CAT purchasing manger • Working Group AAB/CAT + Steering Committee

22. ABB/CAT case Questions • What are the changes of the Key Account Management in 2004 at ABB? • What caused the problems at CAT’s Large Engine Plant concerning turbo charger? • Had Dan the right approach to solve the issue within ABB? Is the organizational structure appropriate? • What other steps could you propose?

24. Thank you!谢谢！ Waldemar Pfoertsch Professor Business Marketing CEIBS 699 Hongfeng Road, Shanghai China