Strategic Suppliers

1. Action Plan Strategic Suppliers The recommended approach for Strategic suppliers is to actively manage the relationship • 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 Leverage Strategic High High Manage Supply Routine Bottleneck Business Impact Easy Difficult Low Supply Market Opportunity Easy Difficult Low e.g. typically most direct commodities fall into this category Strategic relationships must be partnerships with mutual benefits

2. Action Plan Bottleneck Suppliers The recommended approach for Bottleneck suppliers is to ensure supply of critical items • 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 Leverage Strategic High Routine Bottleneck Business Impact Ensure Supply Difficult Easy Low Supply Market Opportunity e.g. complex specification products Bottleneck suppliers should ultimately be transitioned into another quadrant

3. Action Plan Leverage Suppliers The recommended approach for Leverage suppliers is to cut cost using innovation and competition • 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 Leverage Strategic Reduce Total Cost Business Impact Routine Bottleneck Easy Difficult Low Supply Market Opportunity e.g. commodities… Leverage relationships are built solely around price

4. Action Plan Routine Suppliers The recommended approach for Routine suppliers is to minimise management attention and investment • 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 Leverage Strategic High Routine Bottleneck Business Impact Minimise Effort Difficult Low Easy Supply Market Opportunity e.g. Office Supplies, Desktops, Laptops etc. Routine relationships should take up minimal time and effort