Unit 4

1. Unit 4 Supplier’s Core Capabilities and Strategies for Sustainability and Growth

2. Introduction • Supplier base is diverse • Local  global • Specialized  general • Etc.

3. Top Companies • Table 4.1 • Table 4.2 • Table 4.3

4. Overview of vendors and intermediaries • Sole supplier • Sole accountability • Governance easier • Risk  SQ may be low since 1 provider cannot be best in all dimensions • Best of breed • Many suppliers; act as head contractor • Is low-risk • Panel • A preferred list of suppliers who constantly bid against each other; each one has own strengths • Good for app dev, hwpurch, & consulting • Prime contractor • One head contractor (accountable) with a network of other suppliers (specialties and/or geographic areas)

5. Offshore intermediation • Offer a range of services • Major funtions • Mitigation of cultural disparities • Mitigation of cognitive distance • Comprehensive preparation of the client for an offshoring venture • Facilitating and managing the ongoing relationship between client and offshore vendor • Consultants: Deloitte and TPI are just a few • Legal firms: …..

6. Core capabilities of suppliers Levina and Ross 2003: • Client-specific capabilities • Relational routines and resources that align the vendor’s practices and processes to the client’s goals • Process capabilities • Task delivery routines and resources that accomplish software design, development, and execution • HR capabilities • Recruitment, training, and mentoring • Designing jobs to broaden skills sets • Good performance appraisal and compensation systems

7. 12 Key supplier capabilities • Leadership • Business mgmt • Domain expertise • Behavior mgmt • Sourcing • Process improvement • Technology exploitation • Program mgmt • Customer development • Planning and contracting • Org design • Governance

8. 3 key competencies • The 12 core capabilities can be leveraged into three key competencies Relationship Competency Planning and contracting Organizational design Goverance Cust. dev Leadership Pgm Mgmt Process improvement Technology exploitation Delivery competency Business mgmt Domain expertise Transformation competency Behavior mgmt Sourcing

9. 8 key lessons re: supplier’s capabilities • Client has bargaining power in supplier selection/negotiation • Customers need to focus on supplier’s competencies and capabilities (rather than amt of resources) • Choosing right supplier configuration is important • Clients should examine supplier’s capabilities and competencies in relation to business context (don’t always need the best) • CEOs must understand that deals excessively favoring client are not LT viable • While tendering is most common and effective strategy in choosing suppliers, joint decisions including CEO, business execs, and IT mgrs are most effective • Communication and transparency during negotiations • Client CEO has two roles: • Select right supplier at right price • Contributing to dev of relationship and ensuring proper staffing of vendor

10. What Suppliers say about clientsLacity and willcocks, 2011 • “Are you a desirable client?” • Prestige of client • Size of proposed deal • Potential for additional revenue • Good profit margins • Opportunity to enter new markets • Opportunity for knowledge transfer • Client’s risk profile

12. The clients o/s learning curve Phase 4: Institutionalized/reinvented Phase 3: Relationships Mature Phase 2: Pilots Phase 1: Hype and Fear