This Report is provided in Cooperation with

Robi Bendorf, CPSM, MCIPS, C.P.M.,

Founder-Director of Bendorf & Associates
© 2010 Cattan
 Purchasing & Procurement Center is an organisation whose sole focus is on procurement,
sourcing, contracts consultancy, training and software solutions. Below is a summary of our services.

I. Procurement Consultancy Services III. Procurement Trainings Outsourcing

Setting Up New Procurement Department You can outsource training your procurement staff, by
 Results Expected: A world class Procurement sending them to attend our public courses or running a
Department with comprehensive processes, policies course only for your team. Below is a list of some of the
and procurement systems. course that we do.
Procurement & Purchasing Cost Reduction Procurement Trainings
 Results Expected: Typical results you can expect are  Best Procurement Practices
anywhere from 5% to 20% savings.  Cost Reduction in Purchasing
Procurement Gap Analysis & Best Practices  Purchasing Performance Measurement
Implementation  Purchasing Negotiations
 Results Expected: At the end of the project your team  Capital Equipment Purchasing
will have a plan that outlines the actions to take to  Leading & Managing For Procurement
close the gap.  Category Management in Procurement
Customized Consultation Based on Special  Preventing & Managing Backdoor Selling
Requirements  Purchasing for Non-Purchasing Professional
 Results Expected: In-depth implementation of your  Excellence in the Procurement of Services
organization procurement plans.  MRO Purchasing
Supplier Development & Relationship Commercial Contracts
Management.  Contract Management & Administration
 Results Expected: Proper processes to select and  Contract Development
qualify suppliers, plus strategies to manage supplier  Contract Negotiations
relations and development.
 Contract Terms
 IT Contracts
II. Procurement Software  Oil & Gas Contracts
E-Purchasing  Construction Contracts
 PPC E-Purchasing handles both direct and indirect  Tender Management
goods and services purchase and automates and  Contract Specification Writing
streamlines the purchasing process. PPC E- Strategic Sourcing
Purchasing includes: RFQ, Quotation, Purchase  Seven Step Strategic Sourcing
Order, Delivery Order, Invoice, Reporting, Catalogue  Implementing Global Sourcing
etc.  Strategic Sourcing for Best Supplier Selection
Materials & Inventory
E-Bidding (Reverse Auctions)  Materials & Demand Planning
 E-Bidding is a sophisticated eBidding Solution  Inventory Management
designed to deliver significant purchasing savings.  Warehouse Management
PPC E-Bidding is a web-based solution and is  Supplier/Vendor Managed Inventories
accessible on the web. Supplier Management & Development
 Improving Supplier Performance Thru Audits &
E-Tenders Surveys, Supplier Relationship Management &
 E-Tender is a sophisticated web-based solution Development, Supplier Selection & Qualification &
designed to cover the entire tendering process from Certification, Supplier Risk Management
tender specifications right up to tender approval and  Supplier Rating & Collaboration
award.

All Procurement Trainings: http://www.purchasing-procurement-center.com/procurement-trainings.html

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 Strategic Sourcing Report:
Implementing Strategic Sourcing Plans With a Take-Away Outline
Robi Bendorf, CPSM, MCIPS, C.P.M.,

The development and implementation of formal detailed strategic sourcing plans for major spend
categories has been and will continue to be an essential element of top-class supply management
operations. Yet most supply management organizations do not have them. This paper focuses not
on the “why” or “what” since the ISM Article Data Base covers this very well but on the actual “how
to” by providing an example of a step-by-step procedure for conducting the development of formal
sourcing plans and a detailed outline of what typically would be in such a plan.

Since it is generally much easier to implement plans and procedures when you have a draft of
something that already exists, the following should provide a starting place to allow immediate
implementation of the planning process.
STRATEGIC SOURCING PLAN PROCESS EXAMPLE
Purpose: To provide a formal process for developing and communicating procurement strategies
for supply management activities of major goods and services through Strategic Sourcing Plans.
Discussion: Basically over -----% of the total sales revenue of Company is expended for the
purchase of goods and services from outside suppliers. Strategic total cost management of these
purchases is therefore a major issue for Company. To achieve the magnitude of cost improvements
and innovations required to maintain a competitive position requires that Company and its suppliers
develop joint strategies to improve customer satisfaction and lower total cost for our customers, our
suppliers, and Company. A well-proven method of strategic total cost management of purchased
goods and services is through the development of Strategic Sourcing Plans. These plans will be
created by cross-functional Strategic Sourcing Teams that will be viewed to be collectively
responsible for the development and implementation of the supply management strategies. Each
Strategic Sourcing Plan requires the identification of objectives for quality improvement, total cost
improvements, process improvements, supplier relations, lead-time reduction, innovations, inventory
reduction, and other objectives that benefit Company.
Scope: This procedure covers the development and communication of Strategic Sourcing Plans
(SSP) for major goods and services purchased by Company. Key commodities are defined as those
items or groups of items or services making up the top 80% of the annual spend for goods and
services purchased by Company.

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RESPONSIBILITIES:
A. The (Title of Top Procurement Position) has the responsibility of defining the spend categories
that will be covered by SSPs and determining the Strategic Sourcing Plan Team Leader.
B. The Team Leader has the responsibility of selecting the Strategic Sourcing Team, the
development of the SSP, insuring that SSPs are communicated, and the actions described
therein are completed in a timely fashion.
C. Strategic Sourcing Team members, upon their selection to the team, will contribute to the
development of the SSP, and perform the duties assigned by the team in accordance with SSP
schedule.
APPLICABLE DOCUMENTS:
A. Strategic Sourcing Plan (See Outline After the Procedure Section)
PROCEDURE:
A. At the beginning of each year the (Title of Top Procurement Position) will define the key spend
categories that are to be covered by a SSP. These will generally be selected from the goods and
services purchased by Company that make up the top 80 % of the total annual expenditures.
The (Title of Top Procurement Position) will also determine, based on resources and skill sets
available, the lead responsibility for developing the SSP.
B. The Team Leader will select a Strategic Sourcing Team composed of those individuals at
Company involved with the spend category or any others needed to support the development or
implementation of the plan. The Team Leader will schedule Strategic Sourcing Team Meetings
and prepare the agenda.
C. The Team, led by the Team Leader, should meet and discuss all aspects of the procurement
activity related to the selected category. This should include, but is not limited to, the Company
business strategies related to the commodity, supplier performance and relations, supplier
selection, quality and delivery issues, cycle time reduction, inventory, global supply market
conditions, sourcing methods of competitors, potential for total cost improvements, contractual
arrangements, ordering and payment process, substitutions and commodity innovations, and the
forecasted requirements for the spend category. The team should develop the necessary data to
complete the SSP including the action plan. The SSP shall then be submitted to the (Title of Top
Procurement Position) for concurrence.
D. The (Title of Top Procurement Position) will review the SSP and if acceptable indicate
concurrence on the SSP. If not acceptable, the (Title of Top Procurement Position) will meet
with the Strategic Sourcing Team to guide them in the development of an acceptable SSP. The
(Title of Top Procurement Position) will advise teams on priorities and assist them in obtaining
needed resources to complete and implement the plan.

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 E. Once the SSP is approved by The (Title of Top Procurement Position) it should be presented
by the Strategic Sourcing Plan Team to Executive Management for concurrence.
F. The Team Leader shall administer the SSP with team members providing input per the SSP
action plan. The Team Leader shall report status to the team members and the (Title of Top
Procurement Position). End of Process
After completing the organizations version of the above process the next step is to develop the plan
which will be made much easier by having the following outline showing the headings found in
typical strategic sourcing plans so that the Strategic Sourcing Plan Team can basically fill in the
blanks of the plan segments.

STRATEGIC SOURCING PLAN OUTLINE

1. Item/Service Description:
2. Company Business Strategies: Describe the Company Business Strategies for the
product/service utilizing the item/service.
3. Strategic Sourcing Team: List the Company Associates responsible for developing and
implementing the SSP.:
4. History:
A. Total Annual Volume Per Year: Show the year and amount In a table or attached spread
sheet.
B. Price Changes by supplier: In a table provide Dates, New Unit Price, % Change, Total
Impact to Company in $, and Date effective. Also include the reason for each price change and
what actions were taken to resist the original price change request and the results of those
actions. Also show the comparison of the change from the supplier to the change in the index
representing the category for the same period.
C. Lead Time History:
D. Cost Improvement History:
5. Current Suppliers: In table form list Current Suppliers, Locations, % of Company Spent to
that supplier, Total Annual Sales of supplier, % of Total Sales from Company, % of Total Market
Share help by Supplier, and when did company start with that supplier

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 A. Supplier Financial Data: Results of review of supplier financial data:
B. Quality: Describe supplier’s quality performance history and corrective action measures and
results:
C. Delivery: Describe supplier’s delivery performance history:
D. Innovation: Describe supplier’s performance in providing innovations or total cost
improvement recommendations:
E. Supplier Relationship: Provide frank appraisal of the existing Supplier/Company relationship:

6. Current Processes:
A. Supplier Segmentation: Describe where the Item/service is positioned in the Company’s
Sourcing Segmentation Process.
B. Supply Chain Map: Provide a map of the current supply chain involving this item/service.
C. Supplier Selection: Describe the current supplier selection process or how this supplier was
selected.
D. Contracting Method: Describe the current method of contracting and give details of the
current contractual relationship (Formal contract, start and end date, pricing methods
established, minimum quantity requirements etc.).
E. Ordering Process: Define the current requirements planning and ordering process.
F. Performance Measurement: Describe how the current supplier’s performance is measured
and reported.
G. Inventory: Describe the current inventory strategy.
7. Supply Market Overview:
A. Suppliers in Market: An overview of the Supply situation. Describe the suppliers in the
market both domestic and global, their market shares, major customers, individual strengths and
weaknesses, strategic alliances, relationships with Company competitors, R& D capabilities,
capacity for commodity, expansion plans, interest in doing business with Company, our interest
in doing business with them, etc.
B. Buyers in the Market: An overview of the demand situation. Major buyers, future demand
from these buyers. Prices paid by best buyers.
C. Competitor’s Sources: Who do our competitor’s buy from? Why? Do they get any
disadvantage or advantage from their supply chain? Do we have any information on what they
pay?
D. Market Trends: Identify general market trends and particularly those that might affect
Company’s short or long-term supply strategies:
E. Major Raw Materials: Identify raw materials and their sources of supply and any issues that
can impact Company’s commodity strategies, both short and long term.
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 F. Cost Drivers: Identify the supplier’s cost drivers and the short and long range issues related
to the cost drivers and how they may impact Company’s commodity strategies.
G. Company Bargaining Power: Describe Company Bargaining Power in the Supply Market
(Do we have significant purchases, are there other suppliers to switch to, what is the switching
cost, can we substitute materials, how profitable is the commodity to the supplier, will Company’s
customer accept Company using a different source or substitute materials, etc.)
H. Appropriate Indexes: Identify the appropriate PPI or other index for the commodities and
major raw materials and show their histories and projected forecasts:
8. Cost/Price Analysis: Provide details of cost or price analysis showing how Company
determined that the current price and/or the total cost were fair and reasonable and that it was the
best obtainable. Show the latest “should Cost” calculations.

9. Strategic Sourcing Plan Objectives:

A. Short Terms Objectives (18 Months or less): Describe the Company short-term objective for
the following:
 Supplier Selection
 Total Cost Improvement
 Quality
 Delivery
 Inventory
 Innovations
 Supplier Relations
 SRM
 Contractual Form
 Process Improvement
 E-Procurement Strategies
 Green Initiatives
 Etc.
B. Long Term Objectives (Greater than 18 Months): Describe the Company long-term objective
for the following:
 Supplier Selection
 Total Cost Improvement
 Quality
 Delivery
 Inventory
 Innovations

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  Supplier Relations
 SRM
 Contractual Form
 Process Improvement
 E-Procurement Strategies
 Green Initiatives
 Etc
C. Relationship to Company Business Plan: Describe how the Strategic Sourcing Plan
Objectives relate to and support the Company Business Plan for the product in which the
commodity is used. What is the impact in not meeting an objective?
10. Implementation Strategies: Describe the implementation strategies and issues for meeting the
Strategic Sourcing Plan Objectives. How are the objectives to be measured.
11. Action Plan: Attach the specific action plan for meeting the Strategic Sourcing Plan Objectives
(Use Microsoft Projects or other Project Management Tool- Include event, start date, end date,
person responsible, resources required, etc.):

An often cited best practice in supply management is the development of formal short and long
range Strategic Sourcing Plans for major spending segments. The preceding should help Supply
Management Organizations in implementing this valuable best practice.

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ABOUT US

PURCHASING & PROCUREMENT CENTER

The Purchasing & Procurement Center provides comprehensive information for Purchasing &
Procurement Professionals. Within its scope the Purchasing & Procurement Center ensures that
you get all your needs covered through web based information, Reports & White Papers, and
more importantly thru personal assignments of in-house trainings, consultations etc. You can
contact us at info@purchasing-procurement-center.com for a Free 30 Minutes Consultation of
your purchasing & procurement needs.

ROBI BENDORF
Robi, C.P.M and Founder-Director of Bendorf & Associates, has over 30 years of diversified
industrial purchasing and sales experience involving both domestic and international activities
for a broad range of manufacturing and service businesses. His vast practical experience
combined with an excellent theoretical understanding, strategic focus, and ability to quickly
implement concepts makes him a much sought after international authority in procurement.

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