Engaging Partners and Suppliers

Build Relationship and Ensure Support for Creating Sustainable Value

 Engaging Partners and Suppliers

Definition and Understanding of Engaging Partners and Suppliers

Partners and Suppliers are the external parties that the organization chooses to work with to Fulfil its
Purpose, Achieve the Vision, Deliver the Strategy and Reach shared objectives that benefits both.

“In many Businesses, the cost of outsourced products & services exceeds 60% of the total sales.
And some suppliers / partners are critical for the business to succeed.”

Partners and Supplier Engagement is a set of mechanisms or interventions that are implemented with them
in order to deliver company’s sourcing commitment.

Key Steps in ‘Win-Win’ Relationship journey with partners and Supplier are

Classification and Relationship &

Segmentation Engagement

Development to Ensure Performance

Support for Creating Value Management

Click here to read Gyanvaani on Stakeholder Management (GV4 and GV5) https://connect.godrej.com/Gyan_Vaani_2020_21.html
 Engaging Partners and Suppliers

Partners and Supplier Classification and Segmentation

Supplier segmentation refers to the process of differentiating the supply base in terms of their impact in your
organization and the risks they pose.

Organizations need to classify and segment the Partners and Suppliers to

Identify the most important supplier

Partners and Supplier may include Raw Material, relationships across all business
Component or Commodity Supplier, Technology, categories,
Logistics, Manpower, Software, Society /CSR, 01
Legal, Institution partner, advertising agency,
consultants, academic institutions, contractors, Encourage suppliers
logistic providers, contract manufactured to strive for 05 Determine supplier
products, traded products, etc. excellence and
relationship management
deliver better service
02 (SRM) activities

Align 04
03 Effectively utilize their time
procurement activity by building relationships
with business with suppliers
objectives

Click to know more of partners and Supplier Segmentation https://www.youtube.com/watch?v=7Slpk8jJcaQ

 Engaging Partners and Suppliers

Partners and Supplier Classification and Segmentation - Methods

Strategic Items
The strategic items quadrant represents high-risk suppliers that deliver critical products
and services for your organization. Without them, your supply chain could face severe
disruption

Leverage Items
Suppliers who fall into this quadrant are equally critical to your organization, but they
present a much lower risk. Perhaps the products and services they provide are easily
obtainable elsewhere
Bottleneck Items
Bottleneck items will largely consist of tail-end suppliers. They’re high-risk but deliver
little-to-no value for your organization. It might be worthwhile to consolidate this section
of your supplier base, rather than investing in more strategic areas

Non-critical Items
These suppliers provide your organization with low-value, low-impact items with
negligible risk. Your supply chain won’t be significantly disrupted should you lose these
Kralijic Supplier Segmentation Method suppliers. Suppliers in this quadrant require the least effort to manage.

Kraljic’s portfolio model is a classic supplier segmentation model whose main While there are many other methods available to segment the Partners and
goals are to identify the strategic weight of strategic suppliers, both externally Supplier, we must also consider the factors like their contribution in Fulfilling
and internally, to aid adapt your business strategies Organization Purpose, Achieving Vision and Delivery of Strategy

Click to know details of Kraljic Matrix https://www.youtube.com/watch?v=38Gyxy1eBec

Click to know more of methods of partners and Supplier Segmentation http://www.scmdojo.com/supplier-segmentation/

 Engaging Partners and Suppliers

Partners and Supplier Engagement Management

Supplier relationship management, is a systematic approach to assess suppliers’ contributions to your business. It helps you
determine which suppliers are providing the best influence on your success and ensures they are performing well.

The main goal is to improve business processes between you and your suppliers. By creating a streamlined approach, improve
efficiency for both your business and your suppliers.

The focus is on developing a mutually beneficial relationship with your suppliers, especially those that are considered strategic
partnerships for your organization.
Identifying and Meeting
Partners and Supplier Engagement is Contact Needs of
a critical step in Relationship Partners
management. Every business need to
develop its own engagement models 01
based on their critical / strategic
suppliers and their supplier model
Greater Supplier 05 02 Develop, Communicate
Support and Value and Execute Supplier
Strategy
04 03
Identify Areas of
Improvements and Build Openness and
Improve the Process Trust

Key Steps in Partner and Supplier Engagement

 Engaging Partners and Suppliers

Partners and Supplier Engagement Management - Examples

Co – Creation
04 • Joint Improvements
• Joint New Product
Developments

03 Co – Sharing
• Mutual Leaning
• Supplier Visits

02 Co – Problem Solving
• CAPA presentation
• Training on problem solving tools

01 Co – Commination
• Sharing Strategy
• Training on Kaizen

Godrej Locks Supplier Collaboration Model Beyond Sourcing : Godrej Interio Supplier Partnership Model

Click to read the best practice of Godrej Interio – Beyond Sourcing

 Engaging Partners and Suppliers

Partners and Supplier Performance Management

Partners and Supplier Performance Management refers to identifying, measuring and improving the performance and perception of
the suppliers to deliver better value to the customer.

The performance areas may include Cost, Delivery, Quality, Hygiene, Risks, Safety, Communication, Technology,
Improvements, Audit Performance, Environment, Society etc.

Measuring both Performance and Perception of the

Establishing
Performance Indicator
Identify the indicators
which you want to measure
for Supplier Cost, Quality,
Delivery etc.
Partners and Suppliers are important.
You may check the EFQM Model Cri. 6.2 (partners and
suppliers’ perception) to align your supplier satisfaction
Categorize Supplier
Centralize Data survey instrument with relevant categories
Clearly categorize which
Bring all data under
measure is for what type of
common portal and
suppliers, not all measure
develop the dashboard
will be for all suppliers.

Create Action plan Collaborate with Suppliers Develop Evaluation

• Improvement Plan with
timelines and review
• Develop Capability and
Competency of supplier
for Review Approach
• Give feedback and build trust Supplier Scorecard,
• Identify areas of Weightage to key
improvements parameters connected to
• Develop plans Jointly strategy etc.
 Engaging Partners and Suppliers

Partners and Supplier Performance Management - Examples

Supplier Capability Model of Godrej Interio

Supplier Maturity Model of Godrej Appliances

Click to link below to see the best practice of Supplier Cluster Management by Godrej Appliances
https://godrej.sharepoint.com/:x:/r/sites/onekmprod/OneKMDev/begoodpractices/_layouts/15/Doc.aspx?sourcedoc=%7B
bcfcfe4c-a3b3-4ea7-8ec2-fadffa137b40%7D&action=View&mobileredirect=true
 Engaging Partners and Suppliers

Development to Ensure Support for Creating Value

Supplier Development is the process of working with certain suppliers on a one-to-one / cluster basis to improve their performance for the
benefit of the organization, creating and delivering the value. Every Business can decide its own set of Standard, Key and Core Suppliers.

Outstanding Organizations work
proactively with its Key Supplier
and Partners to leverage the
culture and expertise of both
parties to achieve mutual benefit
STANDARD – These are the activities in the value chain which are not very
critical and there are abundance of suppliers and partners to execute them.
Organizations outsource these activities to suppliers and focus on
negotiation e.g., printing services, billing services, general
STANDARD manufacturing processes like bending, cutting, etc.

KEY – These are the activities in the value chain which are critical, but
organization does not have capacity or capability to execute the same. It is
KEY available with few / key suppliers
Organizations identifies Key suppliers for these activities and their
supplier development team improves them and leverages their
expertise to add value to its process. E.g. special processes like heat
treatment, sub-assembly, research work, designing etc.

CORE
CORE – These are the activities in the value chain which are most critical,
and organization does not give it to the suppliers
Organization spends its capex and resources in further developing
these activities. E.g., Assembly process, designing, testing, key
technical processes, etc.
 Engaging Partners and Suppliers

Development to Ensure Support for Creating Value

Partner or Supplier development is important and essential for both Organization and Supplier. There are multiple benefits while working
with partner and suppliers. Few of them are mentioned below

Full transparency
Increased supplier
between organization
responsiveness
and supplier

Improved
collaboration between Increased customer
organization and satisfaction
supplier BENEFITS OF
SUPPLIER
Streamlined and DEVELOPMENT
reduced sourcing Increased awareness
activities and lead of supplier diversity
times

Improved quality,
Increased visibility of
manufacturability, and
full supply base to
reliability for new
procurement, quality
designs
Dear readers,
I hope you would have liked this Gyanvaani on : Engaging Partners and Suppliers.

In the upcoming Gyanvaani’s we will understand more on engaging with other

stakeholders

I am sure that you are learning and implementing the concepts of the excellence model
given in Gyanvaani in your day-to-day work. If you have any such implementation story
from our previous Gyanvaani’s, whether it is a failure or successful do write to us
at corpbe@godrej.com We are here to support you on the concepts to make it
successful.

Please give your feedback and don’t forget to take up the Quiz as given in the email.
Last date for attempting the Quiz is 26th August 2021

Click here for the Quiz Link for your reference

Have a good day and keep learning and sharing.

Regards
GYAN