Welcome back to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. This week, I’ll be reviewing a whitepaper entitled “Supplier Nominated Savings: Accelerating Savings through Strategic Partnerships” from Ariba.
I went into this whitepaper with a preconception. By “supplier nominated savings,” I thought that this approach was going to be similar to PPG’s $AVE program that I described in a previous post. But that was not the case.
Ariba’s approach to supplier nominated savings outlined in the whitepaper is a six-step process:
- Supplier & Spend Segmentation
- Conduct Market Research
- Develop Letters & Partnership Program Information
- Virtual Supplier Summit
- Implement Savings
One of the newer practices in this approach is the conducting of a virtual supplier summit. While supplier summits are nothing new, conducting them virtually is.
Let’s face it. Some suppliers have struggled for a long time under the current economic conditions. Imposing a travel requirement on them at this time is likely to (1) tick them off, (2) result in less than optimal attendance, and/or (3) whittle away at already fragile supplier bottom lines. A virtual summit is a good idea, especially now that webcasting technology has gotten much more reliable than it had been in years past.
So how does cost savings result from this process? A leader in the purchasing organization will send “fact-based letters requesting cost savings” to the supply base and those letters “highlight that the purchasing organization is looking to continue to do business with the providers, but
need competitive pricing in order to do so.” Then, “once suppliers respond to the savings proposal request…the buying team must decide whether to accept the proposal or request additional savings.”
Sounds a lot like an RFP/sourcing process except that the suppliers are told they have already won, huh?
Though I’m a little disappointed that the whitepaper didn’t discuss a PPG-like approach to soliciting ideas from suppliers, I really liked the fact that it listed potential risks and mitigation strategies for those risks.
So that’s a brief summary of the whitepaper’s most salient points. It is five pages long so there is more to be gleaned by obtaining your own copy of it. You can download it for free from Ariba’s Web site (registration required).
By the way, Next Level Purchasing has added a new White Papers page to our site. We have a couple of our existing whitepapers available now and will be adding more in the future. Check it out if you get a chance!
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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