Areas of spending with high business impact are the ones to focus on. And typically, starting in the strategic quadrant yields the best results. These will be categories which are closely integrated in your organisation’s value creation. Typically, they provide a core piece of functionality (e.g. the processor in a laptop, the cleaning agent in FM services) or are key components in producing your organisation’s value-creating product (e.g. R&D or IT). When choosing a category to target, the following list of criteria can be a good place to start: • Does the category play a significant role in our organisation’s value creation? • Is the category involved in a large part of our company’s turnover? • Is it only present in some of our products or most or all of them? WHO SHOULD YOU OPTIMISE VALUE WITH? Virtually all value optimisation projects within a category will be in collaboration with one or a few suppliers in the category. But it is not entirely irrelevant who you invite to participate in that development project, and some suppliers are more suitable than others. When reviewing your supply base and selecting a partner for the journey, the below selection criteria can be applied: • The supplier should first and foremost be willing and show an enthusiasm for going on a development journey with you • The supplier should be of a certain size to ensure that they have the muscles to invest in the development • Your spending with that supplier should be sufficient to warrant attention • The supplier should have some innovative capabilities and not necessarily be cost leader but rather at the forefront of technical development • The supplier should have customer development capabilities like visionary engineers, pre-sales resources and consulting departments HOW TO GET STARTED The simplified model on page 6 can help you identify where your procurement function should start on your value-creating journey. So when the request comes about focussing on value creation, you should start at the top, and only if you meet all of the subsequent criteria, should you start the journey: 5
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