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Merck Procurement

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Planning successful corporate travel program within procurement ... champagne. surveys. benchmark surveys. Minimize pushback. How to ensure compliance? ( 1) ... – PowerPoint PPT presentation

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Title: Merck Procurement


1
Demand Management Program Aug 2007
2
Agenda
  • Planning successful corporate travel program
    within procurement framework
  • Ensuring program is structured and measurable
  • Ensuring right balance between reasonable travel
    costs and appeal to business travelers
  • Compliance to Travel Policy
  • Treating Suppliers as strategic long term
    partners

3
Winchester Mystery House - California
  • Number of rooms 160
  • Cost 5,500,000
  • Date of Construction 1884 - September 5, 1922
    (38 continuous years!)
  • Many Doors to nowhere
  • Staircases to nowhere
  • Mrs. Winchester never had a master set of
    blueprints, but did sketch out individual rooms
    on paper and even tablecloths!

4
Travel Strategy Elements
  • Strategic Travel program that
  • Increases efficiency of our travelers
  • Listens to VOC
  • Ensures our travelers safety and security
  • Stretches spend

Restaurants/Ground
Supplier Value Mgmt
Consolidation
Sponsorship
Accurate Robust Data
Travel Policies
5
Structured and Measurable Framework
  • Current State
  • Whats current environment
  • Whats current costs collect data both
    internal and from current suppliers
  • Whats current business needs
  • Whats current best practice external
    benchmarking
  • Future State
  • Whats in future biz environment market and
    business needs
  • Whats best in class cost ratios
  • What makes sense to company vs best in industry
    and businesss
  • What policy to adopt
  • Bridging the Gap
  • Collect business requirements
  • Collect Data, Analyze spend patterns, develop
    sourcing options
  • Develop implementation strategy

6
Business Requirements
  • Company culture
  • Egalitarian or class distinction
  • Special needs for frequent flyers
  • Safety and schedule driven vs low cost
  • Travel requirements
  • International vs domestic
  • Need to arrive in biz shape vs low cost
  • Face to Face meetings vs appetite for
    communication via technological tools T cons,
    Video conferences, virtual meeting rooms, etc
  • Business climate eg Sars, Bird Flu, 911 and
    companys financial performance
  • Company statistics no of employees, spread of
    offices

7
Considerations in Travel Policy Development
  • Safety and well being of traveler of primary
    importance
  • No financial gain and no loss to traveler from
    travel experience
  • Arrive in good business shape
  • Convenience of traveler in mind
  • Company culture
  • Surveys and feedback from traveler important

8
2 ways to get compliance
How to Get Compliance?
OR
POLICE
SELF MOTIVATED
9
How to Get Compliance
  • Communicate expectations
  • Ensure only authorized travel
  • Ensure consistent practices
  • Ease in administration
  • Easier to track down employees in emergency
  • Maximize relationships with preferred suppliers
  • Best value for money

10
How to ensure compliance? (1)
Best Practice in Building Great Travel Policy
Broadband Gym champagne
benchmark surveys
surveys
Agenda
Agenda
How to Get Compliance
Road warrior
Differences in country/culture
Minimize pushback
11
How to ensure compliance? (2)
Roadmap to Policy compliance
Champions in every city
Involve traveler/Booker in decisions
Travel policy
  • Communicate policy widely and clearly

Wheres travel department?
Senior management buy-in
12
Challenges in compliance
Barriers To Compliance
Stay at the cheapest hotel, they said
Emergency trips
Uncommunicated/unclear policy
Agenda
Rewards programs
Unsafe to fly In the rain
Hotel at ski Resort more fun
Personal agenda
  • Experience with supplier
  • Paradigms

13
Investment cost in compliance
  • Initial investments in supplier programs
  • Communication and publication
  • Investment in technology to police
  • Strategic partners to provide data of compliance
  • Strategic Partner to work towards compliance
  • Time and effort in periodic review and follow-up

14
Measuring compliance
Preferred suppliers report production volume
  • Single travel agent with excellent technology

Use corporate credit card but watch merchant fee
  • Check payment records from Finance

15
Supplier Management
16
Expectations of Supplier
  • Supply Assurance
  • Quality
  • Service Delivery
  • Cost Competitiveness
  • Long Term Strategic relationship including
    Innovation for the future

Use the above as KPIs in contracts The more
measurable, the better
17
Program Focus
Bringing Leaders together with a process that
aligns interests and drives results for all
Procurement
  • Results
  • Clear alignment of objectives
  • Mutually beneficial relationships
  • Continuous Improvement
  • Breakthrough results
  • Preservation of Contracted Value

Governance Structured Intentional Interactions
Suppliers
Business Leaders
18
Supplier Review Objective
  • To manage the alignment and consistent
    performance of preferred suppliers
  • To understand the financial performance of the
    supplier
  • To motivate the supplier towards long term
    relationship
  • To help supplier understand long term goals and
    needs of the company
  • To aim towards a global/regional tool (global
    scoring mechanism), to access suppliers past and
    current performance, with emphasis on future
    direction and strategy
  • To have both stakeholder and suppliers to manage
    respective responses into scorecard
  • To understand the gaps in the different
    perceptions between business stakeholder and
    supplier
  • To understand the best in class performance

19
Outcome of good Demand Mgmt Strategy
  • Cost Reduction or Cost Elimination


Company Revenue
Company Expenses
Time
20
QA
Thank You for your time!!!QA / Open Discussion
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