The Purchasing Chessboard

Co-sourcing
and
Commercial
Data Mining
Group 2
Purchasing Management
 Team Members

Vương Phương Thảo Phạm Vũ Hà Mi

20223653 20223542

Tô Ngọc Khánh Dương Nguyễn Hải Long Giang Khánh Linh

20223606 20223618 20223611
 Table of contents

Co-sourcing

A3: Procurement outsourcing

A4: Sourcing community

B3: Mega supplier strategy

B4: Buying Consortia

Commercial Data Mining

C3: Master data management

C4: Cost data mining

D3: Spend transparency

D4: Standardization
 A3: Procurement
C0-SOURCING outsourcing
Co-sourcing is an approach
that can be used when a A4: Sourcing
single company does not
community
represent any significant
demand power in the market
of a particular sourcing
B3: Mega supplier
category and suffers
disadvantages as a result. strategy

In co-sourcing, demand is
pooled across sourcing B4: Buying
categories or with other
consortia
companies.
 A3: PROCUREMENT
OUTSOURCING
What is Procurement outsourcing?

Procurement outsourcing involves delegating

purchasing activities to third-party providers.
Based on 2 core questions:
What services are expected?
What material and service groups are suitable for
contracting out to outsourcing partners?

Group 2
 A3: PROCUREMENT
OUTSOURCING Four steps to implement
Procurement outsourcing

Evaluate Define Implementation Ongoing control

options model
A3: PROCUREMENT
OUTSOURCING
Benefits of Procurement outsourcing

Cost savings and lower process costs

through better pricing.

Reduced business risk.

Focus on strategic procurement

questions.
 A3: PROCUREMENT
OUTSOURCING
A Case of Procurement
outsourcing

Outsourcing of operating materials and

supplies by an automaker Benefits:
Purchasing of Operating Materials and Supplies: Cost Reduction:
The automaker outsourced the entire purchasing Achieved a 10-15% reduction in costs through
process for operating materials and supplies to an bundled purchase volumes with other clients.
external provider. Reduced inventory costs by 40-60% due to
efficient management by the provider.
Inventory Management: The provider was also Complexity Reduction:
responsible for managing inventory on behalf of the Decreased the number of material numbers
automaker. by 30-50% through improved electronic data
processing (EDP) systems and supplier
catalog optimization.
A4: SOURCING
Aims of Sourcing
COMMUNITY Community
Small Companies
Medium-Sized Firms
A Sourcing Community refers to Large Companies

a collective or network of
individuals, businesses, or
stakeholders that collaborate Different types of
and share resources, sourcing
knowledge, and best practices
for sourcing activities. communities
Size of the participating companies
Geographical focus
Sourcing category focus
Roles and responsibilities
Interests and corporate strategies
 GROUP 2

A4: SOURCING COMMUNITY

Success Factors
Partner Selection
Management Support
Group Size
Leadership

Benefits
Shared expertise and market
insights
Improved sourcing efficiency and
innovation
Stronger collective bargaining
power through shared intelligence
A4: SOURCING
Successful Sourcing
COMMUNITY Communities

INDEPENDENT
AUSTRIA'S
AUTO REPAIR
TOMCOM FEDERAL
SHOPS
PROCUREMENT
IN EUROPE
AGENCY
A group of telecom companies
(Bell Atlantic, Nynex, etc.) Small car repair shops in The Austrian government
joined forces to buy mobile Germany and other parts of combined the purchasing
handsets and devices Europe teamed up to buy needs of all its ministries
together spare parts in bulk. into one agency.
Helping them get better Helping them get cheaper Buying things for the
prices and higher quality prices and compete with government cheaper and
products bigger car dealerships. more efficient.
B3: MEGA SUPPLIER STRATEGY:

Definition:
A mega-supplier strategy addresses the challenge
when decentralized customer-supplier
relationships across divisions obscure the full
business volume between two large companies.

Key feature:
Decentralization Issue
Transparency
B3: MEGA SUPPLIER STRATEGY:
STEP TO IMPLEMENT

IDENTIFY MUTUAL INTERESTS DEVELOP BUSINESS SCENARIOS TOP-LEVEL MEETINGS

Determine the level of Present future growth Meets with the mega suppliers
dependence or risks
Address key concerns
B4: BUYING
CONSORTIA

DEFINITION:

Buying consortia are collaborations

between companies that pool their
purchasing volumes, often in
horizontal arrangements with
competitors, to achieve better
sourcing terms and safeguard supply.
 B4: BUYING CONSORTIA
Key features Trust
High trust between companies isn't required

Organization
Consortia may involve coordinated networks
Experts may handle specific sub-projects

Cost Savings
Goals
Achieve better terms by bundling purchasing volumes.

Knowledge Sharing
Pool partner expertise to meet project requirements.

Security of Supply
Ensure reliable access to required materials or services.
COMMERCIAL
DATA MINING

C3: MASTER DATA C4: COST DATA D3: SPEND D4:

MANAGEMENT MINING TRANSPARENCY STANDARDIZATION
C3: MASTER DATA
MANAGEMENT
Denefition
The technology, tool and the process of
managing, updating, and synchronizing
an organization's data

Aims
Improve the quality of an organization's
data and a major prerequisite for
bringing transparency into purchasing
data
C3: MASTER DATA MANAGEMENT
ENCOMPASSES

The standardized Consistent linking

The avoidance of free
classification of material between master data and
ordering
and supplier data the ordering system
C3: MASTER DATA
MANAGEMENT
OPTIMIZE

ANALYSIS AND
REVIEW THE DEFINITION OF THE
ANALYSIS OF THE
QUALITY OF DATA PROCESS
SYSTEMS
C4: COST DATA
MINING Denefition

Analyzes internal cost-related

data on purchased products and

services to uncover potential

savings.

It involves examining and

comparing various cost factors

C4: COST DATA
MINING

Data available internally on purchased

products and services are exploited for

potential savings.

Analyze the cost data from various angles.

Correlations Patterns
COMPARING

Bonus agreements between suppliers categories.

Discount rates between suppliers categories.

Payment terms between suppliers categories.

Delivery terms delivery times between suppliers and sites.

Rejection levels between product lines suppliers.

The wear or service life of products between suppliers.

CASE STUDY
Used cost data mining to optimize purchasing

for indexable inserts.

Focusing on negotiating discounts across

product groups.

Collected and compared all discount lists across

its group -> identify the best group -> negotiated

5–10% cost reductions

 Three Key Axes:

D3: SPEND Sourcing Categories

Suppliers
TRANSPARENCY Location

Denefition
The concept of "spend transparency" as highlighted
in the image involves structuring a company’s
spending data into a "spend cube," which is a
Benefits:
multidimensional framework that helps analyze Identifying inefficiencies
expenditures across various axes.
Optimizing procurement
strategies
Improving cost control
Better decision-making
D4: STANDARDIZATION Group 2

Denifition
Involves replacing Key advantages
custom specifications
with standardized parts Cost Reduction Benefit
and adhering to Consistency and Quality Applying standardization allows
industrial standards. Control businesses to streamline
Efficiency in Supply Chain operations
Improve product compatibility
Reduce unnecessary variability in
their production processes
 GROUP 2

THANKS
FOR
LISTENING!
Purchasing
Management