Improving Purchasing Performance and Effectiveness through Organizational Re-Design

Tolga Tuksal

Director of Strategic Global Sourcing, Supply Chain at Dayco
Improving Purchasing Performance and Effectiveness through Organizational Re-Design

Learning Objectives

Organizational design, effective processes and performance management tools can transform the procurement function from transactional to strategic organization. In this presentation, we will analyze several best-in-class procurement organizational structures. We will explore how to design and implement the most effective structure, create and upgrade processes and performance management tools that complement and enhance the structure in order to build a capable and world class procurement organization.

Key Takeaways:

  • Organizational Structure Types

  • Organizational Structure Gap Analysis and Selection

  • Centralized Purchasing Structure and Performance Management Tools


Hello, everyone, thanks for being here. My name is Tolga Tuksal. Within the next 30 minutes, I will talk about purchasing. And my goal is to give you guys some ideas, tools so that you can go back and apply in your current roles or jobs to make your environment better, to make your team better, or perhaps to make yourself a better Purchasing Professional. 

Little bit about myself—I want to introduce myself to you guys. I am the Director of Strategic Global Sourcing at Dayco. In my role, I lead a global team of corporate and powertrain purchasing and Supply Chain professionals. Previous to Dayco, I had several different roles. I had the opportunity actually to be in several different roles in purchasing sales, engineering, program management with ZF TRW and MPC Norovirus. I was a speaker before with Scope, which I enjoy very much. I spoke in several local organizations here in Michigan, such as OSA. I have a Mechanical Engineering degree from Istanbul Technical University in Turkey, and I have an MBA from the University of Michigan. I also did my micro Master’s in Supply Chain from MIT recently. In case you’re wondering where I’m from, I’m from Istanbul, where you see it in the picture here, which connects Europe and Asia together. I’m a huge soccer fan. I have two boys–two kids. And I’m also very passionate about snowboarding. I’m actually an official instructor of snowboard. Okay, enough about me.  

Now, I’m going to talk about little bit about Dayco, where I work. We are, to be exact, a 115 years old company. We’ve been innovating, designing, developing, and manufacturing essential engine products, drive systems for over 110 years. And basically, everything you see in your engine that moves you forward that drives your engine, your vehicle, we make. We are almost number one or number two in every segment that we serve. We have over 1600 customers. We’re across 20 countries with 50 locations with over 4500 employees. We make everything from rubber components to metal components. Our main product lines are belts, tensioners, the couplers, dampers, and police. We also make some holes and hydraulic assemblies—finally engineering assemblies, where these are used in some braking applications where we have vacuum generation systems as well. Mainly we’re serving for end markets. These are commercial vehicles, off-highway vehicles, industrial engines, and light duty vehicles, which we call the traditional way, automotive OEMs.  

Today, here’s our agenda, how it looks like. Today, I’m going to talk about organizational structure types. I’m going to get into gap analysis for you guys and how to analyze the gaps and select the right structure. I will talk about centralized purchase structure quite a bit. And I will give you guys an idea about performance management tools. And then we will finish up with key takeaways. So, in general sense, there are two types of structures in purchasing: centralized and decentralized. The difference between the two is decentralized purchasing function falls under each business unit. It’s kind of like a repetition of several different purchasing functions, depending on different business units and product lines. The centralized one is a standalone corporate type of structure, where the reporting is directly to the CEO, COO, or Executive VP. There are pros In contrast to each structure, which I’d like to talk about next.  

Centralized structure brings a lot of strategic advantages. The focus is primarily on central buying, aggregate buying, right, so you can aggregate the spend across many different business units and product lines using that corporate structure. Thereby, you can increase the leverage, because now you have one buyer or one team dealing with the same commodity or the component or the product for many different business units across several different product lines. So, that means you bundle the spend, you have improved leverage over that spend and more control. However, this structure could slow things down, right, the speed and responsiveness to the business unit may not be there, which we call it agility, might not be as agile as the decentralized one. The centralized structure is more responsive in nature and more aligned with business units, because they fall under each business unit or each business unit had. Communication is all faster, maybe the local leads. The needs of that specific business unit can be communicated faster and can be understood faster. There’s a lot of cons to this structure: it creates a complex headcount. This aggregates the spends and really reduces, lowers the leverage, because now you have many different buyers, many different teams buying the same thing, maybe four or five different ways, from possibly the same supplier, so it’s not ideal.  

Let’s take a look at how we can analyze the gaps in organization and have to make the right selection for the right performance expectations or result expectations, let’s say. So, when you’re analyzing your weaknesses, or the gaps in your structure, you need to ask yourself the question, “What will the future state look like? What is going to be different two, three years from now?” Okay, this is a very important question. In general sense, every purchasing organization do have four main focus areas. These are results, in the form of savings, or bottom line impact, performance management tools. So understanding your data metrics, KPIs and tracking them, right, process. This could be how you source how you select suppliers, right? How you assigned tracking execute savings projects, and people, which is the foundation, the skill set, the talent management. Right people, right place, right? Each roles and responsibilities clearly defined.  

So, you would want to take a snapshot picture of the current state in each category and ask yourself what the future state will look like. You should define a mid state as well, because you’re not going to get there. You’re not going to get from current state to future state overnight, right? There’s going to be a mid state where you’re going to have a progress or advancement in terms of those four categories, but not full—not the future state, but the midstate. So, typically, in these centralized organizations, you would have cost neutral, the cost center type of structure, right? You wouldn’t have huge bottom line impact. You would have very low level data metric use. The processes would be local optimum, they would not be global. And mostly, the team skill set would be just chasing parts and processing paperwork. So, you want to really move the organization from that state to the middle state where you’re contributing to the profit, you have some kind of savings, right? You have some kind of tracking, metrics—performance metrics. You have somehow global processes that can be repeated across the product lines and the business units. And then you’re actively participating in sourcing and supplier relationships selection. The ideal future state is now adding value, increasing the shareholder value for the organization or the company. This could be in the form of improving the total cost, engaging a supplier where you can bring in a capability that you lack as an organization, thereby maybe entering into new markets or booking critical new business, right, having a very clear data metric driven strategic planning and performance management tools, corporate level and global optimal processes that are sustainable and repeatable, and a team a skill set, talent, a team of individuals who are developing and implementing commodity strategies, right, for the business, across the product lines, you know, across the organization. So, we’ve talked about the gap that we have, when it’s a centralized organization.  

To me, the best way to get from current or future state or meet the future state is a centralized organization. Why? Many advantages to having purchasing under one umbrella, one function corporate with an aggregated spend consistent strategy, right? Leader or single point of contact who is also directly linked with the executive team or the company’s CEO and management. And, ultimately, one team dealing with the same supplier for all the business units in the company, right? There are many advantages, but agility was a problem that we talked about earlier. Well, there are ways that you can fix it—you should fix it. And there’s two practical ways to fix it: which is implementing a commodity and project purchasing structure, there’s really no right or wrong answer here, it’s more of a choice. Or let me say, more of an understanding of your competitive environment, what your company may need manufacturers are produces, the products they sell, the business they’re in. It could be tailored, the approach could be tailored depending on those circumstances.  

Next, I’m going to talk about centralized purchase structure. In any given organization, more or less, supply chain structure looks like this. You have four main buckets in the -company that’s managing end-to-end supply chain. Purchasing, for sure, the first one, distribution and logistics, where you basically manage inbound and outbound transportation and some kind of distribution system for your products. Materials management, where you really ensure that you have the right product at the right time managing that material flow and also inventory management days on end inventory, having the optimal inventory on hand. Planning and scheduling is basically production planning, or planning the complete supply chain from one end to another and scheduling to make sure that you deliver the product at the right time to the right customer. It also includes some kind of customer service interaction with the customers. Most companies have this on their planning or scheduling bucket.  

If we focus on the purchasing, which is our topic today, a centralized purchasing organization looks pretty much like this. You would have five buckets: starts with direct purchasing, where basically everything that’s part of the bill of material, right, the product that you’re making. The direct purchasing is everything that you buy related to that product, which is in the bill of material. Indirect purchasing, which is anything outside of the bill of material could be tooling, capital, production lines, could be even MRO, spare parts tools, required to run the production. It could be IT systems, some HR systems, okay. Then, you would have cost estimating or engineering group which basically gives you an understanding of should cost and supports supplements direct and indirect purchasing, administration, which basically manages the purchase orders, probably special reports, all of the administrative tasks, and the supplier quality or more of a supplier development engineering, where the group takes care of return production quality, incoming quality from the suppliers, as well as finds, develops new suppliers that are required for purchasing organization. 

Now, I want to talk about the direct purchasing structure next. Before we start, it’s very important to spend time on commodity segmentation and consolidation. This is something that you should really do. If you’re in a leadership role, or if you’re even in a purchasing role. If you have a large amount of spend that you’re dealing with, which is complex in nature, you would want to structure that spend in a way that it makes sense for you to address each area based on the cost drivers. So, here is an example that what we have done with my team in the past, where we went from 93 commodities or sub-commodities, 36 sub commodities with five top level commodity groups. The reason we did that was because we had many repetitive, redundant sub-commodities, which did not make any sense when we looked at the cost drivers across the board. So, let’s take steel as an example. In the steel category, whether you’re buying a bolt of fastener, metal parts, a spring, okay, or a stamping part. All of those have one common cost driver, which is steel—steel raw material, okay? So that gives the team, the buyer, the global team ability to understand and classify the cost drivers within that category. It also gives the ability to the global team, the buyer, to maybe benefit from a supplier who could supply, who is capable to supply many different subcategories within that category.  

So, next, I want to give you guys an example of what I mean by bill of material. I mentioned the bill of material, it’s the direct purchasing aspect where you buy everything that’s related to bill of material. This is exactly what I mean. So, if you look at this product, you will see that it’s segmented into several different commodity groups, which we call commodity structure. So, this is the product family example, so what you would want to do is once you categorize all your commodities and sub commodities, you will want to try to understand them as [inaudible] the bill of material. So, here the example is everything you see in blue is chemicals, right? This is the top commodity, where your cost driver is something chemical, it could be either resin, could be fabric, textile, whatever it is, oil-based cost driver, right? Everything you see in red is steel. Everything you see in yellow is other, probably you can put difficult to categorize or one of commodities into this category. We’ve covered the categorization and the bill of material.  

Now, let’s talk about the commodity purchasing structure a little bit. What you’re seeing here is from left to right, from my left to right, you’re seeing a single commodity group. Counting across all the business units and the product families. Top to bottom, what you’re seeing is each business unit product family touching each commodity. So, basically, top to bottom is your bill of material, okay, from left to right is your global commodity, which basically goes across different business units and product families in a centralized way. So, this is what we mean by commodity purchasing structure, where you align your commodity strategy with the product families and the business units. You select your sources or suppliers based on some strategic thinking, right. And you really manage the Commercial performance of the supplier within the given category. So, this is basically a seamless organization where each business units and the product families collaborate, yet purchasing still stay central. The advantage here is that particular commodity, the manager of that commodity, or the team that manages that commodity, deals with the set of suppliers that belong to that commodity on behalf of each business unit, each product family so that there is no proliferation or a different way of doing things. And there’s an aggregated spend across that commodity, which then you can leverage, as a team, right? Buying five items versus 15 items across multiple business units from the same supplier when you’re dealing with that supplier as a team, one team, central team, brings a lot of leverage. So this is really what we mean by the commodity purchasing structure.  

Next, I want us to look at strategic commodity for purchasing, some of the major processes and tools, okay? There are many tools in the toolbox, some are better than the others. Some companies use different names, perhaps they have less tools or more tools. But, in general sense, these are the tools that any purchasing organization global centralized can benefit from, whether you’re sourcing through a sourcing board, through a centralized decision making authority, you need to really manage your forward bill of material, right? You need to understand what your business is coming at, you need to bundle that volume and leverage that line. So, forward bill of material management is a very, very powerful tool. Dual sourcing. Dual sourcing is extremely important, especially within the context of today, where we have an outbreak, an uncontrollable outbreak. COVID-19 a lot of unknowns, right? Some of the suppliers that you may have are not able to deliver, they had to shut down, right? Or maybe they could not procure a client or the raw materials needed because of the outbreak. Some of the transportation routes for shutdown. It’s very important that you have dual sourcing on your critical components, critical areas of your spend, what do we mean by that? You have two suppliers for one part, so that you can avoid supply disruption, you can switch between them, right? And you somehow retain the purchasing power, because then you can compete them against each other versus having a single source where you’re vulnerable. And you’re probably going to concede more on pricing other commercial terms.  

There are many other strategic initiatives, so I’m going to go through these very quick. Global competitive sourcing, where you make sure your sourcing or your bid list is global in nature, right, includes all the global suppliers, low-cost country sourcing, localization, best cost country sourcing—these are tools that you can use localization, when you reassure an offshore component, get it closer to your facility could benefit you, especially during circumstances where we have 25% tariff for every all the goods coming from China, right? This could work. Low-cost country sourcing where you really, that cost driver you go to the country where that cost driver of your commodity is the cheapest, right? Best cost country sourcing, well some countries are better at doing certain things than the others. For example, your best of Europe, especially Germany. They’re extremely good at machine-making, right, very efficient, very low cycle time. They can achieve great pricing points, even though they’re a high cost country. They can compete and supply parts at a very competitive price. So, you can think about these areas and choose the best supply or a strategy that fits with your business needs. Benchmarking cost models, should cost, value chain improvements, freight logistics, minimum more than quantity where you look at the total costs. VAV, something that we use very frequently in automotive, Value Add Value engineering, where you really look at the design of the product, you either redesign, optimize, or you substitute a raw material for the other, that would give you a cost advantage. Supplier consolidation, when the volumes are low or when you have too many suppliers, you would want to choose that tool to really improve your leverage. And, supplier business plan, whatever you’re doing, however you’re managing your supply base, you should have a plan, you should assign targets to them, okay, and then you should measure their performance against it.  

Last, I want to talk about commodity strategy development implementation process. This is very similar to the gap analysis that we talked about earlier, where you need to really identify your current state, your gaps, your weaknesses, your strengths, and then understand your business needs, align with the business, understand your key customer requirements, right? Also, your product family factors, your bill of material, right. Do you need a really precise tight tolerance component? Where you really need to have a highly engineered high quality supplier. Do you need a commodity type of component? Where now you can differentiate based on the cost, not the quality and the performance. What is your key customer requirements or are their development production loans lifecycle too short? So, you really need agile fast suppliers, but you know, reduce lead time. So, you need to align on these factors and then develop a cross functional strategic plan, which is your future state, right? And then once you define that plan, which is who needs to do what and when, globally, in your team, you start executing. One critical factor here for success is that the purchasing organization owns or takes control of this process, this is very important.  

Next, I will talk about project purchasing. Well, to understand project purchasing, first we need to look at project timing and milestones, what it looks like. So, this is an example in automotive, where we call PPAP process or Production Part Approval Process. So, you go through different milestones, project milestones, to deliver that product, okay. Supplier or  supply integrational purchasing role is significant, very key in this process, because without the components and suppliers on board and on time or delivered on time, you cannot launch the product. So, who will manage all of this? Okay, this is where the project buyer comes in. So, the project buyer starts from the initiation phase where the RFU was kicked off until the supply or tooling or production readiness is completed, which is a lead time to the milestone where they’re fully approved to produce and supply your parts. And, to a point where they start delivering high volume or whatever your demand requirements are demand forecast is, meeting that volume points in production. So, all this process, this project timing milestone is the job of project planning.  

Well, let’s now take a look at how this Project Buyer interfaces with the rest of the organization. So, in any given organization, you would have a project team, if you’re launching new products or developing, designing new products, you have some kind of product development cycle. You would have a core project team, which perhaps will consists of Program Manager who manages the whole process, Engineer, who designs, develops the product, Manufacturing Engineer, who now takes that design product and make sure that it’s manufacturable or producible, Supplier Development Engineer who develops and improves the suppliers or maybe sometimes finds new suppliers, a Tool Engineer,  who would deal with, you have tooling or capital investment required to make that product together with the suppliers. So, the Project Buyer being part of that team really interfaces with the suppliers and the project team for each commodity, for each tooling and capital category. So, here, the commodities are still managed by the Commodity Manager or the commodity structure, but the Project Buyer kinda accelerate things, right, brings them together, which then eliminates that weakness that we talked about earlier, which is not being agile, not being responsive to the business needs. So, Project Buyers’ key role here is to really close that gap. This is really a schematic of a product development cycle. You know, put this together based on my past, every product development cycle and engineering has a concept phase. You verify the concept, which is CV. You have design verification, you design, develop, and test and validate that concept, and then the product verification or validation. Now, you’re ready for production, your design is mature, it’s tested validated, now you go into production. Project Buyer really deals with the last element to the product production validation, make sure that the engineering changes the tooling progression, the supplier AQP. which is Advanced Quality Planning, as we call an automotive. All those elements are on time and error-free. In any project purchasing role, you got to have a strategy, right, you got to have step-by-step approach, and clear owners. So, this is a basic example of how you’re going to approach things if you’re in the project purchasing role, right, you start with optimization where you define designs, design standards, move through the early engagement of suppliers. So, this is pre-selection screening of suppliers with some onsite reviews and defining performance metrics. Through the supplier selection with sourcing strategy that is agreed to by the commodity group, because they manage the global commodity group and the suppliers that fall into that category. Once the launch is done, ends with the project is launched, ends with managing that performance based on defined criteria. So, you see each step has a clear owner of the process.  

Next, I want to talk about supplier quality, you know, centralized purchasing structure or some companies call this supplier development engineering, which is also very important. So, just like we’ve talked about project purchasing or project by role, supplier development engineering role also falls under the core project team, okay. So, instead of now managing the project milestones and timing, supply development engineering managers, the suppliers interfaces between suppliers and the project team for supplier development, launch approval, making sure suppliers are able to are capable of delivering the specs requirements of that product. They are on time and error-free. They have the right renetrate production capacity, right? They have done their due diligence in terms of their production rhythms. This is really the role of Supplier Development Engineer. It could be that, throughout the project, you may need time to time new suppliers. A new requirements may emerge, where you may need to bring in a new supplier with different capability. So, this individual should also or will also help with that, will go to the supplier sites, find scout new suppliers, approve them, and develop them. So, something that we talked about before, the product development cycle, Supplier Development Engineer mostly works in the first two stages of this development cycle concept validation and design verification. Okay—why? Because you would want to have pre-screening, early engagement of the suppliers that are capable, basically, to deliver the engineering needs of the product.  

Now, I’d like to talk about one of the key processes, which is the supplier scorecard. That is very important from a global supplier performance management standpoint. So, in any company, there is some kind of scorecard, I believe, the suppliers are measured against. This could be different from company to company, depending on the market the products, right, the competitive environment. But there should be at least six basic elements to a robust, sound, good scorecard. So let’s go through each one of them. First one is the summary, right? If you have a supplier who is supplying many different parts, of course different commodities, business units, and product families, you would want to have a summary of that view. The second element is the trend and the time period. You wouldn’t want to have a scorecard, which does not include a timeframe. Why? Because it’s not going to give you an accurate picture. It’s not going to tell you the trend, right, it’s not going to tell you when a failure happens, or when a non-conformance happens, or when the supplier perform really well. The third section is the quality performance. So, in automotive, we typically measure quality based on parts per million, meaning the defective bad parts per million. This could differ from industry to industry, but there should be some indicator that tells you the quality performance, informs you about the quality performance of the supplier. The fourth category is the launch performance. This is basically in a new product development cycle. Was supplier on time? Did they do too many trials and errors? Or were they successful at launching on time? Okay, which is another key criteria that you should look for, especially if you’re developing or you’re in the engineering of highly complex products. The fifth section is the delivery performance and warranty. So, this is really, you’re in production now, you’re in production environment, you’re getting many millions, many thousands of parts from your supplier. Are they delivering on time? Do they have some warranty issues that are non-conformance out there in the field? This is a very critical segment or part of supplier scorecard because a misdelivery from your supplier could also end up you missing your deliveries to your customer. If you have a contract, you have to abide by the quantity and the delivery times right to deliver in those quantities. You may be penalised if you don’t deliver on time. Or if you have a field issue because of that supplier, you may have to replace those parts, which will drive up the cost in a significant way. Or a big issue may tarnish your reputation as a brand so you should really make sure that you’re looking at the scorecard and understanding the leading indicator errors or early warning signs here. And the sixth section is a really executive summary of the performance status and the thresholds. So if the parts per million is point five, where are they, relative to that performance metric, right? If the total score should be above 90%, all combination of these elements are the red, yellow, green to that score. So, it’s really a brief summary of the status of the supplier.  

So, in the next two segments, I will talk about performance management tools. And then, I’m going to finish up with the key takeaways for you guys. Here, our slogan is “what you measure will improve.” If you have a centralized structure, where you’re managing your commodities in a global basis, you have a project management structure, project purchasing, you have supplier development engineering, you cannot understand how you’re performing and where to improve without some of the key parts and metrics. That’s what I’m going to cover next.  

So, there are really three categories here. We’ll start with the quality and launch performance—what are these? So, basically, as we mentioned before, you should have some type of supplier PPM quality measure, right? How many parts are non-conforming? How are they performing in that area, you would want these to be as less as possible. Less is good, more is bad, right? The other areas supplier on time sourcing and approval, which we call PPAT rule. This is more of an internal, kind of like an internal and external mixed looking internal type of metric, where your purchasing organization hopefully sourcing the suppliers on time. And, if you think about that project, timeline, or milestone, what we looked at together. You would have to have suppliers on board at certain time, so that they could deliver the product and the right time to you because they will have a lead time for production items. So, you would want to measure that. Are we bringing suppliers on board on time? Are we approving them on time? So, this is more of a mixed both supplier and an internal organization.  

Next, is the savings forecast, which is very important for any purchasing organization. Remember, going from a cost center through delivering bottom line impact, and then improving the shareholder value. All these cannot be done if you’re not delivering some kind of savings. So, then, you would want to track and understand and manage your savings performance, which we call savings forecast. So, it could be in the form of waterfall, where you look at pluses and minuses as you’re getting to your targets, could be tracking or commodity. The buyer could be tracking the details by product family and plant—the manufacturing plant. The third area is, is your sourcing performance or supplier selection performance. This is also very important. And the reason being is, chances are, the sourcing decisions you made, the suppliers you select will impact the entire organization, right? The cross functional team being the end user of that supplier will benefit or maybe greatly suffer from that selection. So you got to make sure that you’re measuring your sourcing performance. There are so many different areas here that you can look into but one key area here is doing sourcing, right? Think about, if you’re single source, you have a solid demand forecast, you have solid customer revenue opportunity, but you cannot deliver, because one of your single sources cannot supply to you. So, you need to make sure that you have some type of dual sourcing in place for critical must-have components and commodities. You would want to look at target cost versus source price in your sourcing decisions—why? Any company in any given market must compete, right? Some companies compete based on price, some quality, some delivery, some, maybe a niche engineered product quality, right, that closes a gap in that market delivers what customer needs or values. But in any given market, any company needs to remain competitive in some shape or form. So, you need to make sure that if you have target cost for your bill of material, you’re comparing your source price against it. You’re either staying below that target cost or being at that cost, so that you’re not impacting the financial performance of that product. Also, you should look at new product pipeline, as well as carryover pipeline. The idea here is that in your bill of material, if you’re carryover components, you should make sure that those also go through some sourcing process, right? You should not really go with the incumbent, just because that’s the kayode part, you should make sure that that’s also competitively bid, there is some value in that. You should challenge the current incumbent every often, now and then. So, in some strong performance tools, KPIs will bring you strong results. 

Now, I’d like to end the presentation. And, thank you so much for staying with me. Hopefully, you enjoyed this as much as I did. I’d like to end with giving you some key takeaways, kind of like summarizing everything that we talked about in one slide.  

So, when you’re transforming an organization or improving the purchasing organization, you must take a picture snapshot of your current state, you must assess your strengths and weaknesses, and you must define the future state. You should look at your people, your organizational structure, processes, your strategy, and your role. It could be, most often than not, purchasing organizations role is to save money, right, year over year. Or ensure the company can execute their product strategy, right, or close may be a gap that they have by acquiring that skill or gap or technology from the outside. Okay, whatever that strategies, you need to take a picture of the current state, the gaps, the strengths, the weaknesses, and then you define the focus areas. You cannot attack everything, chances are, in your area, it’s going to be like emptying the sea with your hands, right, you cannot address the complete ocean. So, you need to focus on certain areas that are higher impact and put a plan in place. This is simply who needs to do what and when. And then once you’re progressing through that plan, now you look at your mistake, right, slowly start installing some structure. You segment the commodities, you install the commodity structure, the strategy, you bring in a project purchasing role so that you eliminate that agility weakness, because now you’re centralized versus decentralized. You may need to upgrade some key positions, you may need to move people around so that they’re the right fit for the right job. You might need to train them, develop them, have them acquire different skills so that they can perform better and execute the strategy, and implement new processes that are robust, repeatable.  

Start building leverage. Dual source is a key identify your single sources, your vulnerable areas in your spend, start developing new suppliers and build leverage, and hopefully, start delivering savings. If you build leverage, if you’re a single source, and you’re able to introduce competition, savings will come. It will come. The foundation there is working at building leverage. And then the future state is you basically, continue to improve. Continue to increase the effectiveness by aligning more with the business strategy, whether it’s product family, business unit, overall company strategy, focus on new areas, maybe focus more on the launches, where now you can impact the total cost, right? And on time supplier versus late supplier will increase the expedite costs, will increase the cost in other areas of your organization. Maybe your engineering, your program management sales, your production people will have to work overtime, right? They may have to do a lot of explaining to your customers.  

Focus on your commodity strategy, make sure you have right number of suppliers, you have right categories, right, you’re managing them the right way. The performance is understood and clear. The improvement plans are in place. And that really continues to build leverage and get rid of the remaining gaps and hopefully, start contributing to the bottom line even more and start creating shareholder value for the company.  

Thank you so much for attending this session and thank you so much for staying with me if you made it this far. I truly enjoyed the presentation. And thank you for being here. And, please have a great day and great week.

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