Implementing a centralised procurement strategy for global supplier base management

Figures & data

Figure 1. Conceptual framework for investigating our research question.

Table 1. Summary of data collection.

Focussed projects within the strategic procurement programme	Observational data (workshops and meetings)	Secondary data (documents, etc.)	Complementary interviews (retrospectively encompassing all focussed projects)
Supplier base reduction January 2019 to January 2020	Monthly workshops with global and regional procurement managers to determine what suppliers to cut. Weekly planning meetings in the project management group. Main research was participant in the project management group. Gathering and managing data from workshops.	Programme flow chart. Internal supplier lists containing spend details. Internal supplier grouping lists. Meeting notes.	Senior procurement manager. SRM programme responsible. Global category manager 1. Global category manager 2. Global category manager 3. Regional sourcing head. Regional category manager. Regional team leader procurement. Regional sourcing manager 1. Regional sourcing manager 2. Regional sourcing manager 3. Regional buyer.
Supplier base evolution January 2020 to January 2021	Monthly meetings with each of eight category teams to determine supplier preferred status, transfer spend, and monitor supplier performance. Weekly meeting with programme owner to determine programme parameters. Update on needs regarding supplier dashboard changes from category teams. Main researcher was the programme lead and workshop lead, reporting to programme owner.	Internal supplier dashboards with global supplier performance data. Internal documents containing change of supplier status. Meeting notes.
Global performance effects	Monthly update on delivery performance and status of agreed actions to internal supplier lead. Project team supports supplier leads on an ad-hoc basis to update improvement plans in the dashboard. Main researcher had no direct involvement in programme, but access to dashboards.	Dashboard with delivery performance and agreed actions for each supplier in programme. Programme introduction material sent to suppliers and supplier leads in the programme.

Figure 2. Coding tree.

Table 2. Supplier prioritisation based on globally defined categories (based on case company official categorisation material).

Category	Description
Globally preferred supplier	‘Can and should be used by all regions when buying products within the supplier’s capabilities’ (company-internal presentation on preferred supplier programme) Identified by global category managers
Regionally preferred supplier	‘A supplier that can and should be used by the named region(s) when buying products within the supplier’s capabilities’ (company-internal presentation on preferred supplier programme?) Identified by regional sourcing managers
Not-preferred supplier	‘A supplier that can be used as an alternative supplier in case the preferred supplier does not have the needed capacity or capability to supply the product(s) in scope’ (company-internal presentation on preferred supplier programme?)
Supplier to be avoided	‘Should not be used because alternative supplier(s) is in place’ (company-internal presentation on preferred supplier programme?) Buyers using a supplier in this category will be contacted and asked not to use them moving forward.
Supplier blacklisted	‘Should not be used’ due to one of the following reasons: ‘Supplier is a direct competitor (…), supplier is incapable of delivering the requested quality, [or] supplier is unable to deliver according to agreed deadlines’ (company-internal presentation on preferred supplier programme?) Buyers using a supplier in this category and their direct line managers will be contacted and asked to cancel the order.

Table 3. Case initiatives to achieve global supply management.

	Supplier base reduction (January 2019–January 2020)	Supplier prioritisation (January 2020–January 2021)	Global performance effects
Focus	‘Cutting the tail’ off the global supplier base by eliminating suppliers with a low expenditure from the supplier base. Identification of supplier groups by grouping local subsidiaries of the same global company within the same group.	Identification of preferred suppliers by focussing on suppliers with a positive existing relationship and high spend (or potential for high spend).	Improving case company’s delivery performance to own customers by working with focussed group of suppliers regarding their delivery performance.
Process	Top-down decision regarding which suppliers were to be cut from the supplier base. A four-stage programme including global and regional procurement managers.	Global and regional procurement managers choosing global and regional preferred suppliers based on a top-down minimum spend requirement as well as global and regional category and supplier knowledge.	Globally governed and supported process with top-down chosen largest impact suppliers and supplier leads from the case company collaborating on identifying and mitigating delivery performance issues.
Process challenges	Lack of understanding regarding supplier needs in all business areas, including product and service-focussed departments.	The project suppliers may meet the preferred status requirements only when on a project. Service (aftermarket) suppliers may be too small to be preferred due to their local and agile nature.	The programme only focusses on a small number of suppliers due to resource requirements and only affects suppliers in the programme where case company resources were available.
Effects	Reduction of supplier base from 50,000+ individual suppliers to 40,000 individual suppliers and definition of 8,000 supplier groups.	Identification of 550 preferred supplier groups, who were to be used and promoted as the default preferred suppliers, as well as 7,500 alternative non-preferred suppliers.	Increased delivery performance with the targeted suppliers, resulting in more stable supply from the suppliers in the programme.

Figure 3. Proposed framework for creating globally consistent approach to managing the supplier base in global engineering firms.