PURCHASING PHASE REVIEW Cornerstones of Purchase baseline ESC Toulon - Andres GARCIA

Purchasing area : a key mission in the business Remind of main topics concerning last year Purchasing involvement into the Tender Vet stage The Sourcing stage for Purchasing activity Purchasing missions during the upstream stage Procurement activity and saving calculation ESC Toulon - Andres GARCIA

ESC Toulon - Andres GARCIA Procurement Strategy ESC Toulon - Andres GARCIA

Measures of Performance Procurement strategy overview Alignment to business strategy and competitive environment Commodity specific focusing on value creation Managing bought out requirements to “buy less” and “buy for less” Leverage supplier relationships to maximise benefits of cost, quality and delivery in both innovation and supply Efficient and effective planning and co-ordination of requirements across the supply chain to minimise cycle time in supply and acquisition Lowest cost “purchase to pay” from order to delivery Key Processes Executional Efficiency IT and Information - effectiveness - availability Organisation - skills - structure Measures of Performance - process - results Strategy Sourcing Objectives Definition Development Operational Effectiveness INFRASTRUCTURE Innovation Supply eg product introduction eg continuous improvement eg time to market eg production schedule eg prototypes eg direct materials Requirements Specification and Management Supply Base Management Purchase Demand Planning and Control Goods and Service Provision Enabling infrastructure which underpins effective processes and behaviours A robust procurement strategy will consider all aspects of the procurement cycle. ESC Toulon - Andres GARCIA

ESC Toulon - Andres GARCIA Supplier Selection ESC Toulon - Andres GARCIA

Request from Originator Do we have a qualified supplier ? . If NO FLOW-DOW OF THE APPROACH ( from the request to the supplier qualification ) Request from Originator Do we have a qualified supplier ? . If NO SOURCING Supplier Questionnaire POTENTIAL SUPPLIER On-site assessment Financial - Sales Assessment Quality System Assessment Technical & industrial Assessment Product Assessment AGREEMENT PHASE QUALIFICATION SUPPLIER QUALIFIED ESC Toulon - Andres GARCIA

Supplier selection methodology Define Evaluation Criteria Identify Potential Suppliers ( ‘Long List’ ) Screen Potential Suppliers Identify Potential Suppliers ( ‘Short List’ ) Supplier Cost and Capability Assessment Analyse Assessment Results Input into Supplier Measures of Performance Select Suppliers Model Vendor Relationship & Identify Required Supplier Characteristics Example A structured, standardised and repeatable approach is necessary to give consistency and objectivity to the supplier selection process. ESC Toulon - Andres GARCIA

ESC Toulon - Andres GARCIA Define evaluation criteria QUALITY COST DELIVERY TECHNOLOGY MANUFACTURING CULTURE ITEM SCORE Delivered quality Price reduction performance Age/occurrence of arrears Design facilities Manufacturing strategy Business & finance planning Concessions TAC Accuracy of quantity delivered Testing facilities Product/process range/capability Project management Rejection response Cost breakdown awareness delivery timing engineering Maintenance and condition of facilities & equipment Customer support In-process rejects (cannot be reworked) availability Documentation Design input Housekeeping Procurement rework Internal cost control Production procedures Improvement / innovation Layout Safety Scrap cost Material cost control system Design change Data management and communication Industrial relations Quality policy and responsibility 2 nd tier cost Attitude Performance measurement Absenteeism Quality philosophy Work rate/added value Development and training of employees Quality system/ Adherence to systems and A structured, multi-faceted assessment methodology is necessary to gain a thorough understanding of true supplier capability. ESC Toulon - Andres GARCIA

capability evaluation) Long list pre-screening Alternative Suppliers Non-Traditional Current Screen & Reduce General Questionnaire Internal Knowledge 3rd Party Opinion Etc. Overview Presentation Plant / List brochure Telephone discussion / Interview “LONG LIST” “SHORT LIST” (For detailed cost & capability evaluation) There are many sources (both internal and external) of information available for developing a ‘long list’. Pre-screening reduces the resource requirement for detailed assessment. ESC Toulon - Andres GARCIA

ESC Toulon - Andres GARCIA Supplier Performance Measurement & Development ESC Toulon - Andres GARCIA

Supplier Weighted Score Selection of suppliers for improvement activity ITEM Score Weight- ing Supplier Weighted Score Strategic Importance Business Deliverables Performance - Supplier Ranking Supplier A Supplier B 1 2 3 4 5 Turnover with OEM % of Supplier Business with OEM Model Spread Long-term business prospect Attitude to supplier development Current initiative (int’l/other OEM) Bottom 50% <10% 1 Only Possible Negative Yes Top 50% 10%+ Top 30% 20%+ 2 or more Probable Indifferent Maybe Top 20% 30%+ Top 10% 50%+ All models Positive No 15 7.5 10 100 Quality Cost Delivery Management Top 10 Upper Quartile Middle Lower Bottom Supplier C Supplier improvement/development activity can be optimised through selection of those suppliers where greatest opportunity for improvement exists. Criteria can be weighted to reflect current business objectives and goals. ESC Toulon - Andres GARCIA

Example of Supplier evaluation Methodology Data is centralised from purchasing software Inputs from purchasing (requisition and order) Inputs form the goods reception (time) and the goods inspection (quality). Each month the PSQE analyses an automatic evaluation extracted from the purchasing database Impact 1&2 suppliers are noted as follow: Acceptable Conditionally Acceptable Unacceptable ESC Toulon - Andres GARCIA

ESC Toulon - Andres GARCIA Supplier evaluation Rating methodology: ESC Toulon - Andres GARCIA

ESC Toulon - Andres GARCIA Supplier evaluation Results : ESC Toulon - Andres GARCIA

ESC Toulon - Andres GARCIA INDUSTRIAL & PURCHASING COMMITTEE / Strategic Assessment ESC Toulon - Andres GARCIA

ESC Toulon - Andres GARCIA INDUSTRIAL & PURCHASING COMMITTEE / Strategic Assessment ESC Toulon - Andres GARCIA

EXAMPLE OF SUPPLIER PERFORMANCE PROCEDURE

PROJECT PROCUREMENT MONTHLY REPORT ( P.P.M. Report ) A strong link between Project Manager / WorkPackage Manager and Purchasing

ESC Toulon - Andres GARCIA To provide a mechanism for communicating and agreeing the status of suppliers. To keep the Procurement Manager informed of the key supplier issues on Projects & Bids. Monthly basis. Sent to the Project & Bid managers ESC Toulon - Andres GARCIA

ESC Toulon - Andres GARCIA PLAN A.C.E. Achats Compétitifs en Entreprise Méthodologie d’un Diagnostic Achats, Plan d’amélioration et Mesure de maturité Achat ESC Toulon - Andres GARCIA

Politique Fournisseurs Le diagnostic Achat L'entreprise Qui la pilote ? Achat Amont Politique Achat Organisation Achat Achat Aval Hommes Outils Méthodes Fournisseurs Système d ’information Achat Politique Fournisseurs Nécessité de faire un état des lieux dans chaque domaine ESC Toulon - Andres GARCIA

ESC Toulon - Andres GARCIA LA DEMARCHE Le diagnostic du Plan A.C.E. est un outil d'évaluation complet du processus achat et de Proposition d ’amélioration, ainsi que de sa mesure au niveau de maturité. conçu à l'attention des dirigeants (Comité de Direction, Direction Générale, Responsable achats) des entreprises . pour leur donner une vision extérieure globale en soulignant les points forts et faibles de l’organisation dans le domaine des achats. ESC Toulon - Andres GARCIA

Les étapes de la démarche A.C.E. prendre en compte les constats ( état des lieux et niveau de maturité) communiquer objectivement à l'ensemble de l'entreprise le niveau atteint, les forces et faiblesses obtenir le soutien de tous les métiers et niveaux hiérarchiques impliqués proposer un plan d'amélioration (temps, ressources) en adéquation avec les orientations stratégiques de l ’entreprise mettre en œuvre le plan d'amélioration (suivi par la Direction et mesures de progrès) en l'intégrant aux démarches existantes évaluer la progression ( niveau de maturité) par des audits planifiés dans le temps, voire corriger le Plan ACE dans le cas d ’un nouveau contexte de l ’entreprise ESC Toulon - Andres GARCIA

Le processus achats type de l'entreprise Contrôler la performance Établir un budget et un plan opérationnel Processus de management Définir les orientations stratégiques Recueillir les orientations de l ’entreprise Etablir une Politique Achats Processus opérationnels l ’achat Maîtrise du processus Achat Maîtrise des fournisseurs Reporting, outils de mesures de performances Achat Contribuer à la Compétitivité et rentabilité de l ’entreprise Axes de Progrès Achats cohérents à la stratégie de l ’entreprise Procédures, Instructions, système d'information, ressources humaines, Pratiques Achats Sélection et évaluation des Fournisseurs, Cotation fournisseurs, marketing achat Maturité de la fonction achat, mesures des gains et des ‘ non dépenses ’ Moyens et Finalités ESC Toulon - Andres GARCIA

Les niveaux de maturité La dimension achat est systématiquement intégrée dans les décisions de l'entreprise NIVEAU 5 Expertise achat est reconnue et participe au business NIVEAU 4 Intégration du processus achats dans les processus de l'Entreprise NIVEAU 3 Répétabilité du processus achats - Gestion de projet basique NIVEAU 2 NIVEAU 1 Approvisionner - Gérer le quotidien ESC Toulon - Andres GARCIA

La phase d ’accompagnement achat Préoccupations critiques achats de l'entreprise Nouveaux enjeux : - coûts des achats - coût de la fonction - ... Démarche A.C.E. - Format qualitatif et quantitatif de la fonction achats de l'entreprise - Plan de ralliement Nouvelles organisations et nouveaux processus/outils : - nouveaux processus - EDI interne / externe - Réduction des fournisseurs - Partenariats ... Un modèle de maturité achats est nécessaire pour accompagner une telle démarche ESC Toulon - Andres GARCIA