【正文】 s product purchases, Product A is the most attractive VMR opportunity. EXAMPLE ABC Purchased Products ABC Company Purchasing Category Priority Value Managed Relationships 54 Product category A has the most supplier and client support. Product Executive Commitment Corporate Willingness to Product Change Ranking Supplier Commitment Supplier Cooperation Product Category 1 ? Product A (Widgets) 2 ? Product D EXAMPLE 3 ? Product B 4 ? Product C Purchasing Category Selection Value Managed Relationships 55 EXAMPLE Identify VMR Opportunities Understand Industry Cost Structure Select VMR Candidates Obtain Top Management Commitment Identify Specific Cost Reduction Opportunities Implement VMR Opportunities Track VMR Savings VMR Process Value Managed Relationships 56 Market Trends Market Overview ? $ custom widget market ? 7% industry growth rate ? Highly fragmented market – largest 15 vendors prise 60% ? Suppliers tend towards materials specialization – secondary materials often outsourced Customer/Supplier Relationships ? Industrywide, close retailersupplier partnerships are not mon ? However, all suppliers surveyed have had some partnership experience examples include: – volume driven price discounts – joint Ramp。 attitudes on a partnership with the client ?Train staff to manage process, expand to other areas ?Identification of BDP and system cost reduction targets ?Followup with plant tours, quality checks, etc. ?Hand over category strategy and volume expectations The optimal partnership development process is explicit and clearly articulated. Partnership Development Process Value Managed Relationships 46 Number of Suppliers: Oligopoly Giant(s) and Many Fragmented Sole Source Giant(s) and Few 1530 1530 25 25 1 Supplier Concentration: ?~80% to 68 suppliers ?Rest with 1020 suppliers ?~80% to 1 or 2 suppliers ?Rest with 1530 suppliers ?Evenly among suppliers ?~80% to 1 or 2 suppliers ?Rest with 14 suppliers ?100% to 1 supplier ?Long term petitive bids ?Short term petitive bids ?VMR ?Long term petitive bids ?Short term petitive bids ?VMR ?Long term petitive bids ?Short term petitive bids ?VMR ?Long term petitive bids ?Short term petitive bids ?VMR ?Long term petitive bids Potential Relationship Options: A range of supplier configuration options, should be evaluated. Supplier Configuration Alternatives Value Managed Relationships 47 People ? Is senior management mitted to making this work? ? Have all anizational, cultural, and skill changes been addressed ? Are the incentives appropriate to ensure employee mitment? Operational Execution ? What is the governance structure? ? How is progress monitored? How will roadblocks be resolved? ? Is there open sharing of required information? ? Can all the information systems changes be identified and specified ? How will switch disruptions be minimized? Partner Selection ? What is the optimal number of suppliers? ? Do we really understand supplier39。s needs ?Potential for customized investment in facilities/equipment ?May require investment in weak strategic business ?Adversarial bid negotiations to obtain lowest unit price ?Longterm mitment focused upon lowest total systems cost using value chain perspectives ?Focus driven by internal incentives/ transfer prices ?Separate product design ?Joint product design and cross functional participation ?Joint product design often at odds VMR VMRs can exceed the value of both traditional contracts as well as vertical integration. Strategic Purchasing Options Value Managed Relationships 8 High Potential High Low High Low Purchasing volume (relative to total supplier sales) Valueadded / engineered level ?Product redesign ?Material substitution ?Product redesign ?Material substitution ?Volume discount ?System cost improvement Moderate Potential ?Volume discount ?Some system cost No / Little opportunity (need to cluster) VMRs are most appropriate where high volume and significant value added occurs. Medium/low potential Where Are VMRs Appropriate? Value Managed Relationships 9 ?Large dollar purchase ?High level of valueadded cost in product ?Fragmentation across many divisions and suppliers ?Client represents significant part of industry output ?Industry petitive intensity high: –capacity utilization dropping –consolidation in progress –many new plants looking for volume –historical industry price umbrellas VMRs are most effective in large dollar, high value added products. In Which Categories Are VMRs Most Effective? Value Managed Relationships 10 Consolidate volume in longterm partnership Increased pace of innovation leads to strategic benefits for both Ensures continued supply for buyer and capacity utilization for supplier Commitment and scale justifies joint investment in cost savings and Ramp。Sheila Dubin Value Managed Relationships December 1998 Author: Value Managed Relationships 2 After pleting this module, you will be able to: ?Understand VMR concept and application ?Articulate types of cost savings opportunities created by VMRs ?Use the Bain framework to conduct a VMR ?Refer to real examples of Bain’s VMR process and success Value Managed Relationships Objectives Value Managed Relationships 3 ?VMR Concept ?VMR Key Success Factors ?VMR Sources Of Value ?Bain VMR Process ?Example ?Key Takeaways Agenda Value Managed Relationships 4 A Value Managed Relationship (V