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gs ? How is product bundled and promoted SKU Tree 70A .T . K ea r n e y 6 / 98 .2 9 0 26 2 %3 7 % 3 5 % 3 2 %2 8 % 2 8 %2 1 %1 6 % 1 4 %10%S it e 1 0S it e 9S it e 8S it e 7S it e 6S ite 5S it e 4S it e 3S it e 2S it e 197%45%59%36%5 4 %6 9 %50%24%31%19%U p tim e E f f ic i e n c yO v e r a l l E f f ic i e n c y( = U p ti m e E f f ic i e n c y x % M P P )36 Current Sites: 4 Future Sites: 3 Current Sites: 8 Future Sites: 5 Current Sites: 2 Future Sites: 1 Current Sites: 1 Future Sites: 1 Current Sites: 3 Future Sites: 2 Current Sites: 2 Future Sites: 1 Current Sites: 2 Future Sites: 1 Current Sites: 1 Future Sites: 1 SKU 1 Key Assessments for Integrating Operating Networks Which entity in the supply chain should develop a capability is determined by the business’ scale and strategic objectives Strategic Alliance ? Develop strong relationships with key supply chain partners that have the required capabilities ? Maintain very high levels of crossfunctional involvement InHouse ? Invest in resources and people to develop worldclass capabilities Outsource ? Outsource activity to capable provider ? Organize related activity to minimize transaction costs with outsourced provider Rationalize ? Depending on true switching costs and investment requirements either continue to develop capability inhouse or outsource High High Low Low Activity Strategic Importance ? How core is the activity? How ―entangled‖ is it with the rest of the anization? ? How critical is it to maintain control and involvement in the activity? ? Is the activity an area of petitive advantage today? In the future? Potential For Internal Capability Development ? In the short to mediumterm can the required capability be developed inhouse to be highly efficient and effective in an activity? Differences in each pany have to be understood, and decisions made on both the operating model of the joint venture going forward – a formal process can help in facilitating this thinking Identify the Operating Model and Detailed Operating Structure and Characteristics of Each Firm Determine New Operating Model, and Appropriate Benchmarks Make the High Level Choices As to How the Company Operates Going Forward Step 1 Step 3 Step 2 Define and Align Support Functions Step 4 Holding Company Strategic Architect Operator Functional Strategy Financial Control Capital Allocation Resource Management Accountability Corporate Staff Size Autonomy Marketing Staff Placement DWNA/JV Partner Support Function Alignment Holding Company Strategic Architect Operator Functional Finance ? Accounts Payable ? P/L accounting ? Consolidation/ corporate reporting ? Tax ? Treasury ? Planning/budgeting Human Resources ? Benefits/administration ? Benefits planning ? Compensation planning B B C B B B B/O B/O B C C/B C C/B C B C/O C/O C/B C C C C C C C/O C/O C C C C C C C/B C/O C/O C C = Corporate B = Business Unit O = Outsourced ? Effective, fast rationalization and savings ?Best practices ―Corporate Center‖ BG1 BG2 BG3 Other Business Group ? ? ? Stand Alone Model DWNA BG1 BG2 BG3 Business Group ? ? ?? ? ? Model Create Joint Venture Organization Corporate Center Rationalization Methodology JV Partner BG1 BG2 BG3 Business Group ? ? ? ? ? ? Model 7. Continuously Benchmark and Monitor Supplier Improvement 6. Operationally Integrate Supplier(s) Strategic sourcing is a powerful methodology for leveraging the bined spending base and procurement capabilities of the merged anization Key Elements . Kearney Intellectual Capital Employed 5. Select Competitive Supplier(s) 4. Select Implementation Path 3. Generate Supplier Profile 2. Develop Sourcing Strategy 1. Define Sourcing Categories ? Embed supplier monitoring processes ? Implement market monitoring tools ? Periodically reevaluate supplier petitiveness and performance ? Performance measurement tools ? Technologyenabled data capture process ? Complete implementation templates ? Gain buyin to supplier changes ? Coordinate new supply chains ? Implement systems to monitor results ? Implementation templates ? Tailor and issue RFPs ? Analyze responses ? Develop targeted negotiation strategy ? Negotiate a deal ? Electronic procurement tools ?Inter RFPs ?Online auction tools ? Benchmarks ? Select supplier development or negotiation path including use of market exchanges ? Define initial negotiation strategy ? Experience in the beverage industry, including bottled water ? Negotiation training ? Review supplier lists and supplier capabilities ? Prescreen list to develop short list of suppliers ? Existing supplier lists available globally ? Assess supply category business impacts ? Confirm sourcing strategies ? Validate total supply chain perspective ? Detailed understanding of supply market — Market petition — Industry economics ? Profile spend ? Identify specifications ? Unbundle as appropriate ? Review supply category profile ? Assess procurement processes ? Review trends ? Evaluate total cost and savings targets ? Proven database and management tools ? Existing supply category profiles Seven Step Strategic Sourcing Methodology Strategic Sourcing has a goal of delivering bottom l