© The Delos Partnership 2005 Dairygold Workshop Supplier Relationship Management

© The Delos Partnership 2005 Supplier Types No trust between supplier and buyer Closely guarded information on both sides Buyer dictates price and service parameters Threat of pulling business Buyer views suppliers sales representative as friend Rarely any professional negotiation Long rewarding relationship Genuine commitment, but not tied to any specifics Small supplier gets paid what he needs to remain profitable Supplier is viewed as integral part of buyer’s business Relationship includes technical, operational and sales people Supplier is viewed as resource to gain competitive advantage Long term commitment Enemy Exploitable Exploitable Informal Approved Nuisance - Parasite Preferred Supplier Strategic Partner

© The Delos Partnership 2005 Supply & Procurement Measures Performance Measure Performance Measure Sales Profit and Growth Cost of Sales People Costs AssetsInventoryCreditors Perfect Customer Orders Lead Time Reduction RFTQ100%OTIF Supplier Schedule Achievement On Time New Products Total Net Value Delivered

© The Delos Partnership 2005 Role of a Supplier Manager The supplier manager has overall responsibility for a supplier relationship “Owns” the relationship on behalf of the customer organisation Is a catalyst which enables the two organisations to work together Regularly monitors the contact between the two organisations Reports to Senior Management He or she ensures that communications are effective and efficient Manages initial discussions and assists in drawing up contracts Is kept fully aware of communications & can be involved in negotiations & deals Is the conduit and prime contact Arranges and facilitates meetings and events Can be dedicated to one strategic partner and/or Product Category High involvement: one supplier manager for one supplier Low involvement: One supplier manager for several suppliers

© The Delos Partnership 2005 Identifies new value opportunities Defines the project and measures improvement potential Confirms resource requirements and organisation Create project with stage- gates and milestones Removes Roadblocks for the project team Measures the value delivered and communicates progress Implementation Builds the relationship Supplier Manager Stages

© The Delos Partnership 2005 Positioning Supplier Managers Supplier Importance Current relationship Negotiation & Deal Status Current Communication Involvement levels Performance Measures Key Considerations

© The Delos Partnership 2005 Risk Ensure Supply Partner Value Partner Value Minimise Attention Minimise Attention Drive Savings Drive Savings Strategy Positioning

© The Delos Partnership 2005 Workshop What are the current Supplier Assessment tools for the Top Customers and what needs to be done to ensure customers receive improved Total Value?

© The Delos Partnership 2005 Supplier Performance Assessment Supplier Performance Assessment is a formal supply side management programme that continuously and quantitatively assesses the performance of suppliers against seven performance elements 1)Risk Management 2)Quality, Regulatory and H.S.E. 3)Cost (Price) 4)Delivery 5)Process and Service 6)Innovation 7)Business Value and Net Total Value (€). Its purpose is to provide a channel through which suppliers performance is professionally assessed and their best ideas are captured.

© The Delos Partnership 2005 Supplier Ranking & Performance There are five levels of Supplier Performance is assessed against seven elements for all five levels The level or ranking is based on the net total value delivered Suppliers might be eliminated from any level BRONZE BRONZE(New) SILVER SILVER(Development) SILVER GILT SILVER GILT(Approved) GOLD(Preferred) PLATINUM PLATINUM(Strategic) SUPPLIER ELIMINATION

© The Delos Partnership 2005 SUPPLIER PERFORMANCE & VALUE GAP ASSESSMENT Assessment Measure BronzeSilver Silver Gilt GoldPlatinumScore Risk Management Assessment Quality & HSE Performance Cost Performance Delivery Performance Process & Service Performance Innovation Performance Business Value & Net Total Value Delivered Bronze = New Supplier Silver = Development Supplier Silver Gilt = Approved Supplier Gold= Preferred Supplier Platinum= Strategic Supplier Assessment Measures

© The Delos Partnership 2005 Supplier Relationship Management Strategic Critical Suppliers – Workshop Agenda

© The Delos Partnership 2005 Workshop Scope Used for Strategic / Critical Suppliers to; Reduce & Manage Risk Assure Supply Increase Joint Value Improve Relationships Current Performance Assessment Supply Assurance Joint Total Value Improvement SRM Workshop Relationship Improvement

© The Delos Partnership 2005 Review Supplier’s and current joint Supply Chain and map out the new process with the clear focus to achieve efficiency improvements. To gain full confidence in each others ability to deliver on new established process by defining and agreeing joint KPIs and reporting. Review of Supplier’s internal Supply Chain risk analysis and agree on strategy to minimise exposure of supply Supplier Workshop Purpose

© The Delos Partnership 2005 Focus is to get specific supplier to deliver all orders 100% OTIF Focus is to get specific supplier to deliver all orders 100% OTIF People Processes Poor communication & unreliable promises Supplier lack of goals Manufacturing Material Order Placement Supplier Projected Requirements Machine Availability (Make our orders a top priority) Obsolete, Spoiled, Out of date, Non availability Not to spec Stoppages & Breakdowns due to people, power and equipment No carrots & sticks (rewards & penalties) Materials Free Issue Order management Stores and Goods Receiving Upstream materials long / variable lead time Untrained, low capability, low commitment to value Sub Contracted Focus using Fishbone Tool

© The Delos Partnership 2005 Key Improvement Goals GoalSupplierValueHowWhen Improved Supply Assurance & RFTQ 100%OTIF Cost & Cash Planning and Cost Avoidance Supply Chain Improvement & Lead Time Reduction Net Value Improvement & innovation

© The Delos Partnership 2005 Define & Measure EducateImproveControl Define & Measure SRM – DMAIC Timeline

© The Delos Partnership 2005 Business Priorities The Board, Executive Committee, Shareholders, Employees, Customers, Suppliers & Competitors are focused on business financial performance and outlook

© The Delos Partnership 2005 Supply Priorities Stakeholders, Management, Supply Chain, Procurement and Suppliers are normally focussed on AQCSI (Supply Assurance, Quality, Costs, Service and Innovation), Cash (Assets, Payment, Inventory) & Response Times Stakeholders, Management, Supply Chain, Procurement and Suppliers are normally focussed on AQCSI (Supply Assurance, Quality, Costs, Service and Innovation), Cash (Assets, Payment, Inventory) & Response Times