PRESENTATION ON STRATEGIC SOURCING AT HP

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Submitted By:
NEHA SINGLA

PARUN BANSAL BINDIA CHANDEL HIMANSHU SHEKHAR

5/22/12

RAMANDEEP SHARMA

CONTENTS

Steps in a strategic sourcing process. vKey chain program. vProcurement Risk Management. vThe PRM Framework. vHP Risk Contract-Valuation Analysis. vBenefits.
v

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Steps in a strategic sourcing process

Assessment of a company's current spend Assessment of the supply market Total cost analyses Identification of suitable suppliers Development of a sourcing strategy Negotiation with suppliers Implementation of new supply structure Track results and restart assessment Negotiate with the vendor about the payments terms of the specific organisation.

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THE KEY CHAIN PROGRAM

Order and forecast collaboration Inventory collaboration Auctions

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DECENTALIZED DECISIONS CONTD

e-SMI. vInternet technologies and web-based solutions

Inventory collaboration

Auctions

Initially the focus of HPs e-Bazaar program was not in using auctions for sourcing, but rather for supply chain execution. vSupport supply chain execution covered disposing of excess material. vRFP or RFQ process, as a decision mechanism for awarding business.
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RFP(REQUEST FOR PROPOSAL)/RFQ(REQUEST FOR QUOTATION)

Quotation Analysis Form vTechnical capability vDelivery and packaging vQuality
v

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STRATEGIC SOURCING

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Procurement Risk Management

Launched at HP in August of 2000. v Framework to quantify the impact of product demand, component cost, and availability uncertainty on revenue, costs, and prots. v To support the risk management process v Manage procurement uncertainties and risks. v Training curriculum and consulting infrastructure to help HP professionals .
v

Mathematical model. Business process. Software application.

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The PRM Framework

quantify the impact of product demand, component cost, and availability uncertainty. A suite of software tools comprises HPHorizon demand-scenario software, HPRisk component-cost-forecasting software, and HPRisk contract-valuation software. A rigorous PRM business process to proactively manage procurement uncertainties and risks; and A training curriculum and consulting

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HP Horizon Software

The analytics embedded in the HPHorizon software perform a regression analysis of historical forecasts and shipments to quantify forecast bias and uncertainty. then combines this information with current demand trends to represent the uncertainty in the demand forecast. 5/22/12

The HP Risk cost-forecast software

Hi-Tech exhibit signicant cost uncertainty. hi-tech component prices typically demonstrate a long-term decline in costs due to technological and process-related improvements. software performs a regression analysis of historical costs for a particular component to determine 5/22/12 parameters of price process to the

Structured Contracts with Suppliers

the risks are managed by setting up portfolios of structured contracts that HP executes directly with suppliers. binding commitments, incorporating a complex combination of quantity and pricing terms
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HP Risk Contract-Valuation Analysis

these contracts be appropriately analyzed to increase benets and decrease the risk

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BENEFITS

Material-cost savings: $128 million in material-cost savings in FY06, and over $325 million in material cost savings. Assurance of supplyP:despite an industrywide memory shortage approxi- mately one year ago, the PRM contracts that HP business units had executed ensured that they obtained 100 percent of their 5/22/12

Contd

Inventory reduction: The requirement for HP to hold inventory is reduced as suppliers commit to providing dened upside exibility through exible- quantity contracts. Supplier benets: The quantity commitments that HP makes to suppliers, as opposed to just exchanging nonbinding forecasts, 5/22/12

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THANK YOU !!

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