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The Sourcing Forum of the European Chamber is pleased to invite you to the next meeting of the Forum, which will take place on Friday, February 13th 2009. The topic of discussion will be Managing Suppliers - what is the right approach to manage Chinese suppliers; how intense should the management be; how often should one visit a supplier; who should go to the meeting; should there be meetings on management level etc.

A roundtable discussion will follow a presentation on the topic by Mr. Chwan-Pei Shiu from Deloitte Consulting.

With the entire supply chain becoming more integrated and collaborative, supplier relationship management (SRM) receives increasing attention as one of the most critical rings in supply chain management. This presentation will share insights and practices on SRM, discuss SRM methodology and cases to demonstrate how to improve supplier relationship management and to achieve supply chain benefits.

Deloitte Consulting in China is a consulting organisation to both multi-national and large local Chinese companies. It has over 300 bi-lingual staff located in 3 cities in China. Their goal is to assist companies to achieve their business objectives and goals through bringing the best and most relevant talent through multi-disciplinary approach, leveraging global networks, understanding challenges of specific industries within China and bringing them proven solutions and new thinking.

Agenda:
2:30 - 2:35: Opening Remarks by Sourcing Forum Chair
2:35 - 3:05: Presentation by Mr. Chwan-Pei Shiu
3:05 - 3:45: Q&A and Roundtable Discussion
3:45 - 4:00: Coffee break
4:00 - 4:30: Roundtable discussion

Registration:
Please confirm your attendance with Tang Jiaying at nanjing@euccc.com.cn or by phone on 025 8362 7330 or follow the registration button above.
If after registering you are unable to attend, please cancel your participation by phone or email. This will help the smooth running of the event. Fees will be collected in cash at the entrance. @font-face { font-family: Cambria Math; } @font-face { font-family: Calibri; } @font-face { font-family: @宋体; } @page Section1 {size: 8.5in 11.0in; margin: 1.0in 1.25in 1.0in 1.25in; mso-header-margin: .5in; mso-footer-margin: .5in; mso-paper-source: 0; } P.MsoNormal { FONT-SIZE: 11pt; MARGIN: 0in 0in 10pt; LINE-HEIGHT: 115%; FONT-FAMILY: "Calibri","sans-serif"; mso-style-parent: ""; mso-pagination: widow-orphan; mso-fareast-font-family: 宋体; mso-bidi-font-family: "Times New Roman"; mso-style-unhide: no; mso-style-qformat: yes; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-fareast-theme-font: minor-fareast; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin; mso-bidi-theme-font: minor-bidi } LI.MsoNormal { FONT-SIZE: 11pt; MARGIN: 0in 0in 10pt; LINE-HEIGHT: 115%; FONT-FAMILY: "Calibri","sans-serif"; mso-style-parent: ""; mso-pagination: widow-orphan; mso-fareast-font-family: 宋体; mso-bidi-font-family: "Times New Roman"; mso-style-unhide: no; mso-style-qformat: yes; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-fareast-theme-font: minor-fareast; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin; mso-bidi-theme-font: minor-bidi } DIV.MsoNormal { FONT-SIZE: 11pt; MARGIN: 0in 0in 10pt; LINE-HEIGHT: 115%; FONT-FAMILY: "Calibri","sans-serif"; mso-style-parent: ""; mso-pagination: widow-orphan; mso-fareast-font-family: 宋体; mso-bidi-font-family: "Times New Roman"; mso-style-unhide: no; mso-style-qformat: yes; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-fareast-theme-font: minor-fareast; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin; mso-bidi-theme-font: minor-bidi } .MsoChpDefault { mso-fareast-font-family: 宋体; mso-bidi-font-family: "Times New Roman"; mso-style-type: export-only; mso-default-props: yes; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-fareast-theme-font: minor-fareast; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin; mso-bidi-theme-font: minor-bidi } .MsoPapDefault { MARGIN-BOTTOM: 10pt; LINE-HEIGHT: 115%; mso-style-type: export-only } DIV.Section1 { page: Section1 } TABLE.MsoNormalTable { FONT-SIZE: 11pt; LINE-HEIGHT: 115%; FONT-FAMILY: "Calibri","sans-serif"; mso-style-parent: ""; mso-pagination: widow-orphan; mso-style-qformat: yes; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-style-name: "Table Normal"; mso-tstyle-rowband-size: 0; mso-tstyle-colband-size: 0; mso-style-noshow: yes; mso-style-priority: 99; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-para-margin-top: 0in; mso-para-margin-right: 0in; mso-para-margin-bottom: 10.0pt; mso-para-margin-left: 0in }

Event review

Supplier Relationship Management
Time: 14:30 – 17:00
Date: Friday, 13th January 2009
Venue: Jade Room, Sofitel Galaxy, Nanjing
Author: Ralitsa Kanetti (rkanetti@euccc.com.cn)

Agenda:
14:35 - 14:40 - Opening remarks by Business Manager and Chair of the Sourcing Forum
14:40 - 15:40 - Presentation by Mr. Chwan-Pei Shiu on "Supplier Relationship Management"
15:40 - 15:55 - Coffee Break
15:55 - 17:00 - Q&A and Roundtable Discussion

Meeting Minutes:
Business Managers, Ralitsa Kanetti, announced that in the upcoming months members can contact Matthias Broemser who will take over her responsibilities while she is away at mbroemser@euccc.com.cn, 025-83627330, ext. 82.

SRM involves active management of the client/supplier relationship to deliver additional benefits beyond those which can be gained from strategic sourcing alone. It incorporates working collaborative over time to improve the quality of the relationship and ensure that maximum, sustainable benefits are achieved for both parties.

The speaker, Mr. C.P. Shiu (Director at Deloitte Consulting (Shanghai)) introduced the importance of Supplier Relationship Management (SRM), the typical benefits from SRM and the skills required to effectively perform such management in a company.

He went further to explain the methodology of SRM and the components it involved. Main component is having a sourcing and procurement strategy and aligning it with the overall strategy of the company. Part of that strategy is segmentation of company’s suppliers. Segmentation helps ensure consistency and fairness when setting expectations and consistently measures performance with suppliers. The diagram Mr. Shiu presented divides them into Level 1 (core), Level 2 (strategic) and Level 3 (suppliers) suppliers depending on the importance of the product and the complexity of the market.

Another part of the sourcing and procurement strategy is performance management. The speaker emphasized the fact that top management should not only evaluate sourcing managers’ performance by looking at cost saving, but also at other factors, such as quality of suppliers’ database and management of suppliers.

Carefully choosing and managing strategic alliances and relationships and sharing development plans with suppliers is also an integral part of the sourcing process.

Mr. Shiu then presented few case studies and projects he personally worked on.

The meeting continued with questions and answers to the speaker and a very lively discussion on practical execution of SRM.

Mr. Shiu stated that execution of SRM depends very much on the capability of the purchasing team and is closely related to the talent management in the company. However, he suggested, as a general rule when beginning to implement SRM to use critical suppliers as a starting point to get some experience on how to maintain relationships and then move on to the other types of suppliers. He also suggested that whereas core and strategic suppliers need constant attention, Level 3 suppliers require keeping stable, but not necessarily good relationship. If the relationship goes bad one does not need to spend too much time working on it as the reality is that they can be easily replaced.

Managing a relationship with a supplier can be divided into three phases.
1. Create a relationship
2. Maintain a relationship
3. Exit relationship

Every phase is equally important and few factors, including ‘guanxi’, need to be taken into consideration. Although members expressed an opinion that it would be difficult to do in reality, Mr. Shiu suggested that it is important to establish and maintain a good relationship with all short-listed suppliers, even if a company is currently not doing business with them. When terminating a contract with a supplier it is also important to bear in mind the consequences, for example whether the company has other existing stable suppliers, which can take the same volume of orders. Also, when terminating an employment one should consider whether the employee is not a critical part of the relationship with a core or strategic supplier. 

‘Guanxi’ is also important when dealing with government business. However, Mr. Shiu suggested that even it is maybe not as important as before one has to still consider a possible hidden agenda of the person/people one is dealing with.

Members also discussed the question of IPR in sourcing. Many suggestions were put forward, such as not giving full specifications; always have a more reliable source; if a very critical component, do not source it in China; or merge and acquire suppliers (which is an option, often used by big multinational companies). However, members also agreed to even though IPR is a very serious issue in China it is also an issue in other countries around the world. The main thing a company should consider when fighting with IPR theft and building their strategies is what the core competitiveness of their business is.

In answer to the question whether SRM is a task only for Purchasing Department or for all departments members agreed that there should be a close cooperation and coordination of activities between all departments in the company when it comes to SRM. As to the extent of involvement of top management, it is their priority to first give a clear message and strategy for the purchasing and other teams to work with. Some members expressed an opinion that in China, according to their personal experience, it is very important to involve top management in the purchasing activities.

Mr. Shiu also re-established this point by stating that if a company tries to “listen to the voice of their suppliers” they will often find out that many of them are not satisfied, therefore not efficient enough, because they think that the people they are communicating with are not powerful enough.

As to the question of how SMEs (small-and-medium sized enterprises) can execute SRM, Mr. Shiu said that even though it might be difficult to build relationship with big suppliers, companies are still able to actually use this as an advantage. First because it is easier for a small company to build a relationship with a supplier and second because they can build a long-term relationship with small suppliers and develop together.

The discussion ended with Mr. Shiu answering the question whether Chinese companies also apply SRM. He said that only top-notch private and big government companies do that. However, it is still a big sector to be developed. Part of the reason for that is that efficiency of suppliers to these types of companies is not critical as purchasing is usually a family-run business.

To view a copy of the presentation slides please clik here.

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