Jeremy Ferrer
Webinar :
Optimize your C-Class purchases and boost your results.
January
In The Kraljic matrix, Bottleneck Purchases (or bottlenecks) are products that can only be supplied by one supplier or their delivery is otherwise uncertain and have a relatively low impact on financial results.
The supplier dominates the market despite a moderate level of interdependence.
The strategy for Bottleneck procurement is based on several key elements such as negotiation, sourcing, procurement, optimization and cost reduction. In the area of procurement, Bottleneck purchases refer to the purchase of goods or services that are important to the business, whether in terms of financial value, complexity or impact on the business. These purchases may concern production equipment, raw materials, specialized supplies or strategic services.
As we have seen, the main difficulty with Bottleneck purchases is to spot them, so great is their art of camouflage.
To do this, you will not be able to content yourself with a careful analysis of the database. The mesh of your net is difficult to define statistically and you will need to use other tools.
But whether we like it or not, very often Bottleneck products will reveal themselves the day when a grain of sand appears in a system that worked by the inertia of habits. In this case, the first quality is responsiveness.
Whether you discovered the Bottleneck product through careful and scientific research or whether it was imposed on you following an incident, you have a duty to secure its supply.
First of all, the first security step involves a detailed audit of what makes the product Bottleneck:
Then, the second step is to investigate whether the complexity cannot be reduced:
Then, the third security step is the implementation of the action plan.
If you intervene urgently, organizational difficulties will easily be resolved. Therefore, all your interlocutors will be very motivated to eradicate the problem and the momentum will be fuelled by the desire to get out of this bad situation.
On the other hand, if you have diagnosed a Bottleneck product after A purchasing study, it will be more difficult for you to motivate all your internal partners on the need to take action.
Indeed, why spend time when there are no big euros at stake and everything has always gone well! This is where your talents as a buyer and the quality of the relationships you have built within the company will be recognized.
Contractualization is not a panacea. This does not replace the action plan and concrete measures. However, it is a useful precaution. You need to show the supplier that the subject matter is of great importance to your organization.
What clauses can you discuss? This, of course, depends on the criticality factor that you have identified. Here are a few examples.
For a critical product, the supplier cannot stop producing overnight. You must obtain commitments from him on a reasonable period of notice, which must cover the establishment of an alternative plan.
It is up to you to assess it. In general, you can't go much further than twelve to eighteen months.
If you are faced with this situation, the supplier may request a “take or pay agreement”, a firm purchase commitment.
It is a contract by which the supplier undertakes to produce a certain quantity of products, which the buyer undertakes to buy over a certain period of time. Otherwise, the buyer would pay the price of the products produced.
Subsequently, the supplier produces a certain economic quantity for him. It provides stock at the customer's site, which is used as and when needed. Every month (or at any other authorized frequency), the buyer declares his consumption and the seller invoices on this basis.
As a buyer, you can benefit from greater stock security without increasing your working capital.
Also, the supplier can commit to always staying one step ahead in its own stores. Thus, the best practice is to have a sample of the lot in stock delivered to you with the previous delivery.
This precaution will allow you to be sure that you have a controlled stock that meets your specifications.
The criticality of a product may come from its short shelf life.
In this case, it will be good to negotiate a clause under which the supplier undertakes to always provide you with fresh product, i.e. with a shelf life of x weeks on the day of reception on your docks.
Depending on the case, you can ask your supplier to:
When you are going to launch the statistical studies of your portfolio, these products will be hidden among products B or even products C. They will therefore be mixed with simple products in the first analysis.
A tip for trying to isolate them could be to launch new queries in your database.
Instead of sorting on euros or quantities, you can sort:
Among the products that represent a low annual expenditure, some may have a particular complexity related to technical specifications. Of course, no statistics will ever tell you that! The best is to organize several working sessions with development engineers to survey the portfolio in order to determine which items are not pure “catalog” products and which have specific technical characteristics.
At an automotive equipment manufacturer, grease is used in an infinitesimal quantity on the tip of the operator's brush. But very few of the products sold escape it.
1st statistical filter: of course, this fat is managed as a consumable. This small detail leads to a different configuration that nobody paid attention to.
The result is that this product, along with some of its “comrades”, has been excluded from the list of items!
2nd technical filter: at the Development Department, no one is talking about this grease. It appeared following a complaint from a customer. The small brush stroke was therefore the corrective action put in place at that time.
3rd “nomenclature” filter: only a visit to the workshop can attract your curiosity as a buyer. Luckily, you never go down to the studio without your notebook to jot down references.
Going back to the office, your investigation leads you to discover a fat worth 39 euros/kg and for which the Japanese supplier announces a delay of nine weeks leaving the factory... and an expiration period of thirty weeks!
Conclusion: you immediately set up a FIFO monitoring procedure, expiration dates upon receipt. You negotiate with the supplier to receive jars that are still at least fifteen weeks old... In short, you avoid having to perform a miracle at all costs!
There is no typical profile for Bottleneck items; you can find them in every wallet.
There is no question of specializing a buyer on Bottleneck products. Knowing how to manage Bottleneck items is part of a buyer's classic range.
Junior and senior alike must know how to secure their business with these products.
Even if you seem to be wasting time on Bottleneck products or strategic products, Bottleneck products deserve all your concentration.
The purchasing department plays a key role in the process of buying Bottleneck purchases. She is responsible for tendering, managing supplier panels and supplier relationships. She also manages negotiations with strategic suppliers, seeking to obtain the best possible purchasing conditions in terms of price, quality, delivery times and associated services. The purchasing strategy is also based on supply chain management and the company's purchasing policy. It's about optimizing logistics flows, rationalizing Purchasing processes and to implement cost optimization tools. This may include using dashboards to track Purchasing performance, the use of ERP to facilitate inventory management, the dematerialization of purchasing procedures, etc. In the field of Bottleneck purchases, the supplier relationship is essential. Strategic suppliers that meet the company's criteria in terms of quality, reliability, flexibility and competitiveness should be selected.
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