Case 2: FedEx Case AnalysisQuestion 1:A.
Step one, the group should have a deep understanding of all their companies’ requirements, and classify those needs to different spend category. Finalizing it with a mount of research of the products and the supply market. Because a clear need realization is fundamental for the whole strategic sourcing process and the sourcing initiatives.B. Step two, the sourcing strategy selection process is highly depending on all the information they obtained from the previous step. Then, they can decide how they could apply those strategies to the marketplace. For example, depending on the information they have, they can decide whether to use their current sourcing strategy or to seek other alternatives.C.
Step three, the team should do sufficient research with their potential category suppliers to make sure they can finally satisfy their user. For example, they conduct the supplier’s portfolio analysis to determine whether the suppliers could fulfill user requirements, service aspects. The purpose is to have a short list of suppliers to send RFP’s based on their analysis.D. Step four, the team should review the sourcing strategy to adjust everything that could have a negative effect on the negotiation. Then, they should develop a detailed implementation plan. Therefore, this step is a strategy quality control process.
E. Step five, with all the effort the team made in the previous steps, they can finally select the category suppliers based on the negotiations. F.
Step six, they are using Ariba toolset to do the processed aggregate after they select suppliers, as well as identifying integration conflicts to resolve it.G. Step seven, Benchmark the supply market and using FedEx Supplier Scorecard system to keep monitoring the suppliers. FedEx can keep improving their sourcing strategies with on-going monitoring.
Question 2: The Opco-specific governance structure for Federal Express supply chain management helps its center-led sourcing. Federal Express had reviewed and made changes to its all indirect information technology expenses related to aircraft, ground service, facilities services, and so on. Also, Federal Express reorganized its supply chain logistics groups to promote the center-led initiative advocated by its “Strategic Sourcing and Supply” group. Following are the detailed operations:a. Federal Express has assessment team to review theirs spend category to seek the opportunity on reducing cost.
(step1)b. Federal Express put its effort on manage the relationship between sourcing and contracting. For example, SCM at Federal Express has one contract with each supplier, while the department accepts various methods of the transaction when they are sourcing office supplies. (?????)c. A cross-functional (Cross-OpCo) sourcing team insist on company-by-company sourcing action. The team will assess the market in detail, sketch the sourcing strategy and list potential suppliers. Throughout the whole working process, the sourcing advisor will finish the work and move it to a supply chain associate, who will responsible for corporate with suppliers, track the situation of supplies in the market, support ground service, and assistant contracts.
(step 2)d. Then the Business Case Review team will review the work extensively in financial and legal part, in order to ensure the savings were valid and the strategy assumptions were acceptable through legal. (Step 3)e. Next, the review work will transfer to the Corporate Sourcing Council, which led by Chief Sourcing Officer. The council consists of each divisions’ executives. The council’s work is not only review and make the final decision on the strategy, but also give recommendation and assist the sourcing team to operate and implement the strategy under regulation. The strategy that reviewed by the council should be larger dollar items, or has an impact on spend or brand image or other areas.
(step 4) ??????????????f. After that, Strategic Management Committee will take care of the issues come from Corporate Sourcing Council, break a deadlock and deal with it. (step 5)g. At last, stakeholders and SCM staff, like supply chain associate will corporate with the selected supplier, negotiate with the supplier through the corporation on benefits, changes and so on, and report those results. The most important is they monitor the market and evaluate the suppliers with the scorecard to track the completeness of work. (Step 6)Formatting a central and specific team that governed by different departments, groups and council can be very helpful for leading these sourcing initiatives, they are responsible and supportive of the strategic sourcing process. Also, the center-led governance structure helps FedEx souring team integrating purchases from different suppliers, relief the situation that gets different actions, thus implement FedEx’s ability on control maverick spend. Question 3 : To answer this question, firstly, we need to figure out what the elements of the strategic sourcing process are.
Seeing the picture below, we can determine what the elements are in the process map. From our perspective, it is common that most of the elements could be used in other industries. It gives a brief idea how these elements are impactful in the strategic sourcing process from the FedEx procurement process.
To see how these elements could be impactful and applied to other companies, we decide to show some examples. Most of the companies in the world need to go through the sourcing process, as well as think about how to make the strategic sourcing process more effective and efficient. Companies like Nike, Target, and McDonald’s will all go through their procurement process. Nike should think what kind apparels that may gain more attention from the customers, that also could become the reason why they should focus more on assessment of customer’s need, also for the materials of production.
As for companies like Target, and McDonald’s, they are mainly concentrating on public daily needs, groceries, and food. Their centralized style of sourcing process will lead the companies to build a good relationship with suppliers so that companies can have accurate information flow into the system. Appropriate information from suppliers will help the Strategic Management Committee to update useful information momentarily, which also could help management level of procurement department to make wiser and better choices. Given that, elements of the strategic sourcing process from FedEx, could be similarly used for other companies.