Driving Value from a
Supplier Relationship
Management Program
Quality and Operations commitment to excellence
Quality and Operations commitment to excellence
• Covidien Overview
• Welcome
• Women in Supply Chain
• Driving Value from Supplier Relationship Management
(SRM)
Quality and Operations commitment to excellence
Covidien is …
• A global healthcare products manufacturing company with
nearly $10 Billion in annual revenue
• Well positioned with a diverse portfolio of products and
technologies in attractive franchises
• A company with a history of quality and innovation
• Highly efficient and productive, producing strong margins and
cash flow
• A leading player across our portfolio
Quality and Operations commitment to excellence
2012 Net Sales by Business Segment
$9.9 Billion
Medical Supplies
$1.8B
18%
82%
Medical Devices
$8.1B
Quality and Operations commitment to excellence
Medical Devices Overview
2012 Sales by Product Group
Other
4%
Vascular
20%
9%
Airway &
Ventilation
11%
Oximetry &
Monitoring
29% Endomechanical
11%
16%
Energy
Soft Tissue
Repair
 2012 Net Sales: $8.1B
 Strong franchises, market
leadership positions and a highly
diversified product portfolio
 Focus on growth through
innovation, product leadership
with superior clinical evidence,
acquisitions and further
geographic expansion
 Ramp up R&D, globalize footprint
and accelerate new product
launches
Quality and Operations commitment to excellence
Medical Supplies Overview
2012 Sales by Product Group
Original
Equipment
Manufacturer
SharpSafety
 2012 Net Sales: $1.8B
 Leading provider of a broad range
12%
17%
46%
25%
Medical
Surgical
Nursing Care
of high quality products used to
improve patient care, including
wound care, incontinence, needles
& syringes, enteral feeding,
operating room kits and accessories
 #1 or #2 market positions across
core product categories
Quality and Operations commitment to excellence
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Carl Resteghini
Kelly Carey
Keith Lapointe
Ann McCaffrey
Kim Hardy
Lisa Taylor
Courtney Sullivan
Abhinav Singh
Jane Comeau
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Vanessa Linke
John Richardson
Brian Budzinski
Lauren Bell
Jeff Wright
Marlon Lapp
Bruce Graham
Robert Simonelli
Kevin Brennan (HR)
Quality and Operations commitment to excellence
Welcome Northeastern Supply Chain
MBA Students
Quality and Operations commitment to excellence
Quality and Operations commitment to excellence
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Quality and Operations commitment to excellence
Month
August
 Complete
Activity
Official Kickoff Luncheon
September  Complete
Workshop: “How to Prepare for a Performance Review
& Discussion”
October  Complete
Workshop: “How to Write a Robust IDP”
November
Panelist Discussion: “Supply Chain Career Paths at
Covidien”
December
Local Philanthropy/Networking Event
January
Guest Speaker: Jessica Hameline – “Market Forces
Shaping Covidien”
The best way to stay informed about upcoming events is to join our PulseConnect site!
Quality and Operations commitment to excellence


maryjo.griffin@covidien.com
kristin.watson@covidien.com
 http://www.hbanet.org/join-hba
Quality and Operations commitment to excellence
Quality and Operations commitment to excellence
Value
Supply Value Proposition
Collaboratively Focused
Role of Supply Base
Increase business value
derived from collaboration
Value
Mgmt.
Reduce demand activity,
complexity and variability
Demand
Management
Aligned/loyal
Shift from lowest price to TCO
Total Cost of
Ownership
Operationally
excellent
Right goods/services at
the right price
Purchased Cost Reductions
Priced competitively
Right goods/services at
the right time and place
Protecting the Revenue Stream
(Supply Assurance)
Reliable/solvent
Innovative/flexible
Transactionally Focused
Source: 2011 The Hacket Group, Inc. ; All Rights Reserved
Quality and Operations commitment to excellence
Supplier Relationship Management (SRM) is a model and
supporting processes for maximizing the value of supplier
relationships to the organization over the full relationship lifecycle.
SRM defines approaches for on-going enterprise-wide interaction
with suppliers as well as with other internal company personnel to
plan and manage the relationships. SRM also defines formal
mechanisms for targeting and driving proactive value generation
and managing challenges and gaps
SRM at Covidien Is
SRM at Covidien Is Not
• A cross functional program that aligns
supply chain activities with business needs
• A model for managing on-going interactions
with suppliers in a way that maximizes longterm value
• A different view or mindset of the elements
of joint Covidien and supplier success
• Just a procurement initiative
• The same thing as Strategic Sourcing or
Category Management
• A technology initiative
• Executed as a one-time project
• Managed the same way across all suppliers
• A quick fix
• A new way to get margin concessions from the
supply base
Quality and Operations commitment to excellence
Supplier relationships
will be stratified based
on strategic importance
to prioritize resources
and tailor management
processes
Structured crossfunctional model
organized to maximize
collaboration and
effectively manage
relationships
Supplier
Stratification
Supplier Enabled
Excellence
SRM
Governance
Performance
Management
Capabilities of existing
suppliers will be
developed to deliver
continuous
improvement and
proactive value
generation
Supplier performance
will be managed across
different supplier types
and strata to maximize
performance
Quality and Operations commitment to excellence
Supplier Criteria
Value
Creation
&
ROI
0-4 per GBU
# Varies by Category
Bottom 60-80%
of Supply Base
Definition
Strategic
Core
Value
Covidien’s most strategic Suppliers with
whom the organization will develop long-term
strategic relationships to drive joint value
Medium to long-term relationships that
deliver significant value with active
management and opportunistic
investment
Short-term transactional
relationships with Suppliers
that meet basic
performance needs
Exit
Quality and Operations commitment to excellence
Supplier Criteria
Value
Creation
&
ROI
0-4 per GBU
Definition
Strategic
Core Investing
# Varies by Category
Bottom 60-80%
of Supply Base
Core
Business
Value
Covidien’s most strategic Suppliers with
whom the organization will develop long-term
strategic relationships to drive joint value
Medium to long-term relationships that
deliver significant value with active
management and opportunistic investment
Medium to long-term relationships that
deliver significant value. Will not require
investment
Short-term transactional
relationships with Suppliers
that meet basic
performance needs
Exit
Quality and Operations commitment to excellence
Supplier Perspective
H
S
P
E
N
D
Cash
Cow
Develop
Maintain
Monitor
M
L
M
H
G R O W T H
Quality and Operations commitment to excellence
Stratification
• Exit Suppliers as Identified
• Reassess Stratification as needed to ensure Alignment with
Organization
Governance
• Manage Suppliers to Stratification Ratings
• Relationship Charters Solidified for Strategic/Core
Investing Suppliers
Supplier
Enabled
Excellence
• Engage in Agreed Development Activities
• Develop the Strategic/Core Investing Suppliers with
Specific Plans of Engagement and Monitoring
• Monthly Supplier Collaboration Meeting
Supplier
• Track # Suppliers Added/Deleted to GASL
Performance • Limited Status Rating Change Agreement
Quality and Operations commitment to excellence
 Reduce Supply Base per Stratification
 Engage Deeper with Strategic /Core Investing Supply
Base
• Early Supplier Engagement with R&D
• Suppliers On Site working with COV Development Teams
• Engagement with Supplier Development Teams
 Continue One Covidien Supplier Collaboration Meeting
 Track and Monitor Progress
 Link Improvement to Overall Business
Quality and Operations commitment to excellence