Managing Business
Marketing & Sales 7
Professor Waldemar A. Pfoertsch弗沃德
Term 4/MBA 2006 Oct. 8 -28, 2007
Strategic Procurement &
Key Account Management
• From short term profit and transaction
behavior to relationship behavior
• Leads to positive effects on firm’s financial
performance and customer relationships
Strategic Procurement &
Key Account Management
• Everyone is a winner!
• Measurement and risk affects both suppliers and
customers
• What happens when??
– Earth Quake in Japan
– Strike at Supplier
Key Account Management
(KAM) Effects
Firm A
Firm B
Stronger customer relationships
Stronger supplier relationships
Extended customer relationships
Stronger supplier relationships
Key Account Management
(KAM) Issues
• Supplier performance measurement
• Risk Assessment of supplier relationship
• Developments:
– Supplier reduction
– Supplier development
Tier
1
System
2
Module
Components
3
4
Parts
Strategic Procurement &
Key Account Management
Example
Factories Trucks
Cars
Buses
Strategic Purchasing
System
Supplier
Module
Supplier
18 000 suppliers
1
2
n
Drivers of supplier’s selection
Supplier performance
measurement
• It is need, but not always done
• Metrics are needed
• Move to shared supplier performance
measurements
Supplier Performance
Measurements (SPM)
• “Value for Money” (transactional element):
– Price
– Quality conformance
– Delivery reliability
• Service (per relationship)
– Response flexibility
– Technical support
– Solution selling
• To joint shared performance measures
Joint shared performance
measures
•
•
•
•
•
•
•
Order size
Repeatability
Standardization
Timeliness of order
Pricing terms
Pricing structure
Accuracy of
specifications
• Schedule of delivery
• Fulfillment for
profitability
Fulfillment for profitability
Example: Electrical components company
New Paradigm shift
• From: We win, the other side loses
• To:
Win – Win
• For: Easy to do business with fair
relationships
ABB / CAT Case: The Players
ABB
• Fred Kindle CEO
• Dan Ahern KAM for CAT
• Dinesh Paliwal Senior
Executive Team
• Greg Scheu
Senior
Executive Team
• Frank Duggan Group
KAM
• Oliver
Riemenschneider
Baden Plant
• Rolf Schweizer GM
Turbo Sales
CAT
• Jim Owens CEO
• Dan Murphey VP Global
Purchasing
• Paul Wroblewski Kiel Plant
• Tom Sandborg Purchasing
Turbo Systems
ABB with $ 20,7b sales in 2004
Utilities
Industrial
&
Automation
The Turbocharger
• Improves efficiencies
and performance
The partner
ABB Sales Management
ABB Key Account Management
New
Frank Duggan
Dan Ahern for CAT
The ABB CAT Account
• 2004 Total $ 67m
•
Turbo $ 40m
– 30% of total sales
– 10 % of profit
– For CAT Lafayette,IN & Kile, germany
• Supplied from Baden Germany
– Oliver Riemenschneider VP Turbo Marketing
– Rolf Schweizer GM Turbo Sales
The CAT Supplier ABB
•
•
•
•
3 suppliers + own Air- Systems
“ABB were holding them hostage”
Develop new source
Issues
– Service approach of ABB
– Intellectual property
• Tom Sandborg CAT purchasing manger
• Working Group AAB/CAT + Steering Committee
ABB/CAT case Questions
1. What are the changes of the Key
Account Management in 2004 at ABB?
2. What caused the problems at CAT’s
Large Engine Plant concerning turbo
charger?
3. Had Dan the right approach to solve the
issue within ABB? Is the organizational
structure appropriate?
4. What other steps could you propose?
Thank you!
谢谢！
Waldemar Pfoertsch
Professor Business Marketing
CEIBS
699 Hongfeng Road, Shanghai China