What is The Seprio Wheel?

The Seprio Wheel was created to illustrate the best practices sourcing and supplier governance lifecycle.

The Seprio Wheel Overview

  • Sourcing

    The best time to involve sourcing professionals is as early as possible. The sooner you have someone who lives and breathes sourcing to guide your team, the better.

  • Supplier Governance

    Most companies don’t handle sourcing correctly, much less supplier governance. If sourcing properly is a 101 course, then supplier contract management, supplier risk and performance management, and supplier relationship management are 201, 301, and 401 respectively.

  • Best Practices

    At the center of the wheel is the Best Practice Engine. This is the culmination of Seprio having been in business for 20+ years and the 100s of years of combined experience of its staff, all coming together for your benefit.

Stage 1

Sourcing

The top half of the wheel is the sourcing process, and we like to joke that it doesn’t begin where it says “Negotiation starts here”, or even at the first “Discovery” wedge on the left. It begins 3 websites to the left of this one, back when the business team first uttered the words “maybe we should think about buying a new product”. But it was too hard to draw that, so we went with this.

It formally begins with “Discovery” and “Assessment”, where we work to identify what the business team is trying to accomplish, what they need, what they want, and what the market has to offer. Then it moves directly into Strategy Development where all of those things are rolled up into a strategy document that describes the agreed-upon goals and objectives and the sourcing strategy to accomplish them. Your ‘must-haves’, your ‘we’d sure like these’, and your drop-dead date all are included, so everyone is on the same page.

Then we move into Leverage Development and RFx. Leverage is the currency you use to motivate your vendors to give you what you want (and…hint…it’s not always money.) The best way to maximize leverage is to have competition, and the best form of competition is the even-handed and fair competition created by using an RFP, RFI, or RFQ (aka RFx). If we can do an RFx, we should. If not, there are ways to create almost-as-good competition. This is where the strategy comes to life and the foundation for the negotiation is laid.

Finally, the negotiation and contracts. You can’t have one without the other. Negotiate a great deal but neglect the contracts, that great deal might be dust in the wind. Focus on the legal terms but neglect the commercial terms, you’re leaving money on the table. You’ve designed your strategy and maximized your leverage. Use it.

If you’ve done these things, and done them consistently across all of your new purchases, renewals, replacements, terminations, etc., you’ll experience the primary benefits of Sourcing: Visibility, Consistency, and Cost Savings/Risk Reduction. When you know what your organization is buying, and you know they’re buying those things using consistent best practices, you can relax a bit, confident in the knowledge that your organization is getting the best price and the best contracts. Congratulations, you’ve done it!

Signs this is for you:

  • You’re wishing you had an objective third party to validate that you’re getting the best price and fit for your situation

  • Don’t have time or expertise to have an in-house team do an RFx.

  • You need to provide a due diligence report to the executive team to justify your choice of vendors and/or solutions.

  • Don’t want to hurt relationship with vendor, but need a better price.

  • Your team has a good RFx process, but you want to optimize it and make sure they are utilizing best practices for RFx’s in the future.

  • Your team doesn’t have an existing RFx process, or the current process isn’t cutting it.

  • Uncertain of risk exposure without needing a lawyer to simplify it.

  • The pricing structure is a nightmare to understand.

  • Don’t feel comfortable engaging in negotiations with a vendor.

  • Currently negotiating with a vendor, wanting the best deal possible.

  • Contract renewals around the corner, looking for better savings

Got a question specific to your situation? Let’s get it answered.

Stage 2

Supplier Governance

Supplier Governance is the development of an overarching set of enterprise-wide policies, processes and procedures, which is designed to optimize Supplier performance, minimize Supplier-related risks, and maximize your return on overall Supplier investment.

The key components of a successful Supplier Governance framework include (i) Contract  Management, (ii) Performance Oversight, (iii) Risk Assessment, Management and Mitigation, and (iv) Development and Optimization of Strategic Supplier Relationships.

There are many technology tools that can assist with the ongoing operations of a Supplier Governance program, but Seprio will provide a consultative approach designed to develop a well-designed Supplier Governance framework developed around people and processes that is targeted for YOUR company. Seprio can help you will make the most out of any supporting systems you are currently invested in, or may invest in the future.

Seprio provides the expertise to guide you in adapting rigor and process in a quality Supplier Governance program that meet your organization’s specific strategic and operational needs.

 

What is the Process?

1.      We begin with a comprehensive, initial consultation to gain an understanding of your business goals and challenges as they relate to your supply base.  This will include gaining both historical and current context of your third-party spend. 

2.      Seprio will then provide an overview of our Supplier Governance Framework and discuss the three key components and segments of each, as follows:

 

  • Supplier Contract Management

  • Provide a Central Repository for Contracts

  • Track Risk, Terms, Notice Requirements, Renewals, Spend, Contact Info, Etc.

  • Provide a Reporting Mechanism for Management Use

  • Maintain Historical Data for Future Negotiations

  • Supplier Risk and Performance Management

  • Identify Key Areas of Risk that Apply to Your Company

  • Perform Due Diligence Reviews

  • Assess Levels of Risk (e.g., company-wide or functional area only)

  • Negotiate Contractual Changes

  • Develop and Monitor SLAs and KPIs

  • Create Performance Dashboards

  • Perform Root Case Analysis of Recurring Supplier Issues

  • Develop Corrective Action Plans w/Executive Reviews

  • Supplier Relationship Management

  • Underlying Principle is Best Supplier Relationships are “Win-Win”

  • Align Suppliers to Support Strategic Objectives

  • Foster Key Relationships with Scheduled Executive Engagement

  • Minimize Relationship Abrasions Through Periodic Touch Base Mtgs. At Operational Level

  • Utilize Supplier Capability Rollouts

 

3.      From here, our model is adaptable. Based on your specific needs, Seprio will develop an implementation plan for Supplier Governance rollout that can include the full framework for your entire organization, one business unit, one department, one or more spend category categories, or some other segmentation of your supply base.  We can also focus just on an individual component of the Supplier Governance framework to address your primary concern(s), leaving other components to be addressed later as timing and resources allow.

 

Signs this is for you:

  • Limited understanding of which Suppliers are key to your business.

  • Limited understanding of which Suppliers present the greatest level of third-party spend and whether this spend is increasing and at what levels.

  • Less than optimum understanding of your company’s highest areas of risk, which could be affected by your Supplier base systems and/or performance

  • The magnitude of risks Suppliers present may have the potential of introducing to your bottom line if an unforeseen incident occurs such as a data breach.

  • Incomplete ability to measure Supplier performance against service level agreements (SLAs) and key performance indicators (KPIs).

  • Key Suppliers no longer support your strategic direction, or it is unclear whether they will in the future.

  • Supplier issues reoccur without resolution, negatively impacting affected business areas.

  • Poor overall communication with Suppliers – often leading to you being “blind-sided” by last minute contractual changes, pricing increases, etc.

  • Incomplete vetting of Suppliers leading to unintended issues or risks.

  • One or more supplier’s strategies (product development) veers from your organizations strategic/operational plans.

Got a question specific to your situation? Let’s get it answered.

Stage 3

Best Practices

We’ve seen the processes, and now we’re to the chewy nougat in the middle, the Best Practices. This is the Seprio difference, what sets us apart. Since 2000 we’ve been working for small companies with little leverage, for huge companies whose name is the leverage, all the time honing these skills, these tactics, and this mindset, and they now exist for your benefit. We can’t tell you what they are, in part because it’s kind of our most valuable asset, and also because it’s in our DNA and can be hard to explain. It starts with seeking, every time, a win-win solution. Vendors are people too, just trying to do their job. Understanding where they’re coming from, and working to accommodate that, while getting what is important to us, is what negotiation is all about, and it’s what will help foster an even stronger relationship with that vendor. We’ve also found that developing a best practice sourcing and supplier governance program doesn’t require immediate, transformational change (something your business people are often intimidated by). It can be done gradually, organically, by winning those business people over, one by one, as they see the benefit of following the process. A lot of the time, our Clients don’t even realize they’re using a best practices sourcing and vendor management program, they just know they’re working with Seprio on their deals, and we think that’s the best way to effect change. But if you’re interested in moving faster, we do have The Green Notebook, in which we compare your current state to our best practices, and we show you the gaps.

Signs this is for you:

  • You need to provide a due diligence report to the executive team to justify your choice of vendors and/or solutions.

  • Don’t want to hurt relationship with vendor, but need a better price.

  • Your team has a good RFx process, but you want to optimize it and make sure they are utilizing best practices for RFx’s in the future.

  • Your team doesn’t have an existing RFx process, or the current process isn’t cutting it.

  • Uncertain of risk exposure without needing a lawyer to simplify it.

  • The pricing structure is a nightmare to understand.

  • Don’t feel comfortable engaging in negotiations with a vendor.

  • Currently negotiating with a vendor, wanting the best deal possible.

  • Contract renewals around the corner, looking for better savings

 

What are you here for?

We’d love to chat about your situation.