Linking the SCM support to strategic sourcing
process at FedEx:
Improving the purchasing process with
respect to effectiveness or efficiency requires strong sourcing tactics. FedEx
Supply Chain Management is aimed to leverage the process of souring for all the
FedEx family of companies, to ease up the processes.
Center-Led Sourcing Process:
With FedEx re-organising and grouping its services, IT, Equipment,
Aircraft and supply chain logistics under the Strategic source and supply group,
has led to Center-Led initiative or Center Led Supply Chain management sourcing
model. We believe that this model houses and focuses on centralizing sourcing
This model facilitated in integration of Ariba Buyer – further expanding
its use to other operating firms and to process requisitions within a supply
chain. SCM team have an online catalog for contracts, on submission,
the requisition is bounced against a purchase approval policy. If an individual
does not receive the product or service, Ariba will develop e-mail reminders
that will eventually escalate to senior management if left unattended.
SCM team is believed to have a single POC for
all the pricing, negotiations and other transactional elements. This lead to migration
towards a centralized view of approach towards sourcing. These central led sourcing
process are under constant scrutiny of stakeholders, legal, finances dept and
are ultimately approved by FedEx corporate of sourcing council. Initially the
sourcing group lead the initiatives for sourcing and a hand-off competency to a
supply chain associate is made. This competency occurs in Integration Step of 6
mentioned above. The Supply chain associates who are to be category associated
now ensure the agreement of the supplier thereby responsible for implementation
within the specifies marketplace. They also hold responsibility of completing scorecard
with the supplier. FXFD’ supply chain technology (Innovation) complements the central led souring enabling greater
savings (Cost), Data management
improvements (Dependability, quality, speed). Central led process also helps in flexibility as SCM can change the business rules according to the
C.E.O portraying a good level of control.
§ The SCM
team is bound to determine the threshold limits for supplier metrics, The SCORE-CARD
is mainly maintained to manage supplier relationship. The SCM associate manages
performance assessment and maintains a score ranging from 1-5, they are also
given the authority relating to weight percentages to different elements of
scorecard. The elements are based on the statement of work mentioned in contract.
If a supplier falls below 350 range the SCM team will have to re-evaluate their
supply strategy, supplier management is completely dependent on SCM teams.
§ Each member
is assigned responsibility in managing one supplier relationship. SCM team has
a mixture of elements to deal with under strategic and tactical level this
sometimes can be challenging on the SCM associates, because they must deal with
both strategic and tactical levels. SCM team is held responsible for business
process issues as well, they are required to maintain coordination between the
supplier and engineering group.