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Sourcing and Supplier Management

SSM

The Sourcing and Supplier Management (SSM) capability is the ability to evaluate, select, integrate, and manage IT suppliers in line with defined sourcing and supplier management strategies.

Structure

SSM is made up of the following Categories and CBBs. Maturity and Planning are described at both the CC and the CBB level.

ASourcing Strategy

A1Strategy Alignment

Maximize the benefits of the organization's IT supplier sourcing practices (for example, insourcing, outsourcing, etc.) by aligning them with the organization's wider strategic priorities.

A2Objectives and Scoping

Specify the sourcing objectives (for example, quality, cost, flexibility, risk, innovation, agility, sustainability, and social responsibilities), and the criteria used to evaluate and select suppliers.

A3Sourcing Decision

Select the sourcing models that best support the organizational sourcing strategy. For example, this could involve using internal or third-party providers, single or multiple providers, microsourcing, or cloud sourcing.

BSupplier Contracting and Classification

B1Supplier Identification and Selection

Establish criteria for evaluating and selecting suppliers. Rate and rank suppliers and potential suppliers in such a way that they can be classified, for example, as ‘preferred’, ‘Tier 1’, etc.

B2Contract Preparation and Closing

Develop the contract negotiation position (for example, by identifying negotiable and non-negotiable items, building flexibility into supplier contracts to avoid lock-in and allow for agility), and understand the IT supplier's success criteria.

CSupplier Integration and Engagement

C1Supplier Relationships

Develop supplier engagement appropriate to supplier classification and foster long-term strategic relationships with preferred suppliers.

C2Supplier Communication and Governance

Ensure appropriate communication channels are in place to address problems as they arise. Plan, manage, and execute the exchange of information with appropriate governance and performance oversight structures.

C3Supplier Qualification

Establish suppliers on procurement systems and qualified supplier lists. Manage supplier qualification for the full range of IT products and services, including supplier phase-out in a controlled manner.

C4Service Transition

Support the introduction of new IT services or the migration of existing IT services between the IT supplier and the organization, considering all pertinent aspects (for example, staffing the project team, preparing technical interfaces, migrating data, security protocols, and defining access rights).

DSupplier Operations Management

D1Performance Management and Contract Compliance

Manage the obligations and responsibilities of both parties (as specified in the contract) to avoid or address incidents of non-compliance. Manage key performance indicators (KPIs) to inform decision-making in relation to supplier management.

D2Continuity of Supply

Manage risks associated with continuity of supply from external sources, including oversight of the wider supply chain/ecosystem.

D3Supplier Innovation Management

Work with suppliers to identify opportunities for co-innovation (for example, adapting processes and products/services, or co-investing in research and development).

Overview

Goal & Objectives

An effective Sourcing and Supplier Management (SSM) capability aims to:

  • Manage and develop interactions between the organization and its IT suppliers.
  • Assess the value and relevance of sourcing opportunities and relationships.
  • Foster long-term strategic relationships with preferred suppliers.
  • Engage and communicate proactively with suppliers to resolve incidents and problems, and to address poor performance.
  • Strike a balance between cost efficiency and quality.
  • Make best use of suppliers' expertise, good practices, and innovations.
  • Build flexibility into supplier contracts to respond to the ever-changing digital landscape.
  • Establish a common approach to selecting IT suppliers.
  • Make the organization more effective by simplifying, automating, and integrating processes relating to sourcing and supplier management.
  • Ensure continuity of supply by managing risks across the portfolio of suppliers.
  • Ensure the integrity of suppliers performance via rigorous and systematic monitoring.

Scope

Definition

The Sourcing and Supplier Management (SSM) capability is the ability to evaluate, select, integrate, and manage IT suppliers in line with defined sourcing and supplier management strategies.

Improvement Planning

Practices-Outcomes-Metrics (POM)

Representative POMs are described for SSM at each level of maturity.

2Basic
  • Practice
    Use defined criteria to translate sourcing objectives into contract terms and conditions.
    Outcome
    Supplier expectations are explicitly managed.
    Metric
    Percentage of contracts based on an approved template.
  • Practice
    Implement processes for ensuring efficient interaction with IT suppliers.
    Outcome
    The operational costs and errors associated with interacting with suppliers are actively managed.
    Metric
    Percentage of IT suppliers following the defined processes.
  • Practice
    Define the IT supplier engagement model.
    Outcome
    In some cases interactions are efficient, and problems and conflicts can be resolved.
    Metric
    Percentage of supplier relationships managed using the defined IT supplier engagement model.
3Intermediate
  • Practice
    Mandate standard criteria for selecting the appropriate IT sourcing model.
    Outcome
    Appropriate sourcing models can be consistently selected.
    Metric
    Percentage of selected sourcing models that have to be changed.
  • Practice
    Implement a supplier classification policy.
    Outcome
    Relationship management can focus effectively on preferred suppliers.
    Metric
    Percentage of the IT supply base that is classified.
  • Practice
    Assign relationship manager or supplier account manager roles to preferred suppliers.
    Outcome
    There is greater potential for idea sharing, and a reduction in information bottlenecks
    Metric
    Percentage of preferred suppliers to whom relationship managers or supplier account managers have been assigned.
4Advanced
  • Practice
    Ensure that there are inter-supplier Operational Level Agreements (OLAs) in place across the supply chain/ecosystem for all business critical services.
    Outcome
    There is increased confidence in the continuity and integrity of service supply.
    Metric
    Percentage of business critical services with OLAs in place.
  • Practice
    Establish guidelines for fostering collaborative relationships with preferred suppliers.
    Outcome
    Innovative partnerships are systematically created.
    Metric
    Number of product/service innovations arising from collaboration with suppliers.
  • Practice
    Consider positive incentive clauses across relevant sourcing contracts.
    Outcome
    Sourcing contracts provide win-win opportunities for the organization and the supplier.
    Metric
    Number of innovations jointly realized.
5Optimized
  • Practice
    Regularly assess IT product and service delivery against business case objectives.
    Outcome
    Results can feed into the process of re-evaluating the sourcing of IT suppliers.
    Metric
    Percentage of IT suppliers re-evaluated against original business case
  • Practice
    Continually review suppliers for continuity and integrity of supply and risk evaluations and contingency plans.
    Outcome
    Vulnerability and exposure to supply disruptions can be reduced.
    Metric
    Time since review of switching flexibility and redundancy in suppliers' products and services.
  • Practice
    Explore innovation opportunities relating to emerging technologies with key suppliers.
    Outcome
    Mutually beneficial relationships can be established with suppliers and opportunities for joint value created.
    Metric
    Number of joint innovation projects undertaken with key suppliers.

Reference

History

This capability was introduced in Revision 18.01 as a merger of Sourcing (16) and Supplier Management (16).