Linking the SCM support to strategic sourcing
process at FedEx:
Improving the purchasing process in terms of efficiency and
effectiveness requires more than one single system or approach. FedEx Supply
Chain Management is aimed to leverage the process of souring for all the FedEx
family of companies, to ease up the processes.
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 strategies. 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 has 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.
E-procurement through the Ariba system play
a big role in the process. Business rules are established within Ariba Buyer
depending on the category of spend taking place. The types of controls made on
purchases will vary. Once those approvals are completed, it releases out to the
team have an online catalog for contracts that are in place; several thousand
office supplies are set up on the catalog. Requisitions can find what they
want, and once submitted, 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.
FedEx also uses ELAMS, an information
system for labor on contracts. The ELAMS system allows online requisitions and also
controls the rate and type of individual sent out and can approve the invoices