Purchasing Power Procurement Blog
Enabling Purchasing Power for Professional Buyers

Supply Risk Management - Key learnings from Hurricane Season

Supply Risk Management - Key Learnings from Hurricane Season

Due to hurricane Harvey’s impact on the Houston area, Newell Brands reported serious resin shortages. According to Reuters:

Newell said nearly all its resin suppliers with facilities in Texas and Louisiana had shut their plants for more than a week and some were yet to resume operations.

The resin shortage is expected to persist through the fourth quarter and result in higher prices through 2018.

The company said its search for alternative suppliers met with some success, but costs were significantly higher.

About 70 percent of Newell’s suppliers are in the impacted regions, according to estimates from J.P.Morgan.

Could Procurement Risk Management Avert these Shortages?

There are several factors that attributed to the resin shortages.

  • Supplier Plant Location - Hurricane season occurs every year. If key suppliers are located in this region, even if you have multiple suppliers, the supply chain is at risk. An improved strategy would select suppliers from multiple regions. This would include single source suppliers with alternate production site contingency plans.
  • Inventory Strategy - just in time inventory and lean practices would increase the supply risk. Even a short-term supply disruption will disrupt production lines due to bad weather. Increasing inventory during the hurricane season is a good option. I once visited an injection mold supplier that had one year of resin inventory on site.

With key suppliers impacted by the hurricane, purchasing power has been significantly decreased. Alternate suppliers outside of the impacted region are charging a higher spot price. Resin supply shortages and higher prices will result.

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Relationship Segmentation Procurement Template

Segment Key Suppliers During Strategy Development

This is the tenth procurement template, in our blog series 10 free procurement templates in 10 weeks. Procurement uses the relationship segmentation Excel template to segment buying categories and suppliers.

Suppliers are Segmented into Three Tiers

The procurement sourcing team scores economic and compatibility criteria on a scale of one through five. In all, there are 10 criteria for evaluation on the Excel template. The rating scale for determining each tier is as follows;

  • Tier 1 Strategic Relationship - score greater than 20 points
  • Tier 2 Preferred Relationship - score greater than 15 and less than 20
  • Tier 3 Transactional Relationship - score less than 15

Putting suppliers in the correct tier will drive purchasing power for your organization.

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Stakeholder Feedback Procurement Template

Here is a screenshot of the procurement stakeholder feedback template:


Procurement Template for Aligning Stakeholder Needs

There are four columns is the stakeholder feedback template:

  1. Stakeholder Feedback - state both formal and informal feedback regarding issues and opportunities for improvement.
  2. Restatement of Problem - procurement uses root cause analysis to restate understanding of the underlying issues.
  3. Resolution to the Problem - list action steps that will resolve stakeholder issues and concerns.
  4. Measure of Progress - state direct quantifiable metrics to measure action plans.

A key to enabling purchasing power is is to ensure procurement is aligned with key stakeholders. This procurement template will help align both stakeholder and strategic sourcing needs.

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Project Charter Procurement Template

Procurement Project Charter for Cost Reduction Projects

Procurement uses the project charter template to document and track cost reduction initiatives. Each buyer in the procurement department completes project charters. The project charter slides are typically collated into a purchasing department presentation. The template file format is Microsoft PowerPoint.

Effective procurement teams organize and prioritize key intiatives with the Excel project charter template. Focusing on key priorities enables purchasing power.

This is week eight of ten free procurement templates in ten weeks. Be sure to check blog posts for free procurement templates from weeks one through seven.

Week 1: sourcing strategy

Week 2: request for quotation rfq

Week 3: supplier cost improvement

Week 4: flexible supplier scorecard

Week 5: supplier risk assessment

Week 6: supplier financial viability

Week 7: inbound transportation survey

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Inbound Transportation Survey Template

Procurement Decreases Inbound Freight Costs

Purchasing Agents use the transportation template to survey suppliers for inbound shipping data. The Excel template identifies inbound lanes, carriers, and freight cost information. The survey requests information on both full truckload and less than truckload shipments. Procurement leverages key tranportation data to enable purchasing power. Freight lanes and carriers can be optimized with the Inbound Excel template.

This is week seven of ten templates in ten weeks. Be sure to check out blog posts for free procurement templates from weeks one through six.

Week 1: sourcing strategy

Week 2: request for quotation

Week 3: supplier cost improvement

Week 4: flexible supplier scorecard

Week 5: supplier risk assessment

Week 6: supplier financial viability

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