solvay purchasing process (spp)

Solvay Purchasing Process (SPP)HANDBOOK 2016

Solvay Purchasing Process Handbook 20161

Introduction 2

Editorial 3

Solvay Way 4

Solvay Purchasing Process 6

How to read the Process Maps 9

A. Establish Strategic Planning 10

B. Establish Category Strategy 13

1. Define Customer Needs & Analyze Markets 15

2. Define Supply & Negotiation Approach 16

3. Negotiate & Contract 17

4. Manage Supplier Performance and Relationship 18

5. Manage System Performance 19

Glossary 20

Summary

Mission of the Purchasing organization:

In partnership with the GBUs and Functions, Purchasing and Supply Chain Excellence (PSCE) will create additional value

through simple and clear purchasing processes and excellence programs managed by a global network

of talented people

2

Introduction

This handbook explains how the purchasing strategy is defined and presents the Solvay Purchasing Process (SPP). Moreover, detailed procedures are available to support the ISO accreditations and a deeper understanding of our processes for newcomers and interested internal customers.


3

Kristian Saksida

We aim at developing sustainable relationships with our Suppliers in order to deliver value added and innovative solutions to our Businesses.

Our purchasing organization is designed to animate theentire Purchasing Professional Family in order tosupport our businesses and functions in terms ofcompetitiveness and growth.

Our organization is a matrix model: with a centralfunction responsible for multiple domains and overalldecision making and a part of the purchasing resourcesare hierarchically managed by the Global BusinessUnits (strategic Raw Materials and site representatives)and a part by Solvay Energy Services.

The SPP has been designed as a simple and flexibleprocess to manage the different steps and purchasingneeds of the businesses while providing a platform toensure that our corporate values with both our internaland external stakeholders are upheld.

Furthermore, we have a category managementapproach. These category strategies are furtherincreasing the maturity of purchasing within Solvay andare filling our future pipeline of REBITDA and cashopportunities as well as improving security of supplyand stimulating innovation.

Our core competency is represented by a highlyprofessional network of buyers and supported by acommon way of working articulated by the SolvayPurchasing Process (SPP).

With your professional collaboration we will certainlykeep simplifying and improving our processes andshaping Purchasing Excellence.

Kristian Saksida

Senior Executive Vice President

Group General Manager Purchasing and Supply Chain Excellence


4

Solvay Way a driver for progress

Introduction

Deployment

Maturity

Performance12

34

A company-wide continuous progress tool – aligned with ISO 26000 – integrates social, environmental and economic aspects into the companies management and strategy

Customers

Employees

Planet

Investors

Suppliers

Communities STA

KEH

OLD

ERS

stakeholders

Our Suppliers, one of the six stakeholders of the Solvay Way program, play a crucial role in the Solvay Purchasing Process (SPP). A balanced relationship with our suppliers forms the basis for mutual value-creation through innovation and close cooperation.

Adherence to our Supplier Code of Conduct is considered to be of utmost importance for building sound relationships and promotion of sustainable purchasing practices.

Suppliers


5

Strategic Sourcing linked with SPP

Strategic Planning

SPP

CategoryStrategy

Procedures & Good Practices

LT / RM Directors

SSDCCommittee

PSCE / RM-network

PSCE

• Set Domain Targets & Assign Resources• Approve Planning & Priorities

• Provide Market Intelligence• Challenge & Arbitrate Category Strategy• Integrate CSR, Key Account & Risk Management

• Deploy Enhanced Analytics and Intelligence• Select Suppliers in line with Category Strategy• Focus on Suppliers Negotiation and Internal

Customer

• Deploy WW Procedures and best practices• Integrate Zone specific requirements

Role description

CategoryLevel

ProjectLevel

Domain Level


6

Solvay Purchasing Process Map, Requirements & Resources

Manage System Performance

1

23

4

5

Project Review*

SPP

EstablishStrategic Planning

EstablishCategory Strategy

Contract

Strategic Planning SSDCBA

Sustainable Development Solvay Way

Safety & Environment Solvay Care Mgt. System (SCMS)

Corporate & Business Strategies and Governance

Human Resources

Document & Data Management

ISO 9001 & otherInternational Standards

GBU / Function needs and priorities

Information Systems

REQUIREMENTS

RESOURCES

PROCESS MAP

* Performed by SSDC.

Defined SourcingStrategies


7

Strategic Sourcing Definition

EstablishStrategic Planning

AEstablish

Category Strategy

B

Assess Current Domain Situation

A.1

Build Internal & External Profile

A.2

Prioritize Opportunities &

Allocate Resources

A.3

Perform Analysis at Category Level

B.1

Propose & Approve Category Strategy

B.2

Strategic Planning SSDC


8

Solvay Purchasing Process (SPP)

Define Customer Needs & Analyze Market

Review Category Strategy Implementation

Project Review *

1 2Define Supply& Negotiation Approach

Negotiate & Contract

ManageSupplier Performance & Relationship

3 4 Manage SystemPerformance5

1.1

Analyze Scope / Stakes

1.2

Define Customer Needs

1.3

Analyze Supplier Market

1.4

Define Supply Approach

2.1

Define Negotiation Approach

2.2

Perform Negotiation

3.1

Establish Contract & Formalize

3.2

Deploy Contract

3.3

Monitor Supplier Non-Conformance

4.1

Monitor & Improve SupplierPerformance

4.2

Manage Supplier Relationship

4.3

Assess System Performance

5.1

Improve System5.2

Communicate Results & Changes

5.3


Contract


9

How should you read the process maps?This page sets out the structure of process maps. For each of the processes, the following is detailed:

In the header part

A

In the central part

PurposeThe aims of the process

BInputs & outputsPotential inputs and outputs of the process

CFlowchart of the processThe stages by which our operational performance is structured

DStakeholders & responsibilitiesCustomers for who we purchase supplies or services


Purpose• Identify and assign Global Category Leaders;• Provide required Resources;• Understand spend by Category, RM, GBU, region and supplier;• Define scope (perimeter).

Inputs & outputs

• Spend & cost data

Inputs

Outputs

• Assigned Global Category

• Leaders• Scope• Spend analysis

• By supplier;• By GBU;• By Category;• Region;• …

Flowchart

A1.1 Assign Global Category Leaders

A1.2 Define Scope

A1.3 Analyze Spend

Global Category

Leader

Stakeholder & Responsibilities

Sub-process accountability

Buyer Network

Global Domain

/ RM Directors

Assign Global CategoryLeaders

Define Scopeand SelectCategory

Analyze Spend

and InternalCost Drivers

Bring inputs on spend (regional)

Bring inputs on priority

identification

A

B C D

10

Purpose• Identify and assign Global Category Leaders;• Provide required Resources;• Understand spend by Category, RM, GBU, region and supplier;• Define scope (perimeter).

A1. Assess Current Domain Situation

Inputs & outputs

• Spend & cost data

Inputs

Outputs

• Assigned Global Category• Leaders• Scope• Spend analysis

• By supplier;• By GBU;• By Category;• Region;• …

Flowchart

A1.1 Assign Global Category Leaders

A1.2 Define Scope

A1.3 Analyze Spend

Global CategoryLeader



Buyer Network

Global Domain / RM Directors

Assign Global CategoryLeaders

Define Scopeand SelectCategory

Analyze Spendand InternalCost Drivers

Bring inputs on spend

(regional)


Bring inputs on priority

identification

11

Purpose• Understand high level cost model and cost drivers;• Understand external market drivers shaping demand & supply;• View on market position within industry;• Understand internal capabilities/needs.

A2. Build Internal & External Profile

Inputs & outputs

• Cost breakdown• Market trends • Category knowledge• Internal needs

Inputs

Outputs

• Internal profile (cost, needs)

• External profile (market)

• Benchmarking (if applicable)

Flowchart

A2.1 Internal Needs & Internal Benchmarking

A2.2 Cost Modelling

A2.3 Supply & Demand Market Dynamics




BuyerNetwork

MarketIntelligence

Consolidate and review

Describe Supply & Demand Market

Dynamics

A2.3 Market Position Assessment

Provide internal requirements & benchmark data

Build high level cost model

& cost drivers Provide input for cost model

Market trends

Industry trends ( e.g. Concentration,

profitability), Geographical approach

Industry reports


12

Purpose• Identify Opportunities to reduce TCO;• Define Sourcing Approach based upon complexity;• Identify additional analysis to be performed by Market Intelligence;• Prioritize Opportunities and Allocate Resources.

A3. Prioritize Opportunities & Allocate Resources

Inputs & outputs

• Internal Profile (cost, needs)• External Profile (market)• Benchmarking (if applicable)

Inputs

Outputs

• Sourcing Approach (Speed, Strategic, Deep)

• Defined Opportunity list• List of additional analysis

to be performed by Market Intelligence

• Prioritization and resource allocation

Flowchart

A3.1 List Opportunities

A3.2 Define Sourcing Approach

A3.3 Deploy Analysis Diamond




Global Domain/ RM Director

Leadership Team / RM Directors

Identify Opportunities to

reduce TCO

A3.3 Prioritize & Allocate Resources

Propose SourcingApproach based upon Category criticality and

market complexity

Validate & PrioritizeIdentified

Opportunities

Propose suggestedadditional analyses

to support SPPexecution

Validate Sourcing Approach: Speed,Strategic or Deep

Sourcing

Validate additionalanalysis to be

performed

Present PrioritizedOpportunities,

Sourcing Approachand Analysis Diamond

Validateoutcome and

assign resources


Analyze spendand internalcost drivers

Receive prescription &

Challenge needs & specifications

Analyzeregional

supplier market

Confirm GBUstakes

Elaborateprescription on

the basis ofcustomer needs

Bring inputs onsuppliers

13

Purpose• Understand spend and internal cost drivers; • Challenge customer needs and define prescription;• Understand supplier market and industry cost drivers.

B1. Perform Analysis at Category level

Inputs & outputs

• Strategic planning• Spend & cost data• Customer needs &

specifications • Market & supplier data • Market Intelligence input

(e.g. Market trends, …)

Inputs

Outputs

• Scope & stake analysis• Internal needs & specifications• Supplier & market insights• Industry knowledge, trends• Business conduct including

sensitivity and maturity of CSR and Sustainable Development practices

Flowchart

B1.1 AnalyzeScope / Stakes

B1.2 AnalyzeCustomer Needs

B1.3AnalyzeSupplier Market




BuyerNetwork

MarketIntelligence

Consolidate spend and internal

cost drivers

Review analysis from cross zone

perspective

Analyze globalsupplier market& consolidate

regional analysis

Collect MarketIntelligence input: market, industry,

trends, best practice, …

Customer

ProvideMarket

Intelligence


14

Purpose• Have a clear understanding of TCO;• Propose “Purchasing Strategy” (Go-2-Market, P2P, Risk, CSR/SD, Innovation …); • Obtain “Mandate to Source” on the market in order to satisfy customer in full

consistency with the proposed “Category Strategy”.

B2. Propose & Approve Category Strategy

Inputs & outputs

• Scope & stakes analysis• Internal needs/specifications • Supplier & market insight • Industry knowledge, trends• Market Intelligence input on

e.g. TCO, clean sheet and other cost analyses

Inputs

Outputs

• Approved Category Strategy

• Mandate to Source & Savings target

• Negotiation toolbox• Sourcing Decision Grid

weights

Flowchart

B2.1 Propose Category Strategy

B2.2 Propose Negotiation Strategy

B2.3 Obtain Mandate to Source

Global Category/RM Leader



BuyerNetwork SSDC

Collect MarketIntelligence inputs,

including Cost Analyses such as

TCO, clean sheet, …

Propose negotiationStrategy (incl. SourcingDecision Grid weights,Negotiation tool box)

Provide inputfor Strategy

Provide inputfor Mandateto Source

Present proposed Category Strategy, Negotiation Strategy &Performance Targets and Obtain

Mandate to Source

MarketIntelligence

ProvideMarket

Intelligence

Challengeand approve the proposed

Strategy

Propose Category Strategy (TCO, P2P,

Contracting, Risk,Go-2-market


15

Purpose• Understand and review use of Global Category Strategy when available;• Understand spend and internal cost drivers; • Challenge customer needs and define prescription;• Analyze supplier market and supplier cost drivers.

1.Define Customer Needs & Analyze Market

Inputs & outputs

• Spend & cost data• Customer needs &

specifications• Market & supplier data• Approved Global Category

Strategy (if applicable)

Inputs

Outputs

• Scope & stakes analysis• Specifications• Suppliers database & market

overview• Critical suppliers identification,

if applicable

Flowchart

1.1 Review Category Strategy Implementation

1.2 Analyze Scope / Stakes **

1.3 Define Customer Needs

Buyer



Customer

Analyze spend andinternal cost drivers

Review if Category Strategy exists and

applies for current project

Receive prescription & Challenge needs

& specifications

Elaborate prescription on the basis of

customer needs

1.4 Analyze Supplier Market ** Analyze supplier market & supplier cost driver

Bring inputs on suppliers

** Use Category Strategy information if available


16

Purpose • Identify the best suppliers on the market in order to satisfy customers in full consistency with Supply Approach.

2.Define Supply & Negotiation Approach

Inputs & outputs

• Expiring contract• Identified critical suppliers • CSR-results (CSR-questionnaire,

TfS-assessments, …)• Bidder list• Scope & stake analysis• Specifications• Supplier database & market

Overview • Approved Global Category

Strategy (if applicable)

Inputs

Outputs

• Supply and Negotiation Approach

Flowchart

2.1 Define SupplyApproach

Buyer



SSDC

Review Negotiation Approach

Define Project Supply Approach inline with Category Strategy

(if applicable)

Check if proposed Supply and Negotiation

Approach andperformance targets are

in line with existing Category Strategy

Challenge and approve the proposed Tactics if no Approved Category

Strategy exists


Go to 3.1

Yes

NoApprovedRejected

In line withCategoryStrategy?

2.2 Review Negotiation Approach

Project Review*

• Project > 500k€(1) and proposed strategy is not compliant to an existing Category Strategy

• Project > 500k€(1) and no Category Strategy exists.

Project Review required when:

(1) For Speed Sourcing/CAPEX threshold is > 2M€.


17

Purpose• Negotiate supplier proposals to maximize value creation for the Solvay Group;• Ensure that the negotiated benefits, customer needs / risks are covered by the contract;• Ensure proper contract implementation (approvals, signature, communication, storage

and deployment).

3. Negotiate & Contract

Inputs & outputs

• Negotiation Mandate with agreed Negotiation Strategy & target savings

• Sourcing Decision Grid weights• Negotiation toolbox • Contract & clauses template,

approved by Legal • Purchasing Approval Matrix• Supplier Code of Conduct

• Awarded supplier’s; classified as “critical” or not

• Signed, shared & deployed contract

• Updated Contract Management Tool

Flowchart

3.1Perform Negotiation

3.2 Establish Contract & Formalize

3.3 Deploy Contract

Contract Approver(s))



Buyer Customer

Approve Contract,respecting

PurchasingApproval Matrix

thresholds

Execute Supply Strategy (RFP,…) and negotiate by Ensuring

full compliance with the Category

Negotiation Mandate

Ensure Contract signature and post the Contract in the

Contract Management Tool

Deploy Contract

Inputs

Outputs

Informed about new contract

terms &conditions by

the buyer

Connection with SBS

Procure-to-Pay


18

Purpose • Continuously improve supplier performance and supplier relationship to create value for the Solvay Group.

4.Manage Supplier Performance & Relationship

Inputs & outputs

• Agreed upon terms & conditions• Supplier Non-Conformance • Supplier Performance Assessments

reports• Customer feedback• Supplier feedback• SBS Procure-to-Pay: Issues,

Reports & Supplier Data (Externalized process)

Inputs

Outputs

• Value creation for Solvay Group (Cash, Cost, Risk mitigation & Innovation)

• Optimized operational processes• Improved relations with Suppliers • Innovation • Every Buyer Every Visit • SBS Procure-to-Pay:

Reports & Supplier Data (Externalized process)

Flowchart

Monitor Supplier Non-Conformance

Monitor and ImproveSupplier Performance

4.1

4.2

4.3 Manage SupplierRelationship

Leadership Team/RM Directors



Buyer Performance & QualityCustomer

Support Supplier Non-Conformance

process

Register & Treat Supplier Non-

Conformances;Initiate & Drive

Corrective Action*

Provide guidance on process deployment

& Consolidatereports

Lead supplierevaluation, initiate &follow-up

supplier actionplans

Provide feedback on

Supplier Performance

Provide guidance on process

deployment & Consolidate

reports

AssignKey Account

Managers

DevelopSupplier Relation

SupportRelation

Development

ManageSupplier

Tools, Data & Registrations

* Done by P&Q for LATAM


19

Purpose • Continuously improve the Solvay Purchasing Process to meet customers ‘ needs and the Solvay Group strategy.

5.Manage System Performance

Inputs & outputs

• Performance tracking tool• Non-Conformance reviews• Assessments, audit reports• Customer feedback• Supplier feedback

• Updated Continuous Improvement Plan

• Priority setting ; project resources

• Decisions impacting Strategy and Organization

• Newsletter, reports

Flowchart

5.1 Review SystemPerformance

5.2Improve System

5.3 Communicate Results & Changes

Leadership Team/RM Directors



Buyer Customer

Decide & support improvement

Decide & Support Improvement Actions & Allocate Resources

Provide feedback on system performance;

participate to assessments , audits

(if relevant)

Realize ContinuousImprovement Planin cooperation with

Performance & Quality

Inputs

Outputs Update & MonitorContinuousImprovement

Plan

Performance & Quality

Perform System Performance

Reviews

Plan & Coordinate

System Performance

Reviews

Inform all stakeholders about system results and changes (organization, action plan, market trends, customer and

supplier satisfaction rate, ….)


20

CSR Corporate Social Responsibility

GBU Global Business Unit

ISO International Standard Organization

LT Leadership Team

PSCE Purchasing and Supply Chain Excellence

P2P Peer to Peer

RFQ Request for Quotation

RM Raw Material

SCMS Solvay Care Management System

SD Sustainable Development

SSDC Strategic Sourcing Decision Committee

SPP Solvay Purchasing Process

TCO Total Cost of Ownership

WW Worldwide

Glossary


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solvay purchasing process (spp)

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