About SCMG: Strategic Sourcing Strategy Program

"In today's competitive environment, the pressure to improve performance continues to escalate while some of the traditional approaches to achieving it are being exhausted. Firms that can harness the potential of an integrated strategic sourcing strategy will achieve the strongest positions in the marketplace..."
Robert M Monczka & James P Morgan
Purchasing Magazine

Corporations facing increased market pressure are seeking innovative ways to enhance profitability in lieu of growing sales or downsizing their workforce. Strategic value added sourcing of chemicals and materials through managed vendor alliances is a methodology that produces demonstrable results.

Through the Strategic Chemical Management Group (SCMG) strategic sourcing alliance, parties that were historically adversarial (buyer and seller) join together to implement mutually beneficial project goals. With barriers removed, productivity increases and costs fall dramatically. Ultimately, long term win-win relationships are formed and everyone prospers.

The approach outlined in this discussion combines new and innovative strategic concepts with proven methodologies. By including an integral environmental management component, our program takes chemical sourcing through a natural evolution. The result is an efficient holistic program that views procurement as a golden source reduction and data collection opportunity.

The Strategic Chemical Management Group offers unique programs which combine to create the framework of a comprehensive strategic sourcing approach. These programs reliably deliver numerous short and long term benefits; the most dramatic of which are enhanced utilization of personnel resources, reduced environmental liability and significant cost savings. This concept embodies a dynamic and innovative approach to chemical purchasing and environmental management.

We invite you to explore these ideas with us and reap the rewards that their implementation will bring.

INTRODUCTION

Strategic Chemical Management Group provides an innovative, managed procurement approach. This new perspective is a value-added approach to doing business known as Strategic Sourcing. When applied to chemical procurement and management, strategic sourcing includes:

1. A close working relationship with suppliers - a Team approach
2. Expanded supplier commitment and responsibility - value added services
3. Shared use of resources - user support, delivery scheduling, etc.
4. Extended contract terms - expanded opportunity for discounts
5. Quality performance from suppliers - mutual goals which benefit everyone.

These concepts involve a nontraditional approach to chemical procurement, which constitute an organization-wide cultural change. This cultural change or paradigm shift gives the customer a competitive edge in the area of procurement, as well as in chemical and environmental management.

The Strategic Chemical Management Group (SCMG) works closely with our customer (primary partner) to create a program that will ensure timely delivery of the best possible chemical products at the most economical prices. Project success is measured not only by cost savings, but also by environmental compliance and customer satisfaction. It is SCMG's job to ensure that procured chemicals and materials are appropriate, consistent, environmentally compliant and cost effective.

Primary to the success of strategic sourcing is the establishment of an alliance. The Strategic Sourcing Alliance is a logical evolution of the traditional chemical procurement process. More than conventional vendor-customer relationships, strategic sourcing alliances empower all parties to think, feel and act with one another's best interests in mind. The end result is a flexible, responsive and successful team effort towards a common goal.

In the alliance model, the vendors are full participants - Partner-Suppliers, working through SCMG to assure cost effective regulatory (OSHA, EPA, etc.) compliance. The chemical user is no longer solely responsible for managing the environmental, health and safety ramifications of the purchased chemicals.

The strategic sourcing alliance form of chemical management is particularly appropriate for companies grappling with the management of hazardous chemicals. A well-managed strategic sourcing program is the ultimate Source Reduction /Pollution Prevention effort, which yields verifiable cost savings. For example, while industry generally acknowledges that there are no drop-in replacements for ozone depleting solvents and other hazardous chemicals, progress has been made in implementing environmentally preferred alternative solutions. Challenges like this can best be met by combining resources available at the customer site with those of SCMG who has a proven track record in this area. Strategic alliances are not a utopian vision. Many companies, including General Motors, PPG, and Timken have saved millions of dollars while significantly improving efficiency through strategic procurement alliances.

WHY THE STRATEGIC CHEMICAL MANAGEMENT GROUP?

The Strategic Chemical Management Group (SCMG) invents implements and manages custom strategic sourcing solutions for industry. One function of SCMG as part of the Sourcing Alliance is to serve as the managing partner for Partner-Suppliers, who in turn deliver chemicals and related services to the customer. SCMG, as the managing partner, will coordinate the procurement of the chemical products. SCMG will select, organize, train, manage, motivate, troubleshoot, monitor and benchmark the performance of the Partner-Suppliers.

The Partner-Suppliers function as an integrated, high performance team delivering a level of responsive service never before possible. The coordinating entity, SCMG, functions as an extension of the customer's internal system, insuring that all needs are effectively met. In effect the customer, SCMG's Primary Partner, will outsource part or all of its chemical procurement to SCMG. This reduces costs, not only in chemical pricing, but also in staffing and related aspects of chemical management cost.

The cost savings that result from this program are significant. As a result of the work undertaken by SCMG, the customer will realize immediate savings in areas beyond base chemical costs. These savings will be generated in the areas of:

1. Procurement - efficient use of resources
2. Accounts Payable - significant reduction of invoices, cutting checks, financial administration
3. Material Handling - managed delivery, custom labeling
4. Inventory Management - customized material supply, monitoring
5. Data Collection - accurate complete electronic information, MSDS, etc.

Furthermore, SCMG believes that a range of additional "invisible costs" will also be positively impacted through this strategic sourcing alliance. While the dollar value of these invisible costs are not always quantified, our strategy addresses their reduction.

Some of the invisible costs we target as an integral part of our operating plan include:

1. Manufacturing
2. Testing
3. Disposal
4. Information Support
5. MSDS Management
6. Environmental Reporting
7. Emissions Management

One Stop Shopping

The Strategic Chemical Management Group offers the customer a focused and centralized contact point for everything: order placement, payment, information management, and technical assistance- anything the customer needs to support chemical procurement. Figure 1 represents the process flow.

This diagram describes a continuous flow of goods, services and information between the customer, SCMG and the Partner-Suppliers. This continuous feedback loop yields enhanced communication and support for the customer's chemical procurement needs, while it decreases cost to the customer and expands the productivity of all stakeholders. Addressing all chemical needs through a focused point of contact will result in procurement and accounts payable savings almost immediately.