Strategic Sourcing at Best Banks
Karen Williams, the new director of supply management at Best Banks, was excited to be working at her new job. After gaining over 10 years of experience in various supply management positions at a first-tier automotive supplier, she was looking forward to being in a new industry.
Best Banks is a medium-sized bank with assets of over $1 billion. It is a community-focused financial services company with 35 branches in northwest and central Ohio. Providing competent and friendly service to its customers is critical while keeping the costs of banking affordable. Bank employees are encouraged to remember their customers and call each by name.
Historically, each branch manager did purchasing. However, within the last five years, the bank created a centralized supply management department that is responsible for the bank's major purchases. For instance, this group handled the sourcing when the bank upgraded its information system to make online banking easier for its customers.
Based on her experience in the automotive industry, Karen knew strategic sourcing could be a way to increase the value that supply management could bring to Best Banks. As a first step she conducted a spend analy- sis. After information systems (30 percent), the two top spend categories for the bank were temporary personnel (15 percent) and print advertising and promotional materials (8 percent).
Karen decided to explore each of these categories in more detail. She found that each of the branch locations selected and made its own decision for which temporary agency to use. In fact, over 20 different temporary personnel agencies were being used. The marketing department at the bank's headquarters made all of the sourcing decisions for advertising spend, and Karen was surprised to learn that the supply management department was not involved.
Questions
1. Using the framework in Figure 10-3, how would you categorize information technology, temporary personnel, and advertising as spend categories for the bank? Why?
2. What recommendations do you have with respect to sourcing temporary personnel? Why? What challenges is Karen likely to encounter?
3. Should the supply management department be involved in purchasing of the print advertising and promotional materials? Why, or why not? What should supply management's role be?
Text Book: Managing Operation Across the Supply Chain 2nd Edition.