- How can you increase time to market with efficient supplier cooperation?
- How can you maximize your buying power towards your suppliers?

Commodity structure
Many companies work very project focused when working with suppliers. It is also common that silos are built up between the different projects or functions and it is the separate project’s time plan and business case that is prioritized in favor of the company’s overall performance.

With a clear commodity structure and commodity teams consisting of cross function teams, a company move away from organizational silo thinking to focus on activities leading to overall decreased total cost and increased profitability. The commodity teams should work as key account teams for the suppliers in the commodity, e.g: driving supplier relationship management strategies, driving supplier improvement programs, negotiating terms and conditions, consolidating all spend in your company to the best suppliers, developing and driving commodity strategies, make sure there is a healthy balance of spend, have clear single and second source strategies, being the key interface for supplier innovation and early involvement in the design process and coordinating internal stakeholders to gain buy in and efficiency in your supplier activities. The commodity teams should be the single owner for the supplier relationship in your company.

A company with a clear commodity structure with aligned cross functional teams who develop and drive a coordinated commodity strategy will be faster in time to market, have lower total cost and be more innovative than it’s competitors.

Common pitfalls

- Spend is not coordinated across different functions or projects since there is no commodity organization to drive this coordination from a commodity perspective

- New business is awarded project by project without considering the risk of becoming too dependent of certain suppliers or utilizing the buying power you have before awarding new business. This could lead to significant supply risks impacting your sales as well as lost cost down opportunities when not using the moment of maximum buying power

- With an uncoordinated commodity work, the suppliers could get different directions from different functions in your company. This could lead to longer time to market, increased cost and less efficiency. By coordinating your communication and activities with your suppliers, your company will speak with one single voice giving the same directives. This will increase efficiency leading to faster time to market, increased quality, innovation and decreased total cost