Commodity Councils
What are Commodity Councils?
Commodity Councils at Boston University are teams of cross-functional stakeholders charged with formulating a commodity / supplier sourcing strategy to be executed University wide. Through participation on a Commodity Council, Boston University employees take part in real cost reduction projects that deliver real results.
What is Commodity-Centric Sourcing?
Commodity-Centric Sourcing is the organization of enterprise sourcing-oriented resources, processes, data and activities around groups of similar commodities. A “commodity” is a segmentable category of goods or services like lab supplies, information technology, travel, financial services etc. The commodity-centric sourcing approach aggregates requirements at a higher level and represents a shift away from managing individual items.
What is the purpose of Commodity Councils?
Commodity Councils ensure that required parts and services are procured and managed to provide the greatest overall value to the enterprise in support of strategic goals. That means maximizing the value of dollars spent on goods and services while minimizing supply chain costs and cycle times.
- Determine what level of BU spending is decentralized
- Conduct diagnostics; review portfolio of suppliers within commodity area
- Establish functional, technical and performance requirements
- Evaluate/drive commonality and standardization of requirements
- Establish/execute BU-wide commodity strategies.
- Leverage volume across the enterprise
- Develop guidelines, strategies, and scorecards
- Assist in RFP development; eSourcing management
- Select source
- Execute supplier agreements, including both sole-source and competitive agreements.
- Integrate suppliers into business operations
- Manage operational relationships with suppliers.
- Conduct and maintain commodity market intelligence
- Continually reduce supply chain costs
What are the benefits derived from Commodity Management?
Commodity Councils drive strategic sourcing best practices with the following potential benefits:
- Access to BU’s supply management planning process
- Critical suppliers engaged in meeting your business goals
- Initial price/cost reductions 5-25%
- Ongoing productivity improvements 2-10%/year