CASE STUDY / UBER TECHNOLOGIES
ENGAGEMENT / ADVERT
Before the coronavirus pandemic erupted, the team had also begun work on the second tier – those in the leverage category of best value providers that offer a mid-to-high level of potential to add value. ‘Tactical’ covers more commoditised parts with standard specifications. Meanwhile the ‘bottleneck’ tier receives attention because it covers those suppliers who provide the company with limited sources of supply. Uber also pulled apart its top supply base to consider anything over $25k and determine which tier it sat in. The team then had stakeholder meetings to review the list of suppliers in each of category to achieve their buy in before producing a scorecard for each. “It resulted in five key elements for each scorecard,” says Aronson. “Quality; Cost; Delivery; Strategic Alignment & Innovation; and Additional Capabilities, but with tailored questions according to the category. “We then got alignment from each key category lead and began rolling it out and had already had performance reviews with some of the top tier one suppliers.” The type of review the business conducts, its frequency and level of detail, depends on the nature of the provider. “We have many suppliers in our ecosystem globally, so one size does not fit all.” It conducts three types: Business Review Light; Business Review; and Strategic Relationship Reviews. “Anything less than $1m is in the Business Review Light category, unless it’s critical to our business,” says Aronson. “Between $1-10m and we will do Business Reviews and anything over $10m we look at from a strategic standpoint.” Supplier surveys are also carried out in the round and have uncovered some surprises. “Some ‘Aha!’ moments would be the disparity with regard to how we view a supplier and how they view themselves. Usually they view themselves in a lesser light than we do, so they’re harder on themselves from a grading standpoint.” It oversees all this with a tool that it was already using for sourcing, projects tracking and savings, which is accessed globally by his seven-nation team. “It helps us scale and make quick changes,” he says. “If I want to make an alteration, I can do it in a template and it goes across all the relevant categories.” Despite the slowdown in formal SRM work following the outbreak of the disease, Aronson says the business continues to evaluate the supply base on an ongoing basis. “Especially now with Covid-19, we do financial health checks repeatedly for the top supply base. “I’m sure our strategies will change as we see how Uber comes back in the market and people start travelling again and what that means for our business long term. We’re pretty flexible and nimble, we have to be. I don’t know what the future will hold, but whatever it is our suppliers will be key and we’ll adapt our programme accordingly.”
Given our revenue, a lot of our top supply base is helping us on cost and some have converted manufacturing capability to produce PPE.
How are you perceived by your
strategic
Why SRM was needed
Uber was already a big name, but rather than rely on simply leveraging from the value of its brand, it knew there were more gains to be made. “There are five key components to why we need SRM at Uber,” says Aronson.
1. To increase collaboration with suppliers 2. To support strategic relationships 3. To provide more visibility to stakeholders 4. To establish an ongoing way to evaluate the supply base and its performance 5. To drive innovation in order to achieve a competitive advantage for Uber.
suppliers?
“SRM is critically important to long-term success. If we don’t track, grade and engage with conversations and quarterly business reviews then there’s no visibility and suppliers will go off and do their own thing. “This brings the business, suppliers, sourcing and the supply chain together to make sure we’re on the right track and looking at things in the right way. We’ve had no issue getting some of the top supply base to be providers to us. They like the SRM programme because it gives visibility to leadership and they also get insight into what we’re thinking and where we’re going as a company. That helps them reshape and think about their strategy too as to how they can support us. It’s been a win-win.”
At State of Flux we have been working with companies for more than 15 years to help improve supplier management capability to both manage risk and drive value. We have conducted more than one hundred Voice of the Supplier studies to help organisations understand how they are perceived by their suppliers and if they are a customer of choice for their most important providers.
Segmentation and engagement
Uber, which has around 25,000 active suppliers, began by splitting the supply base that covered Logistics, Professional Services, Real Estate & Construction, Technology and Marketing into four tiers: Strategic, Leverage, Tactical and Bottleneck, and started by focusing its first efforts on the top tier strategic suppliers who are critical to Uber’s competitive advantage. “There’s a high potential for that group to really add value to Uber in terms of long-term profitability and helping us to grow our business.”
enquiries@stateofflux.co.uk srm.stateofflux.co.uk/2020-report
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2020 GLOBAL SRM RESEARCH REPORT
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