A quadrant approach classifies all Postal Service purchases into four categories, depending on their impact on the Postal Service core competencies (noncore versus core) and complexities (standard versus custom). These four categories are not the same as the categories within the meaning of CMCs. The quadrant approach, used throughout these Supplying Practices to explain product/service competencies and complexities, is different from the quadrant analysis discussed above, which is used specifically for category strategy development, and which identifies commodities according to value and risk (and determines the amount of attention and strategic approach that must be afforded to types of purchases). The quadrant approach should be leveraged by the purchase/SCM team; VP, SM; and SM operations specialists to develop strategies that are specific to each category (quadrant) and to each CMC.
The quadrant approach is extremely useful when establishing how the purchase process, in general, should be addressed and the steps that should be emphasized and prioritized, as shown in Figure 7.2.
Figure 7.2
Quadrant Approach
CMCs in Quadrant I require the overall management of suppliers. The CO must ensure that Postal Service personnel are in compliance with purchase policies and procedures and help resolve questions or concerns. The CMCs in Quadrant I are:
The CO must ensure that supplier continuity is encouraged and promoted. The purchase/SCM team should try to fulfill requirements with more standard products or services in the hope of decreasing the uniqueness of the purchase.
The CO should develop as many contract renewals as possible with the suppliers and develop competition.
CMCs in Quadrant II require the coordination of supply and continuous innovation. Clients must help install leading-edge usage practices. The CMCs in Quadrant II are:
Products and services that will be purchased by clients from CMCs in Quadrant II have restricted sources because they are customized. In addition, they are core and essential to the business operations of the Postal Service and are therefore of high value. Stronger and more mutually beneficial working relationships with suppliers should be forged. Strategically, the Postal Service must continue to select innovative sources of customized and core products/services. Innovation is integral to the Postal Service remaining efficient and competitive. These characteristics must drive the strategy that will be developed for each category/portfolio in Quadrant II.
Because of the high value of these products and services, discussions and negotiations are encouraged to maintain prices at a fair level. The CO must continuously consult the market analyst and pricing analyst in regard to the availability of potential sources, the availability of similar products and services, and the current prices being charged for similar products and services.
The purchases pertinent to Quadrant III CMCs require the overall management of the entire supply chain. Market leaders with lowest costs/prices and self-checking improvements are sought out. The CMCs in Quadrant III are:
Products and services that will be purchased by clients from CMCs in Quadrant III have many sources and provide the Postal Service with many options in terms of supplier selection. The presence of competition means that the Postal Service must aggressively pursue lower prices and award contracts to suppliers with past successful performance and on-time deliveries. The Postal Service must attempt to reduce the costs associated with administration and evaluation to realize cost savings. The CMCs in this quadrant should look for opportunities to centralize and concentrate purchasing to realize savings through leveraging spend.
The CO must leverage the talent of CORs and delegate administrative tasks to them. In addition, the CO should try to minimize attention to negotiation while focusing high expectations on the evaluation of submitted proposals (both solicited and unsolicited).
As with the purchases in Quadrant II, the purchase/SCM team must coordinate supply of core and standard goods and services for CMCs of Quadrant IV. Market leaders must be sought out, and innovation must be encouraged and leveraged. The entire purchase/SCM team must work closely with the client to ensure that the products and services purchased are specifically appropriate to the CMC’s needs because their activities are essential to Postal Service business. The CMCs in Quadrant IV are:
Products and services that will be purchased by clients from CMCs in Quadrant IV have many sources and provide the Postal Service with many options in terms of supplier selection. As with products and services in Quadrant III, the Postal Service must maximize commercial advantage (e.g., aggressively pursue lower prices and award contracts to suppliers with successful past performance and on-time deliveries). The CMCs in this quadrant should look for opportunities to centralize and concentrate purchasing and realize savings through leveraging spend. The purchase/SCM team must regularly reassess the market and maintain flexibility (e.g., be willing to switch suppliers frequently, although the products/services remain the same).
