Supply Chain Management

1
Supply Chain Management

• Purchasing Responsibilities
• Partnership vs. Confrontation
• Process Tools for Supply Chain Management

2
Supplier Benefits

• Lower Costs
• Better Flexibility
• Higher Quality
• Shorter Lead Time
• Sound Familiar ??

3
Supplier Benefits Cont

• Market Perception of Higher Quality
• Easier Availability of Excess Capacity
• Newer Technology
• Broader Access to Technical Expertise
• Better Market Information
• Sharper Focus on Core Technologies

4
Five Rights

• Right Quality
• Right Quantity
• Right Price
• Right Time
• Right Source
• (could include place and service)
• How about the Five Wrongs?

5
Purchasing Responsibilities

• Setting the Terms and Conditions of Purchases
• Supplier Selection
• Supplier Scheduling
• Supplier Education
• Supplier Evaluation and Feedback
• Supplier Certification
• Supplier Development
• Supplier Advocacy

6
Supply Chain

• The sequence of suppliers and organizational
  buyers that spans all stages of processing from
  raw materials to final consumers.
• Vertical Integration vs Supplier Control

7
Comparison

• Exhibit 13.16 from textpage 625

8
Supplier Relationship Continuum
Outparternering
Outsourcing
Reduced Direct Cost Flexibility Name
Recognition Excess Capacity
Access to Technical Expertise Market
Information Rationalization Latest Technology /
Processes
9
Confrontation vs. Partnership

• Six views
• Supplier Design Input
• Criteria for Purchase Decisions
• Number of Suppliers
• Routine Interactions
• Duration of the Relationship
• Implications of Partnership

10
Confrontation

• Supplier Design Input
• Criteria for Purchase Decisions
• Number of Suppliers
• Routine Interactions
• Duration of the Relationship
• Implications of Confrontation

11
Partnership

• Supplier Design Input
• Criteria for Purchase Decisions
• Number of Suppliers
• Routine Interactions
• Duration of the Relationship
• Implications of Partnership

12
Trend towards Partnership

• Customers increased emphasis for speed
• Advances in technology
• Recognition of Core Competencies
• What are the core competencies of
• McDonalds?
• Wal-Mart?
• Taco Bell?
• Compaq?

13
Disadvantages of Partnerships

• Need time to develop
• Vulnerability

14
Process Tools for Supply-Chain Management

• Make-Buy
• Supplier Scheduling
• Value Analysis/Value Engineering
• Supplier Evaluation and Certification

15
Make-Buy Analysis

• Assess the Relationship of the Product to the
  Firms Core Competencies
• Evaluate the Suitability of Product
  Characteristics for Outsourcing
• Evaluate the Reasons for Outsourcing
• Assess All Relevant Quantitative costs
• Assess all Qualitative costs
• Review Capabilities of Current Suppliers
• Evaluate New Suppliers
• Make and Implement a Decision
• Monitor the Decision, Revise as necessary

16
Supplier Scheduling

• System for controlling order release and
  communication of priorities, needs, and
  quantities
• Hope system can obtain
• Detailed and communicated knowledge of buyer
  needs
• Simplified internal supplier scheduling
• Improved communications

17
Value Analysis / Value Engineering

• Improve design while maintaining functionality
  and marketing appeal
• Typically, put team together composed of product
  specialists from design, marketing, production
  during early stages of product design
• What is the power of this technique?
• What are potential benefits?

18
Supplier Certification and Evaluation

• Certify Buying firm sets up its own program or
  relies on outside certification (e.g., ISO 9000)
• Evaluate Feedback on how supplier is performing
  relative to certification standards
• Evaluation facilitates improvement, clarifies
  expectations, facilitates communication and
  creates an audit trail

19
Next Time

• Case 14.2
• Automated Plants
• Ch 14 Resource Management