1) Evolution of theory of supply management

1
Issues in Supplier Management

• 1) Evolution of theory of supply management
• 2) Alternative and methods of management
  relationships
• tiered structures and equity stakes
• reduction in supplier base
• cooperation in four areas
• design and development
• quality
• materials management
• technology transfer
• Partnerships, information exchange, in-house
  suppliers, etc.
• 3) Single vs. multiple
• stability of technology
• price
• survival issues
• size of player
• performance and learning

2
General Management/Strategy Perspective
Dimension A Model J Model
1. Number of suppliers Many
Fewer 2. Selection criteria
Price Quality price, etc 3. Role in
development Smaller
Larger 4. Price practices
Competitive bids Target 5. Price changes
Upward
Downward 6. Defect rates
Higher Lower 7. Quality improvement
Lower
Higher 8. Information exchanges
Lower
Higher 9. Suggestions to suppliers
Few
Many
Source Cusumano and Takeishi In automotive
industry,die changes, inventory levels, and other
measures were an order of magnitude better
(Machine that Changed the World)
3
Some Data on Supplier Base Reduction

• Major decreases at companies, like Xerox
• (-90) and Motorola (-70) through early 90s
  (source LFM Workshop)
• Decreases at major auto companies from thousands
  to hundreds
• More recently, trend is continuing but more
  modestly. (55 cite recent decrease) (Source
  KPMG)