chapter 7 supply chain management

External certification

International Organization for Standardization (ISO) is the world's largest developer of voluntary international standards. It was founded in 1947, and since then have published more than 21,000 international standards covering almost all aspects of technology and business. ISO certification is highly sought after in the business world as it represents achieving and maintaining a stand of excellence verified by an independent third party organization.

benefits of strategic partnerships with suppliers

Benefits for Buyers: Preferred access to the supplier's best people Increased operating efficiencies Lower costs Improved quality Enhanced service Benefits for Suppliers: Greater visibility into buyer's purchasing plans Increased operating efficiencies Longer term buyer commitments; greater predictability of future business Increased scope of business and revenue

benefits of supplier certification programs

reduces the amount of inspection for items Supplier can test the items and send a verification to the buyer before shipment

supplier development

technical and financial assistance given to existing and potential suppliers to improve quality and/or delivery performance. a buyers activities to improve a suppliers capabilities Supplier programs should be designed to achieve: Lower SC total cost Increased profitability for all SC participants Increased product quality Near-perfect on-time-delivery at each point in the SC its providing the supplier with what they need to succeed

Supplier certification programs

these programs differentiate strategic supplier alliance candidates from others Companies may develop internal certification programs, and many also require external certifications such as ISO 9000 / ISO 14000 as part of their overall certification process

supplier evaluation

to identify the best and worst supplier frequent feedback no suprises and maintaining good relationship

Successful strategic partnership

important to achieve win- win competitive performance for buyer and supplier Involves "a mutual commitment over an extended time working together to a mutual benefit of both parties, sharing information and risks and rewards of the relationship"

Supplier recognition programs

A program to recognize suppliers who achieve the high performance standards necessary to meet customer expectations.

keys to successful strategic partnership

Building trust! With trust, partners are more willing to work together, find compromise solutions to problems, work toward achieving long-term benefits for both parties, and go to the extra mile. also both parties should share the same vision and focus on strategic moves to corporate success Companies need to develop personal relationships Alliances are like marriages, both parties need to be happy for it to work Partnerships tend to be successful when top executives are actively supporting the partnership Formal and informal lines of communication facilitate free flow of information. continuous improvement- Making a series of small improvements over time results in the elimination of waste in a system Buyers and suppliers must be willing to continuously improve their capabilities in meeting customer requirements

Tapping into strategic supplier knowledge

Early Supplier Involvement (ESI) - Key suppliers become more involved in the internal operations of the buyer's company, particularly with respect to new product and process design, concurrent engineering, and design for manufacturability. Value Engineering activities help the buyer's company to reduce cost, improve quality and reduce new product development time

internal certification programs

Example of Criteria used for an internal Certification Program No incoming product rejections (e.g., less than 0.5 percent defective) for a specified time period. No incoming non-product rejections (e.g., late delivery) for a specified time period No significant supplier production-related negative incidents for a specified time period

Two iso standards

ISO 9000 A series of management and quality standards in design, development, production, installation, and service. Companies wanting to sell in the global market seek ISO 9000 certification. ISO 14000 A family of standards for environmental management. The benefits include reduced energy consumption, environmental liability, waste and pollution, and improved community goodwill.

Supplier evaluation: weighted criteria

Monitor and collect performance data develop overall scores through calculation of performance and weight of dimension and classify suppliers based on scores

benefits of supplier recognition programs

Motivate Suppliers to Perform Better - Can motivate suppliers to excel in terms of their quality, pricing and delivery commitments. Improve Supplier Loyalty and Commitment - Supplier support is important to ensure that customer delivery commitments are maintained. Encourage Suppliers to Adapt to the Company's Culture - If the company treats its suppliers as a part of the family and engages in supplier recognition programs periodically, it can help to bring the suppliers closer to the corporate values, ethics and principles of the company. Helps to Create Entry Barriers for Competitors - If the suppliers trust the company, they may be more inclined to sign deals of exclusivity with the company for certain crucial components. Encourages Supplier Participation in Product Innovation - Recognition to suppliers also brings about their enthusiasm to work closely with the company on new product development.

Preferred suppliers

Product and process technology, and expertise. Product development and value analysis. Information on latest trends in materials, processes, or designs. Capacity for meeting unexpected demand.

Supplier relationship management system

Reason for a system - - to provide a more comprehensive and objective view of a supplier(s) performance A system will help in identifying and addressing supplier performance issues. A system can also be used to help make sourcing decisions. Automation is meant to handle routine transactions Integration spans multiple departments, processes, and software applications Visibility of information and clear and concise process flows Collaboration through information sharing Optimization of processes and decision making

supplier relationship management

SRM is planning, and managing, all interactions with the third party organizations that supply goods and/or services to an organization in order to maximize the value of those interactions. Most supply professionals view SRM as an organized approach to defining what they need and want from a supplier and establishing and managing the company-to-company link to obtain those needs. SRM is part of the rollout of Strategic Sourcing and typically applied with suppliers: Providing high volumes of a product/service Providing lesser quantities of a crucial product/service That serve many business units of a company or organization Where intensive engineering, manufacturing and/or logistics interaction is essential.

evaluating and selecting key suppliers

looking for suppliers to have a strong collaboration, purchase cost becomes less important conducted by a cross functional team with scorecards

Supplier evaluation performance

monitoring a suppliers performance and metrics such as Supplier price and cost performance Product quality Delivery performance Financial stability