chapter 9 supplier managnment

Lower costs Stable supply of materials and services Quality improvement Improved risk management Accelerated innovation

How Could Managing Your Suppliers Well Help Your Company?

indenify needs step one complex

-Details exact quantities of all raw materials and precise production processes -For services, the "Scope of Work" document includes the required specifications whether they be simple, complex, or tied to a performance metric.

Supplier managment processes (SMP)

1. identify need 2.select supplier 3.develop supplier 4. provide feedback

Identifying Needs- Step 2

Determine the Appropriate Relationship Do you need a transactional (arm's length) or collaborative relationship?

1.Improved Cooperation 2. Increased Capability 3. Better Access to Technology 4. Reduction in Risk and Opportunism 5. Improved Operational Performance (quality, inventory levels, lead times, etc.) Example: Honda & Toyota

Identifying Needs- Step 2 Collaborative Relationships can lead to?

indenify needs step one simple

No requirements for ingredient quantities or production processes

Supplier Selection

Once you know WHAT you need, you can identify where to source it. Selection Steps: 1. Identify Supplier Requirements 2. Search for Potential Suppliers 3. Evaluate Suppliers 4. Negotiate the Agreement

Scope of Work-

Specifications for services May include performance metrics

Supplier Management

The processes of forging strong links by first identifying what is needed by the firm and then selecting, developing, and actively managing the supply base.

provide feedback

goals report cards

select supplier (SMP)

id requirement search evaluate negotiate

develop supplier (SMP)

issure resolution continuously improve

identify need (SMP)

material service relationship

collaborative relationship

the buyer and supplier develop a long-term relationship where they share information, knowledge, and expertise while making specific investments in the buyer-supplier relationship.

transactional relationship

the buyer usually has many choices, doesn't need to share internal company information, is buying a routine item, doesn't expect shortages in supply, and doesn't require any technology innovation from the supplier.