Supply chain chapter 6

Sourcing

- all of the firm's activities used to manage external resources.

Innovative

engeneered products that change like phones :

Green Purchasing

ensuring products or materials meet environmental objectives

Corporate Social Responsibility is the practice of business ethics

how do cmapies behave in the marketplace

Supply Base Rationalization

is often the initial supply chain management effort Reduce supply base to the lowest number of suppliers possible without increasing risk

Business Ethics 2 types of aspects

is the application of ethical principles to business Rights and Duties: some actions are just right in and of themselves, regardless of the consequences.

Third-Party Logistics

managing a firm's sourcing or and product distribution responsibilities they go vendor managed inventories Ups , fed- ex : providing logistics services for a company. Warehousing, distribution, transportation.

Strategic sourcing

managing the firm's external resources specifically to support firm's long term goals.

Co-sourcing (selective sourcing

The sharing of a process or function between internal staff and an external provider. - Supplier does 1st half and the org. does the other half

Build preparation process Develop negotiation database Design negotiation launch process Institute feedback mechanism

U have to understand the info . Before starting negotiation. Review previous negotiations and use whatever u learned and apply it to this making a decison making process and map out where you want to go! in case u have any issues

Ethical Sourcing

positive social change through organizational buying behavior

Value Engineering

u get the supplier invovled even before the product is launched. ( u might end up with a better product)

Electronic data interchange

Allows a supplier to profile demand and determine accurate forecasts EDI also provides reorder point data to permit timely deliveries

Collaborative Negotiations

Both sides work together to maximize the outcome or create a win-win result

Ethical Policies should include

Determining where all purchased goods originated and the manner in which they were made - who are you dealing with Knowledge of the suppliers' workplace principles - Where are they getting their materails from and how they doing that Inclusion of ethics as a performance rating Independent verification of vendor compliance Report of supplier compliance to stakeholders Provision of detailed ethical sourcing expectations to suppliers - What are they doing in terms of ethics and compliance

Key Supplier Selection is conducted by a cross functional team approach using evaluation forms or scorecards.

Less concerned about cost and developing a better relationship cuz If u get that then cost in going to down anyway.

Assessing and Improving Firm's Purchasing Function

Participating in and leading multifunctional teams Participating in value engineering efforts Optimize supply base Create ESI initiatives Utilize e-procurement Further supplier integration Contribute to new product development Improve time to market Initiate supplier cost reduction programs Creation of strategic alliances

Risks associated with outsourcing, include

Potential loss of control Over production decisions, and intellectual property Increased reliance on suppliers Increased need for supplier management

Drivers of Strategic Sourcing

Reduce costs and reduce delivery cycle times Improve quality and long-term financial performance Optimize the number of global suppliers Increase customer focus Reduce high costs of materials Deliver more innovative products, more frequently, and less expensively than competitors

Buyer-supplier partnerships are easier with a rationalized supply base and result in:

Reduced purchase prices Fewer supplier management problems Closer and more frequent interaction between buyer and supplier Greater levels of quality and delivery reliability

Co-managed inventories

Suppliers work from customers' storage areas or at the point of assembly or sale Have ur people ( supplier) at the buyers storage area

Outsourcing allows a firm to

Concentrate on core capabilities Reduce staffing levels Accelerate reengineering efforts Reduce management problems Improve manufacturing flexibility

Primary benefits of e-Procurement include

Cost savings Frees-up time to concentrate on core business

Vendor Managed Inventory (VMI)

From the buyer-firm's perspective: Supplier tracks inventories Determines delivery schedules and order quantities Buyer can take ownership at the stocking location Buyer may also be able to avoid taking ownership until the material is actually being used. From the supplier's perspective: Avoids ill-advised customer orders Supplier decides inventory set up and shipments Opportunity for supplier to educate customers about other products

So over time what did the companies have to addd

Fuction : procurment, manufacturing and logistics processes and reseources risk and sercuity ethcis and sutain

Sustainable Sourcing should seek to

Grow Revenues New sustainable product introduction Reduce Costs Increase resource efficiencies Manage Risk Link brand to social consciousness of consumer Build Intangible Assets Build social and environmental responsibility

Reverse Auctions

I want to buy something and companies bid on who will supply

Skill set requirements of purchasing professionals

Interpersonal communication Ability to make decisions Ability to work in teams Analytical skills Negotiation skills Customer focus Ability to manage change Influencing and persuasion skills Strategic skills Understanding business conditions

Early Supplier Involvement

Key suppliers become more involved in the internal operations of the firm, particularly with respect to new product and process design, concurrent engineering and design for manufacturability techniques

e-Procurement Systems

LARGE VOLUME - SMALL PURCHASES SO UR BREAKING THEM DOWN and few suppliers .

Pain and Gain Share Agreements

Share the up n down side equally . Theres a agreement about itts

Framework for sourcing strategy development

Step 1 - Classify the firm's suppliers as belonging to either the innovative or functional category. Step 2 - Develop strategic sourcing goals and strategies Step 3 - Evaluate supply chain capabilities and compare to required performance Step 4 - Set goals for improving capabilities including those identified from audits or from past experience. Step 5 - Implement the work plan. Use formal project management process. Step 6 - Monitor progress and adjust the work plans.

Ethical and Sustainable Framework

Step 1: Establish ethical and sustainable policies Are you going to make a decision that u wont work with any company that uses slave labor and shit (1) Step 2: Train staff and implement policies Step 3: Prioritize opportunities for improvement Step 4: Develop performance measurement systems Step 5: Monitor progress and make continuous improvements Step 6: Expand focus to other departments and partners

Supplier co-location or JIT II

Supplier's employee is embedded in buyer's purchasing department to forecast demand, monitor inventory and place orders. Involves granting supplier access to proprietary or sensitive data

In-sourcing (back sourcing

When u take something that's outsouced anf bringing it bck internally

Strategic Alliance Development

Working with the supplier to identify their capabilities and telling them ur goals and if u plan to expand.

Sustainability

ability to meet current and future needs in terms of ecnonocmics etc.

Benchmarking:

seeing how other business are doing and matching thier performance

Functional Products

stable and old product: readily avian. By mult. Suppliers Massive quantities

Distributive Negotiations

to self-interested, one-sided outcome