om - 3 – supplier relationship
TRANSCRIPT
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 1/44
Operations Management
3- Supplier Relationship
Denis Stalder2009/ 20010
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 2/44
2
The context
Historical Market evolution
Demand
Offer
1975 20001950
Customer Client
Product to sellProduct to sell Product then sellProduct then sell Sell then productSell then product
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 3/44
3
Focus on the main process
R & D
Pr d cti n
Sale
L gi tic
Maintenance
General
ervice
S b
c ntracting Acc ntancy
P rcha ing
H man Re rce
Finance
Added Val e Externalizati n
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 4/44
4
Transfer from salaries to purchases
P rcha ing am nt increa e
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 5/44
5
A great variety
BOM Purchases
± Raw materials
± Standard Components ± Specific Components
General services
± Furniture
± Intellectual services
± Technical services
Projects
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 6/44
6
Fit to the strategy
Financial impact on margin
± All purchase discount increases the
profit
Securitization
± The contract lower the supplier risk
Increase the productivity ± Better organization of the
administration process
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 7/44
28 novembre 2010Denis Stalder November2007
7
Three Process
Order
Reception
Billing
Daily
Procurement
Specifications
Supplier
Price
Needs
Selection
Negotiation
Weekly
Purchasing
Companys
strategy
Purchasing
Policy
Purchasing
Marketing
Monthly
Management
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 8/44
Sourcing : RFI
28/11/2010Deni Stalder 8
Purchasing
Strategy Supplier
selection
Criteria:-Size
-Machines
-References
-ISO certif.
-Export
-Innovation
-Low cost
RFI
Request for
information
RFI
Request for
information
RFI
Request for
information
RFI
Request for
information
RFI
Request forinformation
RFIFilled in
RFI
Request for
information
RFI
Request for
information
RFI
Filled In
RFI Elaboration
Supplier Selection
Short List
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 9/44
Sourcing : RFQ
28/11/2010Deni Stalder 9
Need
Specification Supplier
selectionCriteria:
-Performance
-Quality
-Service
-Price & Cost
RFQ
Request for
Quotation
RFI
Request for
information
RFI
Request for
information
RFI
Request for
information
RFI
Request forinformation
SuppliersProposal
RFQ Elaboration
Supplier Selection
RFI
Request for
information
RFI
Request for
information
Suppliers
Proposal
Short List
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 10/44
Inquiry process
RFI = Request for Information ± Name, address, activity
± Number of employees, Turn over
± Quality standards, Exportations
± Process, Equipments
Inquiry ± Technical specification
± Contract project
Supplier proposals
Selection ± Define criteria
± Evaluate each supplier proposal
± Negotiation
± Make a decision
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 11/44
Electronic puchasing
processes
28/11/2010Deni Stalder 11
Supplier
selection
Needs
definition
Price Inquiry NegotiationOder Delivery
- Payment
e- rcing Market place Rever e a cti n e-pr c rement
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 12/44
E-sourcing
RFI management ± Suppliers professional database
± RFI design: criteria file template
± RFI automatic broadcast (e-mail, fax, )
± RFI answer management
± Comparison tables / short list
selection
RFQ management ± RFQ template design
± Proposal management
± Comparison matrix28/11/2010Deni Stalder 12
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 13/44
Market Places
To facilitate contacts
± Directory of suppliers
± Tender publication
Vertical / Horizontal
± Vertical = one sector (automotive, electronic )
± Horizontal = Office supplies, Computers
Transactional / Collaborative ± Transactional = To conclude a transaction
± Collaborative = To exchange information
28/11/2010Deni Stalder 13
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 14/44
Reverse auction
The purchaser send a RFQ
The suppliers issue a
proposal
Web meeting
± Purchaser
± Several suppliers
The Lowest the winner
11/28/2010Deni Stalder 14
Pr ject de ign
Req e t f r Q tati n
AU TION- Invitati n
- nnecti n
- A cti n pening
- Neg tiati n
- Analy i / Re lt p blicati n
- Tran acti n
ONTR A T
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 15/44
Some Web sites
Buying-Partner
DoubleTrade
Econia Goodax
FreeMarkets
Portum France
Synerdeal
Trade-Match
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 16/44
Negotiation
Definition
The Negotiation is a process to manage
disagreement in the purpose to satisfycontractually the needs
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 17/44
17
Prepare the negotiation
Prepare questions to ask
List the subjects to be negotiated
Define Objectives to be met
Think about arguments to use
Foresee potential concessions
Imagine the negotiation progress
Write this elements on a table
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 18/44
18
Prepare the negotiation
S bject t
be
neg tiated
S pplie
r
pr p a
l
Objectiv
e
Acceptabl
e val e
Arg ment Orde
r
Re l
t
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 19/44
19
Negotiation dialog
Rigid statements
Relations based on power
No transparency
Suspicion
Offensive or defensive
strategies
Favorable issue for oneself
Common objective focus
Relations based on
influence
Problem clarification
Confident climate
Open mind
Everybody accepted deal
Competition Cooperation
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 20/44
Select a strategy
1- Avoid Negotiation Steer clear of negotiation altogether.
2- Competitive strategy
Aggressively achieve our goals through competitive negotiation.
3- Compromising strategy Compromising by realizing some of our needs and some of the needs
of our counterparty.
4- Collaborative strategy Satisfy all our needs and all the needs of our counterparty by taking a
cooperative negotiation approach
11/28/2010Deni Stalder 20
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 21/44
Negotiation strategy
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 22/44
22
Purchasing contract
C ompanies Identification
Preamble
Technical Specification
Price
Delivery time & Transportation
Quality Payment
Warranty
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 23/44
STRA
TEGICA
NA
LYSIS
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 24/44
Marketing tools
Analogies & antagonisms
Risk & profit matrix
Partnership
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 25/44
Analogies & antagonisms
Marketing tools
± Assess Customer relationship
± Risk = Customer risk (not to paid)
± Profit = Sale Cost
Purchasing Marketing
± Supplier relationship
± Risk = Supplier Risk (not delivered)
± Profit = Savings
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 26/44
26
Risks-Profits matrix
Pr ofit
Ri k
Str ong
Low
Low Str ong
Securitization
Catalog Profits
Partnership
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 27/44
27
Catalog area
Characteristics:
± Low Risks and Profits
± Products : Multiple sources, Substitutionproducts de, Low consumption value
Strategy : Resources minimization
Tactics :
± Shorter administration flow, delegation,number of orders and suppliers reduction,low inventories, standardization
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 28/44
28
Profit area
Characteristics
± Low Risks, Strong Profit
± Products : Multiple sources, Substitutionproducts, High consumption value, Highdiscount potential
Strategy : Strength relationship
Tactics :
± Spot purchases, Bidding, Market andtechnology survey, Purchasing tools...
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 29/44
29
Securitization area
Characteristics
± Strong Risks, Low Profit
± Products : Few sources, Few substitution
products, Low discount potential, Sales ortechnical risks
Strategy : Supply security
Tactics
± Long term relationship, survey, Make or Buy
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 30/44
30
Partnership area
Characteristics
± Strong Risks, Strong Profit
± Product = Functions
Strategy : Supply permanence andimportant profits
Tactics
± Partnership
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 31/44
31
Partnership setup
Define strategic objectives
Check supplier motivation
Design the project Develop strong personal relations
Use conflict and problem resolution
methods Reciprocal style adaptation
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 32/44
32
Purchasing policy
Negotiation parameters
Negotiation typologies
Purchasing family segmentation
Building a policy
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 33/44
33
Negotiation parameters
Time
± Short term / Long term
Frequency ± Punctual, regular, partnership
Repartition
± Unique, Multi-source
Purchasing Value
± Low, High
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 34/44
34
Negotiation typologies
Open inquiries for each order
Inquiries limited to selected suppliers
Multi source contracts
Unique source contract
Imposed suppliers
Sourcing
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 35/44
35
Open inquiries for each order
Needs written on a specification
Inquire (all) potentials suppliers (known)
Advantage Drawback
-Competition, price-Wide information
-Equity
-Time consuming-Low engagement
-No economy of scale
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 36/44
36
Inquiries limited to selected suppliers
Suppliers homologation for a family of
products
Inquire all these suppliers for each order
Advantage Drawback
- Competition, price
-Technical security
-following up
-Time consuming
-Low engagement
-No economy of
scale
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 37/44
37
Multi source contracts
Reliable forecast
Needs gathering, repartition
Annual negotiation : Fixed or indexed price
Advantage Drawback
- Stabilized prices
- Supply Security
- Economy of scale
- Less negotiation
- Long term
engagement
- Minimum of
quantity
- Good visibility of
forecast
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 38/44
38
Unique source contract
Forecast, needs gathering
Several supplier inquiry
Only one supplier contract
Advantage Drawback
- Stabilized prices
- Economy of scale
- Less negotiation
- More competition
- Long term engagement
-Unsecured supply- Good visibility of
forecast
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 39/44
39
Imposed suppliers
Imposed by :
± Technology
± Tools
± Customer
Partnership negotiation
Price decomposition
Supplier progress management
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 40/44
40
Sourcing
Advantage / Drawback
Global cost
Homologation Repartition to change
Actual supplier elimination
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 41/44
41
Global Cost
Suppliers inquiries, meetings, homologations
Specific tools, developments
Actual purchasing price (on the bill)
Packing & Packaging costs
Transportation, Installation, Handling costs
Financial costs (terms of payment,Inventories )
Training & setup assistance cost
Spare parts and maintenance cost
Wastes, scraps, packaging recycling
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 42/44
42
Purchasing family segmentation
Raw material
Standard components
Specific components Sub-contracting
General services
General supply Investment, Project
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 43/44
43
ABC Method
80% of p rcha ing amount i made of 20% part familie
amillie mount otal % umulated
Raw materiel 6 . % %
tandard component 0 2 .6% 80%pecific component 6 8. % 8 %
ub-contracting 2 .2% %
r oject . % %
eneral er ice 8 2.2% %eneral uppl 0.8% 00%
6
cla = 0% - 80% B cla = 80% - 95% cla = 95% - 100%
8/8/2019 OM - 3 – Supplier Relationship
http://slidepdf.com/reader/full/om-3-supplier-relationship 44/44