iii. Value Management
Achieving operational integration with suppliers creates the opportunity for the value management. Value management is more intense than supplier integration strategy. Value engineering, complexity reduction and supplier involvement at the early stages of new product development are few ways of procurement that can work with suppliers to reduce total costs.
Value management extends beyond procurement in the organisation and requires cooperation between numerous participants, both internal and external. Teams representing procurement, engineering, manufacturing, marketing, and logistics as well as key supplier personnel jointly seek solutions to lower total cost, improve performance, or improved accommodation of customer …show more content…
3.1.4 Supplier Management
Suppliers are major contributors in the effective functioning of supply chain operations. They can contribute through the timely and quality deliveries of goods and services. Therefore, it is essential that a purchase manger should work with suppliers to coordinate their operations and customer needs.
i. Aspects of Supplier Management
There are various aspects of supplier management such as vendor analysis, supplier audits, supplier certification and supplier partnering.
• Vendor analysis
It is the process of evaluating the sources of supply in terms of price, quantity, reputation and service. There are numerous factors that have to be considered while selecting a vendor (or suppliers). Since the importance of various factors varies in different situations, the purchase department should decide how well the potential vendors can be expected to perform against the various factors.
• Supplier audit
Periodic audits act as means of identifying suppliers’ production capabilities, quality and delivery problems and resolutions, and suppliers’ performance on other criteria. Such audit reveals the problem areas for which the buyers can attempt to find a solution before it becomes a serious problem. Few of the factors that covered by supplier audit as management style, quality assurance, materials management, design process used, process improvement policies and procedures for corrective action and follow – …show more content…
The certification process verifies that a supplier can meet or exceed the demands of a buyer. It is very important when long term relationship with the suppliers is desired. Certified suppliers are also known as world class suppliers. One of the major advantages of choosing certified suppliers is that the buyer can eliminate much or all of the inspection and testing of delivered goods as less risk is associated with them.
There are certain standard industry certifications such as ISO 9000 which show that the companies with those certifications are more reliable.
• Supplier relationships
Purchasing has the major responsibility for establishing and maintaining good supplier relationships. The relationship is based on the contract between buyers and sellers. Short term contracts involve competitive bidding where suppliers are kept at arms’ length and the relationship is minimal. In such cases businesses may be conducted through computerised interaction. Medium term contracts involve on going relationships. Long – term contracts often ends in partnerships that benefit both the parties. Maintaining a good relationship with suppliers is important to maintain a competitive edge. In modern days, suppliers are viewed as partners who can provide high quality supplies, maintain precise delivery schedules and remain flexible relative to changes in productive specifications
Process and tools Target Corporation uses tolls and process for product safety and quality assurance. The company assesses a program for risk –based product safety and quality at every stage in the product life cycle, from development through the life of brand product. Target global team implement a program across 36 countries and 2228 factories producing target product, during the process will require independent third-party testing to validate safety and quality before the guests purchase product. the vendor in the company are expected to employ best practices, including clearly defined and well-documented manufacturing and quality processes including staff training , and record keeping. What does the TC required to do the job?
A spend analysis evaluates spending to keep costs down. The advantages of a spend analysis is that it contains detailed files on what a company buys, how much they spend, and who they buy from. By conducting a spend analysis the controller can consolidate purchases in order to increase buying volume with a smaller number of preferred suppliers. Although this analysis can be used to reduce cost it does have one disadvantage. Spend analysis do not account for nonfinancial questions behind purchasing decisions.
SUPPLY CHIAN NETWORK OF TARGET VALUE CHIAN ANALYSIS OF TARGET Value chain analysis is a set of inter - linked value creating activities performed by the organisation that begin with inputs, go through processing and continue up to outputs manufactured to customers. It is the set of activities that creates additional value for the customer. Value chain plays a central role in improving cost efficiency, quality and customer responsiveness. Each activity in the value chain adds to the value of product in each process from its creation to delivery.
A supplier with strong bargaining power has the advantage of charging their price higher or selling low quality of the product to them. The bargaining power of suppliers will be low as there are many suppliers in the market offers similar products and this allows courts to switch to other suppliers that offer lower cost. Intensity of rivalry within industry High Threat Competitors in the industries There are quite a number of businesses involve home furnishing and electrical appliance.
Air Canada has faced many issues for the past 20 years. The company was surrounded with issues such as centralizing and decentralizing IT and financial difficulties. The past 20 years was a great challenge to Air Canada airline but they manage to accomplish on many fronts for Air Canada. It started off with fuel spike price in 2008 followed by the economic downturn in 2009, they encountered many major issues that were hurdles for their company. The first issue to Air Canada airline was fuel price went up which they couldn’t afford to manage it.
Corporate Strategies Vertical Integration Verizon implements a value chain analysis to understand the parts of the daily operations that create value, and those parts that do not. The value chain analysis is used to determine the level of competition, the type of products and services the consumer needs, and to figure out the ways that Verizon can stay sustainable and remain the market leader in the industry. This is vital because if done correctly Verizon will be able to gain high returns within the telecommunications industry by creating greater value to the customer. Verizon breaks their value chain into primary and support activities. The primary activities are research and development, infrastructure, marketing and sales, and customer
If a suppliers they decrease the quality of components, the quality of the finished product will slow-down or suffer so that manufacturer will lower its price or loses. Switch costs and supplier concentration, we need to have constant suppliers and we did not change any suppliers so that we no need to face any problem about switching cost. If the switching costs are high, fewer buyers will change the suppliers because of switching costs. Indeed, without top quality technologies, organizations like LEAFXPRO Bicycles would not possess the capability to build innovative bicycles that are able to surpass
The adoption of new technologies and trends is being facilitated in the industry for the competition and the customer’s overall experience. Many suppliers that are having similar strategies face a strong competition. The barriers for exiting the markets are high. Products and services of are undifferentiated leading the customer to focus on the prices offered. Low market growth, so it can be increased only by taking another firm’s market share.
Q. 2. Recent development in Technology has enabled huge global organizations to avail information easily in their premises for smooth functioning of various departments within an organization. Much of a company's success comes down to its Supply Chain Management and logistics. The development of Information Systems in SCM helps in cost reductions, customer satisfaction and productivity.
These suppliers are concentrated in Jakarta and can be purchased from for just-in-time procurement. The number of suppliers of this input is high as these materials can be procured from foreign suppliers as well. The cost of switching to another supplier is low and therefore, suppliers of this degree have little bargaining power. However, businesses in the mattress industry compete on technological superiority.
For the company, it gets the raw materials like wood and wood fiber from its internal suppliers and other raw materials like metal from its external suppliers. At this stage, parties like IKEA Industry and IKEA’s external suppliers are involved. Since IKEA has to purchase materials from numerous suppliers, the company has 31 trading service offices in 26 countries so that new idea testing, production monitoring, quality checks and price negotiations can be carried out efficiently. This ensures that the material costs are at its lowest and at the same time, material comes in good
One of the issues with Dreamliner was the late involvement of Boeing 's awareness of supplier related isuses. To improve in this area, Boeing uses the Supplier Performance Measurement Report to monitor and measure the eperfomrance of their supply base with focuses on " first-time quality and drive long-term, systemic improvements". THis system places focus on weather the suppliers have appropriate management systems and quality management systems in place, not just on-time dileverys and quality products. Supplier Quality Information System (SQIS) Communication of Quality Management System (QMS) tracks the audit findings are reported on a Supplier Evaluation Report (SER). BEST Boeing Enterprise Supplier Tool is a “summary” of a Boeing supplier’s performance for Product
The suppliers may likewise get innovative assistance from IKEA 's organization mechanical base camp all through an assortment of business administrations and to pick up his devotion, which helped in making a relationship of association instead of supplier to client relationship. The late, made exceptional business open doors, empowering IKEA to keep on offering an extensive variety of all around outlined, utilitarian home, outfitting items at sensible costs and that however many individuals as would be prudent can bear the cost of them. Section 5: AC 2.2 – Use information technology to create strategies to develop IKEA’s relationship with its suppliers. AC 2.3: From this point, develop systems to maintain these relationships. There are numerous IT arrangements which are connected by IKEA to create association with their suppliers some are as per the following: Investigate genuine time data about business sector patterns deals and requests.
The value chain analysis indicates the firms that strive to create superior products or services through focused differentiation strategy. To ensure the activities are tailor to the strategy Value Chain is used. How each activity generates value and linked to the strategy in UFS? Table 4: Value Chain Analysis Primary Activities
Process Drive to achieve functional excellence and integration across all major processes. - Core supply chain processes driving the business. - Best in class approaches to our core processes (manufacturing, integrated demand planning, procurement, cycle-time, compression, dynamic deployment) - Bulk linkages with suppliers and customers. C. Organization Providing the critical success factors of cohesion, harmony and integration across organization entities - Level of cross functional integration is required to manage core processes effectively - Leverage cross-company skills and abilities - Performance measurement and reporting structure help to achieve objectives D. Technology Empowers the Supply Chain to operate on a new level of performance and is creating clear competitive advantages for those companies able to harness it.