Week5 Supplier Relations

WEEK 5

SUPPLIER RELATIONS

KEY QUESTIONS IN STRATEGIC SUPPLY MANAGEMENT

HOW CAN WE…..

• IMPROVE OUR RELATIONS WITH SUPPLIER ?• INVOLVE OTHER FUNCTIONS MORE EFFECTIVELY ?• INITIATE A PARTNERSHIPS OF ALLIANCES WITH OUR

KEY SUPPLIERS?

KEY STRATEGIC DECISIONS IN SUPPLY MANAGEMENT

1. WHICH SUPPLIER TO PURSUE

2. WHAT KIND OF RELATIONS TO MAINTAIN WITH SUPPLIERS

STRATEGIC DECISIONS IN SUPPLY MANAGEMENT

STRATEGIC SUPPLY MANAGEMENT IS FOUNDED ON THE CONVICTION THAT A SIGNIFICANT COMPETITIVE EDGE

CAN BE GAINED FROM THE SUPPLIERS AN ORGANIZATION HAS DEVELOPED AND ITS SUPPLY SYSTEMS AND SUPPLIER

RELATIONS.

STRATEGIC DECISIONS IN SUPPLY MANAGEMENT

SUPPLIER PERFORMANCE HAS A GREATER IMPACT ON THE PRODUCTIVITY, QUALITY AND COMPETITIVENESS OF THE

ORGANIZATION.

STRATEGIC DECISIONS IN SUPPLY MANAGEMENT

RECENT TRENDS TO BUY INSTEAD OF MAKE, TO OUTSOURCE INSTEAD OF CONTINUING TO MAKE, TO

IMPRO VE QUALITY, TO LOWER INVENTORIES, TO INTERGRATE SUPPLIER AND PURCHASE SYSTEMS, AND TO

CREATE COORPERATIVE RELATIONS SUCH AS PARTNERSHIPS HAVE UNDERLINED THE NEED FOR

OUTSTANDING SUPPLIER PERFORMANCE.

STRATEGIC DECISIONS IN SUPPLY MANAGEMENT

SIMPLIFIED SUPPLY CHAIN PERSPECTIVE

THE NATURE OF THE PURCHASE

• REPEAT PURCHASE• MODIFIED REPEAT PURCHASE• NEW REQUIREMENT• THE SIZE OF PURCHASE• THE MARKET CONDITION

PURCHASE-SUPPLIER RELATIONS

THE NATURE OF THE RELATIONSHIP BETWEEN THE TWO ORGANIZATIONS IS

A MAJOR INFLUENCER OF THE ULTIMATE VALUE AND CUSTOMER

SATISFACTION ACHIEVABLE.

PURCHASE-SUPPLIER RELATIONS

OUTSTANDING SUPPLIER PERFORMANCE NORMALLY REQUIRES EXTENSIVE

COMMUNICATION AND COOPERATION BETWEEN VARIOUS REPRESENTATIVES OF THE

BUYING ORGANIZATION AND THE SELLING ORGANIZATION OVER A LONG PERIOD OF

TIME.

PURCHASE-SUPPLIER RELATIONS

BRINGING NEW SUPPLIERS OUTSTREAM IS EXPENSIVE AND IS OFTEN ACCOMPANIED BY A PERIOD OF LEARNING AND AGGRAVATION FOR

BOTH SIDES.

PURCHASE-SUPPLIER RELATIONS

SYSTEM AND PHILOSOPHICAL COMPATIBILITY BETWEEN PURCHASER AND SUPPLIER HAS

BECOME MORE VITAL AS WAYS AND MEANS ARE FOUND TO SHORTEN THE TIME TAKEN FROM REQUISITION TO ACTUAL RECEIPT OF

THE ORDER.

PURCHASE-SUPPLIER RELATIONS

SUPPLIER GOODWILL

GOOD SOURCES OF SUPPLY ARE ONE ASSURANCE OF GOOD QUALITY TODAY, PROGRESSIVE THINKING AND PLANNING IS A FURTHER

ASSURANCE OF IMPROVED QUALITY TOMORROW.

PURCHASE-SUPPLIER RELATIONS

SUPPLIER GOODWILL

THIS GOODWILL HAS BEEN CULTIVATED THROUGH THE DEVELOPMENT OF TRADEMARKS AND

BRANDS, THROUGH EXTENSIVE ADVERTISING AND SALE PERSONNEL.

( RELATIONSHIP MARKETING)

PURCHASE-SUPPLIER RELATIONS

SUPPLIER GOODWILL

NO COMPANY CAN BE WORLD CLASS IF IT DOES NOT MEASURE ON A REGULAR BASIS

THE SATISFACTION LEVEL OF ITS KEY SUPPLIERS AND TRY TO IMPROVE

CONSTANTLY ON ITS RELATION WITH ITS SUPPLIER.

PURCHASE-SUPPLIER RELATIONS

PURCHASE-SUPPLIER RELATIONS

UNACCEPTABLE SUPPLIER

ACCEPTABLE SUPPLIER

PREFERRED SUPPLIER

EXCEPTIONAL SUPPLIER

PURCHASE-SUPPLIER RELATIONS

UNACCEPTABLE SUPPLIER

ACCEPTABLE SUPPLIER

PREFERRED SUPPLIER

EXCEPTIONAL SUPPLIER

Unacceptable supplier fail to meet operational and

strategic needs of the buying organization.

PURCHASE-SUPPLIER RELATIONS

UNACCEPTABLE SUPPLIER

ACCEPTABLE SUPPLIER

PREFERRED SUPPLIER

EXCEPTIONAL SUPPLIER

Acceptable supplier meet current need as required

by contract.

PURCHASE-SUPPLIER RELATIONS

UNACCEPTABLE SUPPLIER

ACCEPTABLE SUPPLIER

PREFERRED SUPPLIER

EXCEPTIONAL SUPPLIERBoth parties work toward mutual improvements to

eliminate nonvalue adding activities.

PURCHASE-SUPPLIER RELATIONS

UNACCEPTABLE SUPPLIER

ACCEPTABLE SUPPLIER

PREFERRED SUPPLIER

EXCEPTIONAL SUPPLIERExceptional suppliers anticipate

operational and strategic needs of the purchaser and are capable of

meeting and exceeding them.