market and material management analysis

7/30/2019 market and material management analysis

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Submitted by,

Neetu

BBA S6

MARKET AND MATERIALMANAGEMENT ANALYSIS


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A vendor is any person or

company that sells goods orservices to somone else in theeconomic production chain.

Who is a Vendor?


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Vendor Development can be defined as

any activity that a Buying Firmundertakes to improve a Supplier'sperformance and capabilities to meetthe Buying Firms' supply needs.

Vendor Development


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Vendor SelectionProcess


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Analyze the Business

RequirementsAssemble an Evaluation TeamDefine the Product, Material or Service

Define the Technical and BusinessRequirementsDefine the Vendor RequirementsPublish a Requirements Document for

Approval


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Vendor search

Compile a List of Possible VendorsSelect Vendors to Request More

Information FromWrite a Request for Information (RFI)Evaluate Responses and Create a"Short List" of Vendors


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Request for Proposal(RFP) and

Request for Quotation(RFQ)

Submission DetailsIntroduction and Executive Summary

Business Overview & BackgroundDetailed SpecificationsAssumptions & ConstraintsTerms and ConditionsSelection Criteria


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Proposal Valuation and Vendor

SelectionPreliminary Review of All Vendor ProposalsRecord Business Requirements and Vendor

RequirementsAssign Importance Value for EachRequirementAssign a Performance Value for Each

RequirementCalculate a Total Performance ScoreSelect a the Winning Vendor


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Contract Negotiation

StrategiesList Rank Your Priorities Along WithAlternativesKnow the Difference Between What You

Need and What You WantKnow Your Bottom Line So You KnowWhen to Walk AwayDefine Any Time Constraints and

BenchmarksAssess Potential Liabilities and RisksConfidentiality, non-compete, disputeresolution, changes in requirementsDo the Same for Your Vendor (i.e. Walk a


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Contract Negotiation

MistakesThe smallest mistake can kill an otherwiseproductive contract negotiation processThis part of the process will be shorter and less

complex for basic part and commodity vendors

(eg. basic raw materials, office supplies,gas/electric, etc.) and fundamental services (eg.

janitorial, heating/cooling system maintenance,office machine service contracts, etc.).It will take longer for more complex parts and

multifaceted services (eg. Software outsourcing,call center services, etc.).Regardless of the size and scope of the material or

service that you will be selecting a vendor for,

following these steps will help insure the success


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Direct and Indirect cost

in Material Management


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Part of the process of pricing your product is

including the costs of producing that product.Those costs include the direct and indirect costsassociated with producing your product.

Direct Costs

Direct costs are costs that can be easilytraced to a particular object such as aproduct, the raw materials used to

manufacture a product, or the laborassociated with the work to produce theproduct.


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The most common Direct Costs are Direct

Materials and Direct labor

Direct materials are the materials that can

be specifically identified with the product.


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Indirect Costs

Indirect costs are usually called

Indirect costs are those which affect theentire company, not just one product.

They are costs like advertising, depreciation,general supplies for your firm, accountingservices, etc.


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Indirect Materials and IndirectLabor

Materials such as tools, cleaning supplies,and office supplies make production of acompany's products possible but can't be

assigned to just one product. These areclassified as indirect materials

Labor costs that make production of aproduct or products possible but can't beassigned to one particular product areclassified as indirect costs.


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MarketDevelopment


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Market

DevelopmentMarketing development is a marketdevelopment strategy employed by acompany to increase its market, broadenits customer base, and ultimately sell moreproducts


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The first step for a company to increaseits market size is usually to discover thesegments of the market that arecurrently being supplied

convincing current customers to buynew products and services that they arenot already purchasing.

Untapped market segment-Marketingdevelopment can concentrate ondrawing them to a company or product

market penetration to increase its


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Market

Feasibility


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For industry/market feasibility

analysis, there are three primaryissues

that a proposed business shouldconsider:

i. industry attractiveness

ii. market timeliness

iii. identification of a niche market.


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i. Industry Attractiveness

A primary determinant of a new venturesfeasibility is the attractiveness of the

industry it chooses

Industries vary considerably in terms oftheir growth rate


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In general, the most attractive industries

are characterized as thefollowing:(1) Are large and growing;(2) Are important to the customer;(3) Are fairly young rather than older andmore mature;(4) Have high, rather than low, operating

margins;(5) Are not crowded.


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Although the criteria shown on the

preceding slide is an ideal list, theextentto which a new businesss proposedindustrys growth possibilities satisfy

these criteria should be taken seriously.(2) In addition to evaluating anindustrys growth potential, a newventure willwant to know more about the industryit plans to enter.(3) This can be accomplished through

both primary and secondary research


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ii) Market timeliness

considerationsNature of Productor ServiceIntroduction

Major Considerations

Improvement on

something alreadyavailable in themarketplace

Is the window of opportunity

open or closed? Is now a good time for a newmarket entrant (i.e.,are customers buying, areindustry incumbentsmaking money?)

Breakthrough newproduct or service,whichshould establish anewmarket segment

Should we try to capture afirstmover advantage?


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A niche market is a place within a largermarket segment that represents a narrowergroup of customers with similar interests

For a new firm, selling to a niche marketmakes sense for at least two reasons:

a) It allows a firm to establish itself within an

industry without competing against majorcompetitors head on.

a. A niche strategy allows a firm to focus onserving a specialized market very well

instead of trying to be everything to

iii) Identification of NicheMarket


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Another useful way of thinking about this

topic is to distinguish between verticaland horizontal markets :

A vertical market, which is analogous to

a niche market, focuses on similarbusinesses that have specific needs.Startups typically start by selling into

vertical markets.A horizontal market meets the specificneeds of a wide variety of industries,

rather than a specific one.


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market and material management analysis