-
1/28/2015
1
STRATEGIC SOURCINGSTRATEGIC SOURCING/
Fords A/c payable processFords A/c payable process
Ford A/c payable processFord A/c payable process Process
ImprovementProcess Improvement
-
1/28/2015
2
Best Practice : Total Best Practice : Total cost of
procurementcost of procurement
Total cost of procurement Many suppliers competitive market
Cost of goods Other costs*
Total cost of procurement L T relationships with few suppliers
(Lean manufacturing)
Cost of goods Other costs*
Elements of process partnership relationships
AttitudesTrust
Joint learning
Long-term expectations
Sharing success
Multiple points of contact
Closeness of
Actions
Joint problem solving
Joint co-ordination of
activities
Few relationships
Information transparency
Dedicated assets
Closeness of relationship
Supply NetworksSupply Networks
Lean supply networks Lean supply networks Toyota, Honda,
HeroToyota, Honda, Hero
Agile supply networks Agile supply networks Nokia, Cisco,
MotorolaNokia, Cisco, Motorola
Elements of process partnership relationships
AttitudesTrust
Joint learning
Long-term expectations
Sharing success
Multiple points of contact
Closeness of
Actions
Joint problem solving
Joint co-ordination of
activities
Few relationships
Information transparency
Dedicated assets
Closeness of relationship
-
1/28/2015
3
Kankei Kaisha =dedicated supplier plants, Dokuritsu Kaisha =
Independent supplier plants
Agile NetworksAgile Networks
Multi Multi --sourcing more prevalentsourcing more prevalent
Through agility in manufacturing facilitiesThrough agility in
manufacturing facilities
Through network flexibilityThrough network flexibility Multi
Multi --sourcing more prevalentsourcing more prevalent Quick
integration of suppliers (template based)Quick integration of
suppliers (template based) Planned exit at end of contract
periodPlanned exit at end of contract period
Second-tier suppliers
First-tier suppliers
SBU A
SBU B
Second-tier customers
First-tier customers
Focal level
Upstream Downstream
Flow of Products/ServicesFlow of Information
Supply networks agility through change in supplier groups
SBU B
Plant C
xx
x
Supply side of the network Demand side of the network
x x
Various other supply chain flexibilities such postponement,
modularization of products, and more customized products
Design&Development
C
U
S
T
Promotion&Sales
R
A
W
AgileSupplyNetworks(NOKIA India)
Distribution
FinishedGoodsManufacturing
MaterialsSupply
ComponentsSupply
Warehousing Retailing
AfterSalesSupport
ServiceCenters
O
M
E
R
S
Flowsofmaterial,information,money,andknowledge
M
A
T
L
S
Plastics
IndiaSupplier
Quick supplier integration and planned exit
Template based integration of suppliers
-
1/28/2015
4
Supplier segmentation: identifying strategic suppliers
Network Management TheoryNetwork Management Theory Network
StrategyNetwork Strategy
Network ViewNetwork ViewFirm View of Network ManagementFirm View
of Network Management
-
1/28/2015
5
Aligning Firm view and Network viewAligning Firm view and
Network viewNetwork EnvironmentNetwork Environment
TheThe network view -
framework
IKEA networkIKEA network
IKEA IKEA network strategy componentsnetwork strategy
components
-
1/28/2015
6
AlkzoAlkzo Nobel case : Lack table (Future Biz)Nobel case : Lack
table (Future Biz) Becker Becker AcromaAcroma case: IKEA case: IKEA
-- Network ExitNetwork Exit
Toyota Supplier NetworksToyota Supplier Networks
-
1/28/2015
7
Li and Fung CaseLi and Fung Case
ExhbitsExhbits 5&6 : 5&6 : Relative WagesRelative
Wages
Li and FungLi and FungAnalysis of Analysis of ClassiqueClassique
OrderOrder
Options: 1. Philippine -Manilla supplier (2) Chinese supplier
Qingdao (supervise with own staff- 2/3/4 visits) (3) Transfer order
to HV division
Li and Fung: Hos options for Li and Fung: Hos options for
ClassiqueClassique orderorder
Li and Fung Li and Fung
Restructure Soft Toys divisionRestructure Soft Toys division
Soft Toys Soft Toys Old StructureOld Structure Soft Toys Soft
Toys -- Proposed StructureProposed Structure
-
1/28/2015
8
Laus Proposed change in Laus Proposed change in working
structure (Soft working structure (Soft Toys) from one hub at Hong
Toys) from one hub at Hong Kong to three hubs at Hong Kong to three
hubs at Hong Kong, Taipei and SeoulKong, Taipei and Seoul
Cost Benefits for a foreign company to use Li and Cost Benefits
for a foreign company to use Li and Fung Fung vsvs set up its own
offices and staff set up its own offices and staff (Exhibit
10)(Exhibit 10)
Li & Fung turnover $795.5 millionOr HK$ 6125.5 million
Li & Fung Business from top 5 customers $365.9 million
(46%)
Average annual business for each of top 5 customers thru Li d
F
$73.18 millionand FungEstimated commissions @6% $4.39
million
Total cost of maintaining Hong Kong office (Exh 10) $1.38
million
Number of cities in which offices could be maintained w.r. to
commission paid (possibly more because Hong Kong prices are high
w.r. to other locations)
3.2
