Case Study : Supply Chain Management

All their suppliers range from small farming cooperatives to multinational corporations . They consider factors such as capacity, quality and cost when selecting companies to buy from. In addition, seek only to work with suppliers that can consistently meet standards and specifications and

Suppliers want steady orders and prompt payment, they also want to feel valued by the company that they supply.

Before anything else, I would like to clarify the difference between the single sourcing and sole sourcing. Single sourcing is refer to purchase from one selected supplier, though there may have other suppliers provide the similar products or service, which is mean the purchaser has a choice to switch suppliers, but for the strategic and some reasons like cost , purchaser decides to use only a specific supplier. Sole sourcing is refers to

{Build the Supply Base: supplier selection1. supplier evaluation- find potential suppliers, supplier certification (qualification, education, certificationISO 9000,14000). 2. Supplier development- integrate supplier in system, quality require, product specs, schedule/delivery, procurement polices, training, engineer/production help, information transfer procedures. 3. Negotiation- significant element, strategies: Cost based price model (open books to supplier, based on time and materials) Market based price model (based on published, auction, index prices: commodities) Competitive bidding (most common, no longterm relationship, request for rfq). 4. Contracting- share risks, benefits, incentives. Centralized purchasing, E procurement (online catalogs/exchanges, online auctions).} Logistics MGT- obtain efficient operations through integration of all material acquisition, movement, and storage activities. Frequent for outsourcing, allow competitive advantage from reduce costs and improve customer service. 1.Shipping systems: truck(flexible, moves majority manufactured goods) rail( large loads, containers) Airfreight( fast/flexible light loads, expensive) water( used for bulky low value cargo, oldest way of transportation) Pipelines( transport oil, gas,

The Bargaining Power of Suppliers (Moderate): Most of the industry’s products are sourced and manufactured by a network of third parties. The supplier group is diluted compared to the industry; KMD alone has over 45 suppliers. There is credible threat of suppliers adopting forward integration resulting in loss of major suppliers and emergence of new competitors for the industry. Highly effective and specialised products will pose high supplier switching costs for industry firms.

Each alternative must be clearly identified. The key advantages and disadvantages of each alternative must be listed and thoroughly discussed. The compare and contrast (pro and con) assessments of each alternative must be done against the decision criteria previously listed and discussed. A matrix format may be used in order to more accurately compare each of the alternatives. If multiple decision criteria are being used, weighting of each of the criteria must be applied. It is also important to look at the short and long term results of each alternative, and to assess the best, the worst, and the most likely outcomes for each alternative. Qualitative and quantitative analysis will be required. It will also be necessary for the student to use the various supply chain management tools and techniques learned throughout the certificate program to determine those possible outcomes.

Dual sourcing is used very often as quality control problems, giving the buyer additional power to product attributes that are difficult to specify in a contract. In addition, dual sourcing is used less often for systems procured under multiyear contracts, suggesting that competition and contractual completeness may be

In this assignment I will be writing a formal report that will explain a typical procurement process, I will outline a variety of methods of supplier reimbursement and contract relationships; I will also outline the pros and cons of each contract type. As well as this, I will explain a typical supplier selection process through the use of Carters 10 C’s and a typical selection process model.

The buyer will analyze submitted proposals and make a selection based on the business which meets the majority of their requirements. The buyer may choose to negotiate the terms of the purchase with more than one supplier in order to get terms which are more favorable - lower price, finance options & better quality (Grewal, p. 214).

However, regardless of its advantage, sole sourcing of supply is usually considered as risky decision since the company has to rely on the sole supplier. Therefore, it may result in a catastrophic event which is delay in shipment or stop production if the sole supplier has problems in terms of producing machines. Also, the supplier may become complacent or financial problems may occur if ACE increases the cost of production. Thus, maintaining the strong relationship between companies is crucial.

Various important approaches like engineering driven approaches and selection of supplier processes lead to the number of suppliers at premium prices. It reduces cost of

It is quite challenging to discuss about procurement management without stating the importance of its strategies. There are four main basic procurement strategies that serve different functions within a procurement management. To begin with, a “Partnership” strategy focuses mainly on constructing mutual commitment in long term relationship with suppliers. While a “Secure Supply” strategy aims to secure short and long term supply while reducing risk from suppliers. In addition, a “Category Management and E-Procurement solutions” serves as a tool to reduce logistic complexity, improve operational efficiency, and attempts to reduce the number of suppliers. Lastly, a “Competive Bidding” strategy emphasizes on obtaining the “Best Deal” for short term transactions with suppliers.(van weele) Each of these four strategies involves a unique purchasing methodology, which implies that the complexity is embedded in an individual strategic implication. Therefore, it requires different tools to accomplish the specific strategical characteristics. A business entity may need to support and execute procurement decisions with other strategic apparatus with analytical methods, including market analysis, uncertainty analysis, price forecasting, supplier relationship and along with others.(Harvard)

A sourcing strategy, when properly defined, assists an organization by outlining its requirements, mapping of the existing supply market, and the development of a plan for short and long-term sourcing objectives (Duffie & Koester, 2005). A well-defined, clearly stated sourcing strategy significantly improves the quality of performance and the speed needed to accomplish a firm’s sourcing objectives. In order for a sourcing strategy to be truly effective, it must take into consideration the core competencies of the company, in order to create a strategy that will protect and build on these

Vendor Performance analysis is the formal process of running supplier dealings, measuring performance and driving continuous improvement with a company’s strategic suppliers. This tool was developed in order to measure, analyze, and manage an organizations performance with effort to improve the relationships with suppliers, reduce cost, alleviate risk and drive continuous improvement.

In addition to the adequate amount of suppliers, a third criterion would be based on the supplier’s ability to use ePass. The fourth criterion is the ability to repeat the sourcing method yearly in order to make the system effective for a long term basis. The last criteria that the sourcing team should consider ensuring that the overall ePass system requires less time while lowering the cost of sourcing. The sourcing teams needs to ensure that the overall process increases the firms’ efficiency and that it doesn’t put Betapharm at risk.