With an evolving and highly competitive market, firms are seeking more innovative ways to create value and improve efficiency. Historically firms have tried to improve internal processes through housekeeping but in the recent past this have changed and attention has centred on the management of the firm’s supply activities. Open markets and a “flat world “as Thomas Friedman (2005) explains, has seen many new entrepreneurs boom with business ideas that step aside the conventional methods of business. Reduced effort and time from conception till marketing, sales are now achieved at a much faster rate, achieved through technology advances and specialised suppliers. Developing relationships with such suppliers is now an integral part of the business strategy.
One of the most influential ideas suggested was by Kraljic (1983); a positioning matrix that help position product or services base on elements influencing and affecting the purchase item depending on increasing risk to supply and increasing impact on the business.
Fig:1 (source: The journal of supply chain management : Summer 2005)
How Kraljic matrix helps:
In general, depending on the market and the product, require a different buyer-supplier relationship that needs to be managed differently. Kraljic introduced the comprehensive portfolio approach for purchasing and supply management that can be applied to different purchasing and supplier strategies. Each of the matrix boxes requires a different and distinct approach towards the supplier. This model tries to minimise supply risk and maximise buying power. The model allows in easy coordination between sourcing patterns of different business units with a company, in turn improving efficiency and synergy.
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...And to achieve this supplier’s raised their competence, assisted by Motorola. There are formalised procedures and methods in place for suppliers through training programs, annual conferences and other shows to increase the communication and interaction with suppliers.
This process of involving your key suppliers in growth of the business details supplier development as a process in which actions are taken in order to achieve wanted results. This highly integrated supply chain strategy, listed as part of the company’s corporate responsibility website (Accessed 2011) gives you an overview of the importance of supplier’s development in a company’s growth.
Such integration with suppliers has resulted in a consistent performance and has met or exceeded expectations. With a unilateral focus on achieving the same goals has assisted Motorola achieve its business goals.
Any time the company is looking into software project, there are areas associated with risk such as cost, time and relationship with suppliers. However, for Harley-Davidson, “collocation of suppliers with production facilities and their integration into company’s development process was the essential part of long-term relationship development”. Through a continued focus on collaboration and strong supplier relationships, the company could position itself to achieve strategic objectives and deliver cost and quality improvement over the long-term. Since, at that time company had no centralized system in place to handle relationship with suppliers and consequently, most of company’s time was spent on supplier management activities. For example, reviewing inventory, expediting and data entry. Furthermore, each supplier had different information systems for “Maintenance, Repair, and Operations (MRO), Original Equipment (OE), Parts and Accessories (P&A), and General Merchandising (GM) purchasing activities”. The systems, already provided by supplier, had to be further modified to meet individual need at each location, such as “the OE system at Harley-Davidson’s York, Pennsylvania site was different from the OE system in Kansas City”. However, due to long-standing tradition of gradual change implementation and focus on quality, quick transitions were unwelcome and did not come easy for the company. The size of the project determined how much risk was involved in terms of cost, time, and supplier relationships. The idea of switching to global purchasing system was seen as a threat not only in supplies and production flow interruption, but also in damaged dealer/customer relationships and lost sales. Furthermore, failure of the sy...
• Distributor agreements: Finding and securing agreements with exceptional manufacturers and distributors will be an absolute need for success. A unique product will support the brand message. Products, Services, and
How has the use of technology changed its interaction with its suppliers? Wholesalers? Other business partners?
In the 1960s through the 1970s, companies realized strong engineering, design, and manufacturing functions were strong market strategy keys to create and capture customer loyalty. As the demand for new products rose in the 1980s, these market requirements were to increase their flexibility and responsiveness to adapt existing products and processes or to develop new ones in order to meet customer needs. As manufacturing improved in the 1990s, managers began noticing material and service inputs involving suppliers and their major impact on an organization’s ability to meet customer needs. As a result of these changes, organizations now find that it difficult to manage their own organizations. First, they must be involved in the management of their network of all upstream firms that provide directly or indirectly, as well as the network of downstream firms, which are responsible for delivery and market service of the product to the end customer.
In such situations, the buying industry often faces a high pressure on margins from their suppliers. The relationship to powerful suppliers can potentially reduce strategic options for the organization.
‘Supply chain management integrates supply and demand management within and across companies. It encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, thir- party service providers, and customers’. (Web: Council for Supply Chain Management Pr...
Definitions of ESI and EBI are arrived at based on extensive literature review and highlighted in block diagrams. ESI is perceived as an outcome of long- term relations and well managed permanent supply-chains which lead to knowledge integration, trust and cooperation and proactiveness. EBI on the contrary is perceived as an initiative to accumulating ‘relational capital’ which leads to ‘product perfection’. Evaluation of applicability and non-applicability of ESI to the four roles of SCM in construction by Vrijhoef and Koskela, 2000 is carried out. ESI is also pictured as ‘early supplier inputs’ as well as ‘early supplier intervention’. The script has been fairly positive on the application of ESI to the 4 roles other than to improve the supply chain. Within a buyer-supplier framework and the life span of a project, ESI has its limitations in contributing to SCM.
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
It has become apparent the effects of globalization has changed the marketplace so much in the past few decades that a much faster response is demanded from producers and their supply chain. This is done by effective supply chain management, which is the integration of key business processes acrosss the supply chain within organisiations. The objective of this is to create a system of best value for the entire supply chain including the consumer. In recent years, many firms have realised the importance of the optimization and streamlining of the supply chain management processes, it has since become the focus for many firms.
As pointed by Parsons A.L (2002), there was increasing dependent on the relationship and customers is demanding to receive high standard of products and services for them to sustain the business in the intense manufacturing environment. Besides, Xu et al. (2008) has highlighted that supplier is developing a long-term relationship with their crucial suppliers to increase the competitiveness and to establish an effective and efficient supply chain. Trend (2005) also mentioned that work closely in partnership with suppliers is the only way to survive in today’s competitive business environment.
(2014) deduced that procurement performance can be assessed by focusing ondelivery,flexibility, quality, cost and technology. Optimal performance attainment is dependent onhow current suppliers`relationships aremanaged so asto ensure constant availability of needed quality supplies at the organization. This will ensure that sourced materials are indeed procured at the right costand atthe right time. Procurement performancestrives toenable improvements in the procurement process at the organizationso as to improve on qualitydelivery of firm products and servicesatleast possible time and
Supply chain management (SCM) is both art and science that helps to increase the productivity of the company, find the raw components it needs to make a product or service and deliver it to customers. SCM helps the companies compete with the dynamic international market. According to Christopher (1994), a supply chain is “a network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate customer.”
...M, over the past few years, has proven itself as a major staple in the running of a business. There is a high demand for the skills that organize a company according to function and communication. The job skill sets are encompassing of many different disciplines and has one major goal: To streamline an organizations model in order to bring better and more effective service and goods to the consumer. The main purpose of a company's existence is initially to make a profit, but eventually, that goal transforms into maximization of profit, and it is here, that supply chain management becomes indispensable for a company, as we have seen with the example of Hewlett Packard. It requires experience know-how in order to treat many of the real world problems in an increasingly shrinking world and to make it look-like it was smooth and flawless in the eyes of the customer.
In the 1980’s successful Japanese firms proved to be leaders in modern management techniques with strong relationships with suppliers, allowing them to produce products of a higher quality and a faster rate than their American and European counterparts. (Ehret, 2004) Their business model focused on economies of scope, as opposed to economies of scale. Industrial firms realised they needed to manage buyer-seller relationships in order to manage cross-functional and cross-organisational processes that would allow them to become more flexible.
EC offer an effective communication between supply and manufacturing, and companies are able to respond efficiently and quickly to demand. (Turban, 2006)