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4 (26th August, 2011) Lecture Contents about: Supply Processes Book Chapters #. 3
Supply Processes
(Chapter #. 3)
Business Process may Include: Purchasing Process; Marketing Process; Accounts Payable Process; R&D Process.
Robust Process: A set of activities that have a beginning and an end; Occur in a specific sequence; Have inputs and outputs; Must have structure and discipline.
building consensus with the organization around the opportunities to add value.
And this requires vertical and horizontal alignment of
one business unit to the one where it needs; the need of using department;
situations for rush orders considering the lead time as well as any major changes;
Involvement. This will brings in information that may result in cost avoidance / reduction, fast time to market and greater competitiveness;
PEST Analysis
2. Description of Need:
Unclear or ambiguous descriptions, or over-specified materials or quality levels
all may lead to unnecessary costs, re-work, design changes, production losses, etc etc.;
Ideally, organizations must have a template detailing each and every aspect
about the requirement i.e. size/dimensions, color, strength, quality, desired lab test results, manufacturing and expiry dates; delivery packaging; lot size; transportation mode etc. requirements to produce one SKU (Stock Keeping Unit). This document must also summarize the total requirement for a batch size production. persons is to carefully audit the requirement s. To eliminate the chances of ordering the materials which already available in stock within the corporate locations, verification of stock levels is a must to do thing here; and samples, if necessary, and to execute the purchase order and obtain delivery;
BOM Bill of Materials. A recipe document which tells the entire assembly
Before any action being taken, the primary responsibility for procurement
The delivery date requested should allow for sufficient time to secure quotations
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Issuing a RFQ Request for Quotation Issuing a RFP Request for Proposal Issuing a RFB Request for Bid Salesperson interviews, Catalogs, Trade Directories and Journals, Yellow Pages, Direct Mail, Market Visits, Exhibitions, Colleagues, Other Buyers, Agents, Embassies and Commercial Attaches, etc.;
must show other things besides prices i.e. ability, strengths, willingness on terms specified, industry experience etc.
The strategic decision could be make or buy or single source or diversification or whom to issue the order and why.
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3.
Single Sourcing Supplier may be the only possible source; Supplier may be outstanding in quality and service; The order may be small; Associated advantage i.e. discounts and lower freight rates; Supplier may be more cooperative if he has all the business; When the purchase involves a die, tool, mold, or costly customized setup; Delivery may be easily scheduled; The opportunity of JIT, stockless buying,
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Suppliers Ability and Experience; Suppliers Willingness; Suppliers Financial Strength and Stability; Suppliers Facility Location; Suppliers Sources and Resources ; Labour Relations; Production Specialization; After Sales Service;
Other Assessment Factors: Lead Time, Delivery Frequency, Transport Cost, Quality Certifications, Willingness to hold inventory, Pricing terms etc. STRATEGY making a win-win situation for both i.e. buyer and supplier to
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may result in serious legal complications. follow the POs or the Contracts;
Orders do not materialized until and unless written acknowledgement that must Rush Order, Blanket Orders, Open-End Orders; Terms and Conditions must contain: Provision to guard the buyer from non-material costs and damages i.e.; No charges will be allowed for boxing or crating; Acceptance of materials is subject to successful quality inspection; Precise quality parameters and method of quality assurance; Right of cancellation of the order if deliveries are not received on specified date; Quantities with over shipments or under shipments; Non acceptances if changes made in the material specifications without approval. STRATEGY Play safe and sure.
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Following should be considered while negotiating prices with the suppliers: Cost Factor covers total unit cost and earn a reasonable profit; Nature of Market; Competitors Prices; Channel of Distribution; Warranty and after-sale service; Margin for rebates or concessions; Government Policy; Buying habits of customers; Nature of sales seasonal sales or regular sales; Demand and supply; Discounts.
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the original delivery promise, or to deliver ahead of schedule, or to speed up delivery of a delayed order; may include threat of order cancellation or withdrawal of future businesses if the supplier cannot meet the agreement; should be minimized or ideally eliminated from the process;
Expediting
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Procurement Manager depends upon what strategic outcome organization want to achieve;
other hand, not reporting to procurement may result in conflicting focuses and other ways of ill-practices;
implemented;
The functionality of Receiving, Inspection and Storing is by-passed where JIT is The purposes of receiving and inspection are: Confirm the order place has actually arrived; Check the shipment arrived in good condition; Quantity is received as order with any under or over shipment; Ensure the proper documentation and recording. Rejection types include incoming rejection, line rejection and field
rejection; This process also posses the cost and organizations want to cut it to minimum; this would in turn assure the quality input in processes.
STRATEGY Ensuring materials are received with specified and agreed details,
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accounting?;
department. This bring higher levels of goals alignment; critical is missing, invoice is returned for correction;
and approval to cut away any chances of anomalies that may occur;
becomes very necessary to request the invoice to complete the transaction.; performance of both the parties.
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computerized systems (ERPs Enterprise Resource Planning Systems) to keep the records all the cross functional transactions, which provides a great platform for decision makings;
and external relationships are affected throughout the supply process. There is a need of continued efforts of relationship initiation, development, repair and management to keep the business momentum going;
the state where they benefit in a win-win situation.
SZABIST. MBA Fall-2011. Instructor: Faisal Abubakar, Strategic Procurement in SCM
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Convergence:
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