Week7_Supplier%20topic_StudentCopy_2010 - External...

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1 ACCT3583 Management Accounting 2 Topic 7: Managing Supplier Value and Relationships External environment Internal environment Strategy analysis & formulation Performance Measurement Are we creating Shareholder Value? Environment/Society Seminar 9 You are here! Customers Seminar 6 Suppliers Seminar 7 Employees/IC Seminar 8 Strategic Risk Management & Control Seminars 10 & 11 2 Seminar Objectives By the end of the seminar you should be able to… 1. Identify and explain the reasons for outsourcing, 2. Understand and explain the key steps in the outsourcing process process, 3. Identify the critical success factors, hidden costs and contract risks from outsourcing. 4. Explain how the framework provided by Bensaou (1999) and how it helps in the management of supplier relationships. 5. Understand and apply the 'Total Cost of Ownership' philosophy/model. Readings Course Materials and Readings, Reading 7.1 (Langfield-Smith et al., 2006) Course Materials and Readings, Reading 7.2 (Bensaou, 1999) – Focus on understanding Contextual Profiles (i.e. ignore Management Profiles) Textbook Extract 6: Chapter 7 (Van Weele, 2006). Seminar Plan 1. Who are suppliers? 2. Outsourcing decisions 3. Outsourcing process– outsourcing phases Strategic phase Transition phase Operation phase 4. Types of buyer-supplier relationships Bensaou’s framework 5. Cost of transacting with suppliers Total cost of ownership Who are Suppliers? 6 – Tangible Goods vs. Services – External vs. internal
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2 Why the Interest in Suppliers? Admin role strategic role Intense competition 7 – Globalisation – new technology • Product life cycle • Information availability result in power shift => Cost management or improved quality Types of Outsourcing Cost of Outsourcing 8 Buyer-Seller Relationships Decision Transacting with a supplier Process What is Outsourcing? Outsourcing is “the transfer of activities, that were previously conducted in-house, to a third party” 9 third party (Extract 7, p. 173) – Involves transfer of assets – Formation of a longer term relationship – Exposed to a new cost- and risk profile Outsourcing Decisions: types of outsourcing Part of function Buyer co-ordinates In-House Partial Turnkey (Integral) • Entire function • Supplier executes and co-ordinates 10 H Responsibility for project L H Influence on supplier prices L H Influence on staff, technology & materials L H Need for experience/knowledge/ capabilities in running similar projects L L Possibility of delay from coordination H L Dependence on Supplier H Factors influencing the extent of Outsourcing Reasons for Outsourcing? To reduce operating costs 64% Improve company focus 48% 11 Access to world-class capabilities 43% Free resources for other purposes 43% Resources not available internally 34% % of respondents Extract 7, Fig 7.2 p. 122 The university announced its "program of efficiencies" yesterday and emailed about 1200 general staff, telling them they were eligible for redundancy. About 100
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This note was uploaded on 09/14/2011 for the course ACCT 1001 taught by Professor John during the Spring '11 term at Renmin University of China.

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Week7_Supplier%20topic_StudentCopy_2010 - External...

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