PurchasingMidterm study guide

Building deep supplier relationships what are toyota

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Building Deep Supplier Relationships What are Toyota and Honda doing right? Seeking to build long term relationships with suppliers. Toyota instituted a supplier support center, a school for suppliers to learn the core concepts of the Toyota production system. Issues such as quality, reliability and commitment to cost reductions seemed to be prerequisites for consideration. Toyota would not go to the web for online bidding they wanted face-to-face meetings with suppliers and personal inspections of factories and managers. What are Ford, GM and Chrysler doing wrong? GM: arm’s length relationships depended a great deal on price-bidding. GM’s internal manufacturing plants and suppliers were scattered around the U.S. Suppliers/Buyers had little face to face contact unlike Toyota. The trust between suppliers and buyers was lower. GM had policies and contracts that they often betrayed to get the best price. They don’t like the word “partners” GM was too focused on cost reduction and supplier relationships suffered. The Power of Trust in Manufacturer-Retailer Relationships When would a buying firm benefit from exploiting a power position? (class notes) Many big firms, for short term, can justify it. The smaller firm will probably push it to get the contract. But in the long term, they will feel used and will probably not stay with you. You want your suppliers to be around. Not rational to exploit. Rational thing to do is to get the fair price.
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When would it be better for the buying firm to pursue a trusting relationship with a supplier? (class notes) Almost always. Rational to get fair price. Because even with smaller suppliers, who are leverage firms, you do not want to lose them. Want to keep your options open. There is trust in all quadrants (low impact, critical project, leverage, and strategic). Common decency like simple things (treating people nice) gets you far. Is there a “dark side” to trust? Yes. Sometimes trust can go too far. We may be willing to overlook faults or accept unethical practices when we are too close. Supplier Selection (1/30/12), Chapter 11 (including appendices) Where would you look to assemble a list of potential suppliers? The WWW, trade shows, Sales Personnel, Trade Registries and Directories, and other supply management departments. What are the most important criteria for supplier evaluation and selection? (p.244- ) Many uncomplicated, low-dollar-value purchases, examination of basic info that is readily available, such as mailing or website, is sufficient. In some cases, evaluation is unnecessary. Complex, high-dollar-value, and/or critical purchases, additional steps needed: (p. 244) Is the supplier strategically important? If the supplier provided a product that is critical to the firm’s success. Is the product or service being procured considered strategic? if yes, perform evaluation. Are there other short-term alternatives available? if SM can modify the request to allow another product, service, or supplier to be substituted quickly, they can reduce thoroughness of evaluation.
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