Strategic joint practice reverse marketing

This preview shows page 46 - 55 out of 75 pages.

Strategic Joint ventures/alliances/partnerships Practice “reverse marketing” Collaborative relationships Pursue annual cost/price/quality/cycle time improvement goals Use of longer-term agreements Consider insourcing
TOPICS The role & importance of purchasing Sourcing processes Spend analysis Technique used to determine sourcing strategy Sourcing strategies Criteria for evaluating suppliers Total cost of ownership (TCO) 48
GENERAL PURCHASING STRATEGIES: APPLY TO APPROPRIATE SITUATIONS. 23 Strategies in Monczka & Petersen (2008) HR Development Sourcing & SC Vision, Mission and the Strategic Plan Engagement by corp executives & SBU leaders Commodity & supplier strategy process Strategic cost mgmt Measurement & evaluation (metrics for commodity sourcing effectiveness) Functional leadership & business processes, practices & systems Procurement & supply org structure & governance (centralize or center led) Spend analysis used to create commodity categories then to analyze spend in each category Supply base optimization (Duffy, 2005) Aggregate volume; leverage spend With clout & commonality across suppliers, buy suppliers’ inputs for them (backward integration of purchasing) Global sourcing Long-term relationships Early supplier involvement (ESI) Supplier development / Six Sigma Total cost of ownership Electronic reverse auctions (e-RA) Automated ordering (EDI; supplier e-catalogues) Cross-functional / Location teaming Supplier Performance Evaluation (SPE) Most important Most implemented
MACRO PROCUREMENT STRATEGIES
STRATEGY RESULTS - SAVINGS Performance Area Avg Improvement Unit purchase price 4.1% Transp & logistics costs 2.6% TCO 3.5% Inventory investment costs 2% Supplier quality 3.3% Supplier on-time delivery 3.6% Supplier responsiveness/flex 2.3% Supplier diversity 3.1% Operating earnings 7.6% Fixed asset utilization 2.6% Monczka & Petersen (2008)
SOURCING STRATEGY DECISIONS Make or buy decisions outsourcing Alternate sources of supply Multiple vs Sole vs. Single Source Domestic vs. International Reciprocal practices
SOURCING STRATEGIES: NUMBER OF VENDORS Closer working relationship Higher volumes = lower prices Easier to manage “Honest” competition Spread the risk Lower “market” price Supplier stays hungry Reward/Punish with volume MULTIPLE SOURCE SINGLE SOURCE SOLE SOURCE Only 1 source can do/make it Locked-In
SUPPLY BASE OPTIMIZATION The process of determining the right mix & # of suppliers to maintain Costs of maintaining multiple suppliers for each good or service can outweigh perceived reduction in supply risk Resource constraint: Some strategies are not feasible with too many suppliers Supplier integration Collaborative agreements Supplier development Joint total quality/cost reduction efforts Benefits: Fewer contracts Agg volume Leverage lower purchase costs A continuous process Adding, reducing, or switching Optimization not always = “reduction”, but…
SOURCING STRATEGY: FORWARD BUYING Purchasing materials in quantities >

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture