PurchasingMidterm study guide

Without having had any experience with such an

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Without having had any experience with such an arrangement, what would cause a vendor to want to participate? Identify the Need - Relationships (1/25/12), “Buyer-Supplier Relationships” (CP), “Building Deep Supplier Relationships” (CP), “The Power of Trust in Manufacturer- Retailer Relationships” (CP) Buyer-Supplier Relationships Characterize the different types of buyer-supplier relationships described in terms the Figure 4.1 (pg. 66 of the textbook). Transaction--------Alliance based. Alliance: Toyota, Honda, Airbus, McD’s (tough but value suppliers, at one time were the underdog, quality, efficiency, they want their suppliers to succeed, better communicators with their suppliers.) Transactional: GM, Microsoft (price focused, arrogant, entitled, no competition). Collaborative: Acer, Prato, Walmart, P&G, Hollywood (collaborate for a short period, fast turnover, [See Pg. 66-67] Transactional Relationships- most common and basic type of relationship. Arms length. [See Pg 69] Collaborative Relationships- awareness of interdependence and necessity of cooperation. Continuous improvement is easier, which results in reduction in total costs. [See Pg70-71] Supply Alliances- institutional trust (the parties have access to each other’s strategic plans in the area(s) of interface. Relevant cost info and forecasts shared. Risks/rewards addressed openly. Informal agreements as good as written ones. How and why do they differ from each other? How do they compare to McDonalds? (class notes) McDonalds is alliance-based. Transactional- (GM, Ford, HCT, Microsoft) price-focused, short-term supplier, arrogant/entitled, no competition, provide business, not fun place to be for suppliers, fast-paced culture, tradition.
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Collaborative- (Hollywood Motion, Acer, Walmart and P&G, Prato) Some risk, short but collaborative, fast turnover, fast changing style/technique. Alliance-based- (Airbus, Honda, Toyota, McD) have had to compete, tough, but value suppliers, quality/efficiency, better communicators, risk/rewards, pre-reqs/specific needs, power. Which type do you like best? Why? (class notes) One size does not fit all. Depends on what you want to accomplish, but the trend is moving toward alliance based because it is most successful. Collaborating with other firms and forming an alliance helps everyone in the SC become profitable. An on-going deal with an alliance-based relationship is strategic and requires inter-firm trust. Strategic relationships is secret to success. What direction do you expect relationships to move in the future? (case: Building Deep Supplier Relationships, p. 3) Towards alliance-based. We see that Ford, GM, and Chrystler (the Big 3) will do anything to cut costs, and suppliers cannot trust them. Their workers hate their suppliers, and are confrontational. Honda is a demanding customer, but is loyal. People want to work with nice people who respect them and treat them well. Honda and Toyota keep their suppliers and their business because of how they treat the people they work with. Toyota helped helped supplier improve production system, they improved, and Toyota rewarded them with orders.
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