CREATING AND MANAGING SUPPLIER RELATIONSHIPS Chapter 3 CREATING AND MANAGING SUPPLIER RELATIONSHIPS

Disclaimer These slides do not replace the prescribed material. All prescribed material need to be studied for assignment and examination purposes Some of the slide content is based on the 2015 Cengage Learning Instructor resources.

Chapter Outline Introduction Developing Supplier Relationships Supplier Evaluation & Certification Supplier Development Supplier Recognition Programs Supplier Relationship Management ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Keys to Successful Partnerships Successful supplier partnerships are extremely important in achieving competitive corporate performance. This is because effective supplier relations leads  to flexibility in terms of delivery, better quality, better information and better materials flows between buyers and suppliers. Developing strong, win-win, long-term strategic relationships with suppliers creates value for the buying organisation, the supplier and ultimately the end customer. Good supplier relationships also improve integration along the supply chain, which enhances supply chain performance. This learning unit considers the main aspects of developing long-term profitable relationships with suppliers.

Keys to Successful Partnerships (Continued) Key ingredients for developing successful partnerships Building trust Shared vision and objectives Personal relation-ships Mutual benefits and needs Commit-ment and top management support Change manage-ment Information sharing and lines of communication Capabilities Perfor-mance metrics Continuous improve-ment Monitoring Supplier Relationships

Supplier Evaluation & Certification This is process to identify the best and most reliable suppliers Frequent feedback can help avoid surprises and maintain good relationships. Suppliers should be allowed to provide constructive feedback to the customer Supplier Certification refers to “an organization’s process for evaluating the quality systems of key suppliers in an effort to eliminate incoming inspections.” -Institute for Supply Management

Supplier Evaluation & Certification (Continued) Supplier evaluation and certification Weighted criteria evaluation systems What to know: (1) How to calculate the weighted criteria (see example 3.1) (2) The 7 steps (pp 84-85) ISO 9000 1) The difference between the 4 family standards of ISO9000 ISO 14000 The purpose of ISO 4000

Supplier Evaluation & Certification (Continued) The Weighted-Criteria Evaluation System Select the key dimensions of performance mutually acceptable to both customer & supplier. Monitor & collect performance data. Assign weights to each of the dimensions. Evaluate performance measures between 0 & 100. Multiply dimension rating by weight & sum of overall score. Classify vendors based on their overall score: Unacceptable, Conditional, Certified, & Preferred Audit & perform ongoing certification review.

Supplier Development Supplier development There are 7 steps in supplier development: Identify critical products & services Identify critical suppliers not meeting performance requirements Form a cross-functional team Meet with top management of supplier Rank supplier development projects Define details of Agreement Monitor status & modify strategies

Supplier Relationship Management (Continued) Five key points of an SRM system Automation handles routine transactions Integration spans multiple departments, processes, & software applications Visibility of information & process flows Collaboration through information sharing Optimization of processes & decision making

Activity Wisner et al (2016:95) discuss the five key tenets of supplier relationship management. Think of an certain organisation – now consider the five tenets and think of ways in which your organisation has utilised them. Discuss your thoughts with your fellow students and e-tutors on the discussion forum.