Supplier Management

Trade offs The Fresh Connection is full of trade offs Over multiple roles and within roles Sometimes conflicting with role incentives Capacity mgt TCO Product characteristics Demand mgt Supplier mgt Inventory mgt

Supplier selection How to select the best supplier? What criteria did you use? How to prioritize them? Lowest price Lowest cost Fit with strategy

What is Total Cost of Ownership? In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream. The main insight that TCO offers to the supply chain manager is the understanding that the acquisition cost is often a very small portion of the total cost of ownership (APICS Dictionary, 12th edition) In other words: quantifying all procurement related costs of a supplier or a component

What is Total Cost of Ownership? (cont) What related costs can you mention for the Fresh Connection? Product costs Transportation costs Quality costs Interest Inventory & payment terms Handling costs Administration costs Warehouse costs Explore TFC Calculate this costs for one of the components in % How to influence this costs What does this mean for your supplier policy

Product characteristics Product characteristics are important. The focus of total costs of ownership will change. Explore TFC What is the value per pallet for the components? What is the volume and value per week per component? How will the difference in characteristisc influence the policy?

Product characteristics are important for designing a supply chain configuration Type Value per pallet Purchase value Need per week in pallets Pack 518 109K 7 PET 32 292 K 188 Orange 400 406 K 35 Mango 900 72 K 3 Vitamin C 150 1 K 0,1 Waarbij m3 is gedefinieerd als opslag- cq. laadruimte Afgeleid van Ploos van Amstel’s combinatie van waardedichtheid en verpakkingsdichtheid (in collo/m3). How does this influence inventory policy and supplier selection?

Product characteristics and policy Volume/week Trasnportation handling and warehousing 100 Price and availability 10 Transportation and availability 1 100 500 1000 Value/pallet