UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC Business marketing – current topics impacting on sales and purchases in the company. Knowledge from practice. MARKETING/INTERNATIONAL ECONOMICS – UCL – JANUARY, 2014 LECTURER MILAN ORESKY

UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC Business marketing – current topics impacting on sale and purchases in the company Intercompany relations and purchasing policy. Supply chains and networks. E-SCM and E-procurement, E-reverse auctions Customer relationship management – Supplier relationship management

UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC New product development and ESI – early supplier involvement Selling and buying at right price. Tendering Contract negotiations Capital investment purchases

UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC 1. Inter company relations and purchasing policy Supply chains and networks

UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC

Can be classified according to: A Supply Chain is that network of organisations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate customer or consumer. Logistics and Supply Chains Types of Supply Chain Can be classified according to: Customer/supplier characteristics – concentrated, batch, retail and distribution Virtuality - information Scope – international, regional, Service Complexity – direct, extended, ultimate Products – end product (build to forecast, build to order) Purpose and value

Supply Chain Management Customer relationship management Quality of products and services Reverse logistics Returns management Customer service management Product development & commercialisation Demand management Supply Chain Management – Eight Processes Balancing requirements with capabilities.... active influencing demand Supplier relationship management Order fulfillment Manufacturing flow management Company interaction with suppliers, short-term, long-term - intensity Operations management, Quick response manufacturing

Ten ways of Managing Supply Chain Risk Logistics and Supply Chains Ten ways of Managing Supply Chain Risk Diversification – multiple sourcing 1 Stockpiling – inventory as a buffer 2 Redundancy – maintaining excess production, storage... 3 Insurance – against losses 4 Supplier selection – more careful assessment of suppliers 5 Supplier development – working closely with suppliers 6 Contractual obligation – imposing legal obligations 7 Collaborative initiatives – spreading risks 8 Rationalisation of the product range 9 Localised sourcing – shortening transport distances 10

Range of expenditures as percentage of the sales Logistics and Supply Chains Range of expenditures as percentage of the sales Purchasing 55 – 65 % Transport 3,5 – 7 % Labor 2,5 – 6 % Inventory 3 – 9 % System and administration 1,5 – 3 % Facilities 0,7 – 2 %

MARKETING STRUCTURE AND DEMAND What is Purchasing? MARKETING STRUCTURE AND DEMAND Business markets contain fewer but larger buyers. Business customers are more geographically concentrated. Business buyer demand is derived from final consumer demand. Demand in many business markets is more inelastic - not affected as much in the short run by price changes. Demand in business markets fluctuates more, and more quickly.

NATURE OF THE BUYING UNIT TYPES OF DECISIONS AND THE DECISION PROCESS What is Purchasing? NATURE OF THE BUYING UNIT Business purchases involve more buyers. Business buying involves a more professional purchasing effort. TYPES OF DECISIONS AND THE DECISION PROCESS Business buyers usually face more complex buying decisions. The business buying process is more formalized. In business buying, buyers and sellers work more closely together and build close long-run relationships.

More specific objectives of buying unit To select the best suppliers in the market. To help generate the effective development of new products. To protect the company’s cost structure. To maintain the correct quality/value balance. To monitor supply market trends. To negotiate effectively in order to work with suppliers who will seek mutual benefit through economically superior performance. To adopt environmentally responsible supply management.

UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC

What is Purchasing? Purchasing and Change Globalisation Impact Information Technology Impact Chasing Production & Management Philosophies Impact Transgression of national boundaries Advantage of cost Specialised labour skills Emerging economies Slicker transactions Quality of management data Strategic link with suppliers Paperless environment Competitive advantage Outsourcing Supply chain management Supply networks

What is Purchasing? Purchasing in the Future Increase in strategic importance Automated tactical activities Master contracts Electronic purchasing Strategic purchasing competency centres Shared supply chain resources Profit contribution Changed emphasis on individual skills

The price/cost iceberg Total acquisition costs and total cost of ownership The price/cost iceberg

Seven Characteristics of New Type Organisations Structure and Supply Chains Seven Characteristics of New Type Organisations Radical Decentralisation Demanding Expectations Distributed Leadership Networking & Reciprocity Intense Interdependence Transparent Performance Standards Boundary Busting „Small is beautiful“ Leadership distributed among people Direct relationships and communication between individuals + multidisciplinary approaches

“A network structure is a series of strategic alliances that an organisation forms with suppliers, manufacturers and distributors to produce and market a product.” A network is not a world of individual and isolated transactions. Network structures allow organisations to bring resources together on a long-term basis to reduce costs. Networks relate to all aspects of the supply chain, including marketing and distribution.

Second-tier Suppliers Structure and Supply Chains Factors in Configuration Those that integrate for direct supply to the assembler or who have a significant technical influence on the assembly while supplying indirectly First-tier Suppliers Second-tier Suppliers Those that supply components to first-tier suppliers for integration into systems or provide some support service

UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC

Structure and Supply Chains Convergent and divergent elements in a supply chain