Managing Procurement and Sourcing Getting What You Need

GSCM Ch Global sourcing Global Sourcing Benefits Factor- input Market access Risk Factors Quality Ethical concerns Patent protection

Supply management Aims/objectives Process of sourcing & procurement Supplier selection Supplier management

Aims/Objectives The primary goals/objectives of purchasing are: – Ensure uninterrupted flows of raw materials at the lowest total cost, – Improve quality of the finished goods produced, and – Optimize customer satisfaction. Purchasing contributes to these objectives by: – Actively seeking better materials and reliable suppliers, – Work closely with and exploiting the expertise of strategic suppliers to improve quality and materials – Involving suppliers and purchasing personnel in new product design and development efforts.

GSCM Ch The sourcing process

Conduct internal needs analysis  Item to be sourced; characteristics; import restrictions; volume Conduct market assessment of suppliers  PEST analysis of country; risks (threats) and opportunities Collect supplier information  Reputation; financials; references Develop sourcing strategy  Strategic alliance?; level of collaborating Negotiate with suppliers  Price; quality; delivery times Implement supply chain improvements  Develop key performance indicators (Kpi) The sourcing process

GSCM Ch Adapting the process Spend-driven approach  Analysis of every sourced good or service  Suppliers selected to meet company’s spend profile Risk-driven approach  Placing a trial order  Avoiding high-risk countries  Having more than one supplier  Negotiate conditional payment terms

GSCM Ch Efficient sourcing

GSCM Ch Efficient sourcing Total acquisition cost analysis (TAC) Supply base rationalization and consolidation Primary and secondary sourcing E-procurement

GSCM Ch Partnerships and alliances Benefits of supply chain partnerships Foundations for good partnerships Common types of supply chain partners  Vendor Managed Inventory (VMI)  Collaborative planning, forecasting and replenishment (CPFR)

GSCM Ch Outsourcing Benefits Importance of knowing an organization’s core competencies Types of agreements:  Equity joint venture  Equity strategic alliance  Non-equity alliance  Franchising  Production and assembly  Legal services  Technical training

GSCM Ch Outsourcing Benefits  Cost savings  Gaining outside expertise  Improving customer service  Ability to focus on core competencies  Obtaining outside technology Disadvantages Possibility of increased costs Loss of company control Negative impact on employees Negative impact on customers Relationship problems

GSCM Ch Negotiating with suppliers or outsourcers Priority negotiating elements  What volume is being purchased?  Discounts available?  Are logistical and importing costs covered in the price?  What does the price include?  What are the responsibilities of each party involved? Method of payment and documentation Payment terms Ensuring receipt

GSCM Ch Compliance with international law: Export regulations Export control Exchange control licenses Export quotas Export documentation  Commercial invoice  Bill of lading  Export declaration  Packing list  Insurance document  Certificate of origin

GSCM Ch Compliance with international law: Import regulations Importers liability Import quotas Antidumping legislation Tariff classification Import documentation  Commercial invoice  Bill of lading  Import declaration  Packing list  Insurance document  Certificate of origin

GSCM Ch Customs brokers What is a customs broker? What services do customs brokers offer? How should my organization choose a customers broker?

GSCM Ch Becoming a supplier Benefits Locating opportunities Tips for responding to an RFP/RFQ Bidding realistically Export contracts Binding agreements and contracts