UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC 4. New product development and ESI – early supplier involvement

Initial concept Feasibility studies Preliminary design Prototype testing Finalised product Piloting of product and production Release for commercial manufacturing Stages of New Product Development

Concern for overall product design Concern for JIT delivery and supplier relationship Selection of materials Cost elimination of materials Conceptual abstraction of product quality General view of product Close or near perfect parameters, specifications, features and tolerances Practical and economical parameters, specification, features and tolerances Limited regard for availability High regard for availability Limited concern for cost Lowest ultimate cost Use of ideal materials Use of adequate materials Wide margins of quality, safety and performance Minimum acceptable margin of quality, safety and performance Design OrientationPurchasing Orientation

ESI has been defined: A practice that brings together one or more selected suppliers with a buyer’s product design team early in the product development process. The objective is to utilize the supplier’s expertise and experience in developing a product specification that is designed for effective and efficient product roll-out. Early Supplier Involvement in the New Product Development Process

Purchasing in the Future Improved manufacturability AccountabilityInterchange of Knowledge TeamworkJoint problem solving Ownership of IPRSAccess to new technology Decision makingLower development costs Cost and pricing sharingEnhanced quality Technology sharingImproved specifications Release of confidential business information Reduced development time ProblemsAdvantages

UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC 5. Selling and buying at right price. Tendering

Definition of Price The value of a commodity or service measured in terms of the standard monetary unit. Price Equilibrium D1D1 S1S1 Seller’s Market Buyer’s Market S1S1 D1D1 P1P1 Price Elasticity of Demand Price Elasticity of Supply = = % change in quantity demand % change in price % change in quantity supplied % change in price

Perfect Competition – Conditions Item must be homogeneous Item must be easily transportable Must be many buyers & sellers No Preferential treatment or discrimination against any buyer or seller Easy communication must exist between buyers & sellers Competition – Types and Conditions

UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC

Purchasing Considerations in Pricing Agreements Purchaser’s position in the market Nature of the purchase, e.g., strategies (leverage, bottleneck....) Is it a rebuy, etc?....new buy items, modiefie rebuy? Number of suppliers Alternative products Prices paid by competitors – hard to obtain Is the learning curve applicable? Risk attached to purchase Period to which price will apply - tactical, strategic? What does price analysis show? – reasonable price? Quantity What is a fair price?

UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC

Support Tools Cost Schedules Design Facilities Sub-contracting Tender Negotiations - Possible Topics Industrial relations Contract terms After sales service Experience

UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC