1. Ndungu Muchemi 072039 Cynthia Wacera 071915 Benson Maina 072515 Faith Wakahia 071893 Sarah Masila 071065 Ruth Munyinyi 071464 Michelle Achieng O71037 Yvonne Nduku 072453 Helen Kamau 072635 Stephanie Mwangi 071128

2.  Every company is part of a long chain of customers and suppliers and it is therefore a customer to its suppliers and a supplier to its customers through different interactions such as negotiating contracts, purchasing, managing logistics and delivery, collaborating on product design.

3.  Supplier relationship management (SRM) can therefore be defined as the discipline of strategically planning for, and managing, all interactions with third party organizations that supply goods and/or services to an organization in order to maximize the value of those interactions.  SRM entails creating closer, more collaborative relationships with key suppliers in order to uncover and realize new value and reduce risk.

4.  Customers and suppliers have the same goal—to satisfy end user. The better the supplier quality, the better the supplier’s long-term position, because the customer will have better quality. Because both the customer and suppliers have limited resources, they must work together as partners to maximize their return on investment.

5.  There have been number of forces that have changed supplier relations. Which include:  Price  The introduction of the just-in-time (JIT) concept  The practice of continuous process improvement  ISO 9000

6.  Dr.Kaoru Ishikawa has suggested 10 principles to ensure quality products and services and eliminate unsatisfactory conditions between the customer and the supplier: 1. Both customers and the suppliers are fully responsible for the control of quality. 2. Both the customer and supplier should be independent of each other and respect each other’s independence. 3. The customer is responsible for providing the supplier with clear sufficient requirements so that supplier can know precisely what to produce.

7. 4.Both the customer and the supplier should enter into a non adversarial contract with respect to quality, quantity, price, delivery method, and terms payments. 5.The supplier is responsible for providing the quality that will satisfy the customer and submitting necessary data upon customer’s request. 6.Both the customer and the supplier should decide the method to evaluate the quality of the product or service to the satisfaction of both parties.

8.  Both the customer and the supplier should establish in the contract the method by which they can reach an amicable settlement of any disputes that may arise.  Both the customer and the supplier should continually exchange information, sometimes using multifunctional teams, in order to improve the product or service quality.  Both the customer and the supplier should perform business activities such as procurement, production, and inventory planning, clerical work, and systems so that an amicable and satisfactory relationship is maintained.  When dealing with business transactions, both the customer and supplier should always have the best interest of the end user in mind.

9.  Other principles suggested by other scholars;  Recognition of the strategic importance of customers and suppliers.  Development of win-win relationships between customers and suppliers.  Establishing relationships based on trust.  Trust is developed over time through a pattern of success by all parties to fully and faithfully deliver that which was promised. 

10.  A partnership is a tailored business relationship based on mutual trust, openness, shared risk and shared rewards that yield a competitive advantage, resulting in business performance greater that would be achieved by the firms individually.

11. The essential elements of a partnership are:  Partnerships are based on value and respect. Each company has to value and respect the other.  It is a solid, long-term relationship that implies continuous improvement.  The security of remaining a supplier is not by right but by fulfilling expectations. The supplier knows that he must provide better service than competitors at a reasonable price and achieve goals in order to remain a supplier.  Unlike what most people might think, competition under the partnership model is dynamic and fierce.

12. ADVANTAGES  Competitive advantage  Increase efficiency  DISADVANTAGES  Hard to obtain  Costly in terms of:  Time  Effort  This clearly shows that a firm should not partner with every supplier, as the analysis of the advantages and the disadvantages must be made before the decision is made.

13. TYPES OF PARTNERSHIPS  Each partnership has its own Motivating factors, its own environment, its own duration and its own strength; this is why there is not a magic partnership for every situation. We can introduce now three main types of partnerships: TYPE I  It is the most used kind of partnership. Firms involved recognize each other as partners. They co-ordinate activities and planning which are usually in a short-term focus. It involves only one division within each organization. TYPE II  It implies integration of activities rather than co-ordination of activities. Multiple divisions are involved in a long-term horizon. TYPE III  It is the least used kind of partnership. Firms share high level of operational integration. Each firm views the other as an extension of their own firm. There is no end date to this kind of partnerships.

14.  There are three types of sourcing: sole, multiple and single. 1. A sole source of supply implies that the organization is forced to use only one supplier. This situation is due to some factors which include: technical specifications, raw material location, only one organization producing the item or the item being produced by another plant or division of the organization.

15. 2. Single sourcing is a planned decision by the organization to select one supplier for an item when several sources are available. It results in large, long- term contracts and a partnership relationship. With a guaranteed future volume, the supplier can direct its sources to improve the process. For the organization, the advantages are new business from the customer and reduced cost of business and production cost, complete accountability, supplier loyalty and a better end product. For the supplier, the advantages are new business from the customer and reduced cost of business from the customer and reduced cost of business and production processes because of economies of scale. Single sourcing has allowed organizations to reduce their supplier base.

16. 3. There is multiple sourcing which is the use of two or more suppliers for an item. Usually three suppliers are chosen and their portion of the business is a function of their performance in terms of price, quality and delivery. The theory of multiple sourcing is that competition will result in better quality, lower costs and better service. Multiple sourcing also eliminates disruption of supply due to strikes and other problems.

17. Supplier selection should be based on the following:  How critical is the item to the design of the product or service?  Does the organization have the technical knowledge to produce the items internally? If not, should that knowledge be developed?  Are there suppliers who specialize in producing the item? If not, is the organization willing to develop such a specialized supplier?

18. FACTORS TO CONSIDER IN SUPPLIER SELECTION  The supplier must understand and appreciate the management system of the organization  The supplier should have a stable management system like do they have a quality policy and is it implemented and understood by everyone in the organization, are they able to test the effectiveness of the system.  The supplier should be able to produce the amount of production needed and also to attain the capability to do so.

19.  The supplier can provide the raw materials and parts required by the purchaser, and those supplies must meet the quality specifications set aside.  The supplier has to maintain high technical standards and be able to cope with the changing technology  The supplier should be trustworthy in that there is no risk of them spilling the corporate secrets  The supplier should be easily accessible and have a good communication system. The prices and dates of delivery need to be defined and the receipts well kept.

20.  The supplier should be sincere in implementing the contract provisions. Does the supplier have a system for contract review? Is the system flexible? Does the system include maintaining records of reviewed contracts?  The supplier has an effective quality system and improvement program such as ISO/QS 9000.  The supplier has a track record of customer satisfaction and organization credibility

21.  Reference checks  Financial status checks  Surge capacity availability  Indications of supplier quality  Ability to meet specifications.  Buy-in from internal customer(s).

22.  Supplier certification is the process of managing the relationship between your organization and its suppliers to coordinate as one in creating value for all stakeholders. The supplier certification program seeks s to improve quality and on time delivery, to share technology, to establish a long term and stable relationship with a few suppliers, and to reduce cost of quality.

23.  Types of certification  1) Some Specific Certification programs:  2) Standard industry certification processes  Supplier audit  Verification is one of the first objectives that needs to be met when trying to certify a supplier. It is extremely important to determine if the supplier is worthy of being considered for a long term relationship with the buyer. One of the way to do this through a supplier audit. In a supplier audit, the buying organization establishes the criteria it wants to verify that the supplier meets. Some of the criteria should be standard for all suppliers of the firm, while others are more commodity or industry specific.

24.  Management  Procurement  Design process:  Receipt inspection:  Quality information:

25.  Sustainable business performance  Lower cost solutions  Higher quality products  Long term relationship with suppliers  Increase profitability and customer satisfaction- Reduced waste and rework, shortened cycle times, improved problem tracking and resolution.

26.  High Cost  Time Consuming-Documentation  Requires employee support

27.  Suppliers are given standing, status, or title according to their attainment of some level of performance, such as delivery, lead time, quality, price, or some combination of variables.

28.  Helping minimize subjectivity in judgment and make it possible to consider all relevant criteria in assessing suppliers.  Providing feedback from all areas in one package.  Facilitating better communication with vendors.  Providing overall control of the vendor base.  Requiring specific action to correct identified performance weaknesses.  Establishing continuous review standards for vendors, thus ensuring continuous improvement of vendor performance.

29.  Vendors are rated on the basis of various characteristics:  Time deliver  Quality  Price  Others Factors such as  Supplying useful market information  Meet emergency order

30.  Categorical plan:  Weighted point plan  Cost ratio plan:

31. Almost every company is dependent on their suppliers. Suppliers can impact a company in the following ways;  Quality  Reliability  Competitiveness  Innovation  Finance

32.  State your expectations clearly  Stick to the agreement, if there are any changes, it should be on mutual understanding  Pay them well. It should correspond with the quality of their services. If they do their work well, pay them well.  If you are letting go of a supplier, let them know why, so that they can work towards improving themselves for their next client.  It is safe to use many suppliers. This is because you can always rely on the other if one lets you down.

33.  Always pay on time  Give adequate lead times  Get personal  information  Share

34. Any Queries, comments or silence is appreciated.