1. Sourcing and the Management of Suppliers
Purchasing and Supply Chain Management
Sourcing and the Management of Suppliers

2. 1 7 2 8 3 9 10 4 11 5 6 Sourcing and the Management of Suppliers
The Sourcing Progress
Sourcing is the progress of identifying, selecting and developing suppliers
The Eleven Stages of the Sourcing Process 1 7
Identify needs
Pre-screen possible sources 2 8
Define requirements
Evaluate remaining supply base 3 9
Decide to make or buy
Choose supplier 10 4
Identify type of purchase
Deliver product/perform service 11 5
Post purchase performance evaluation
Conduct market analysis 6
Identify possible suppliers

3. Sourcing and the Management of Suppliers Sourcing Information
EU directives
Central, local government directives
Company directives
Sourcing Information
Analysis of
market
conditions
Directives
E-sourcing
Locating
supplier
sources
Supplier
assessment
Supplier
performance
rating
Finance
Production capacity and facilities
Human resources
Quality
Performance
Environmental and ethic aspects, IT
Organisational structure
Primary data
Secondary data
International sources
Government agencies
Non-government agencies – chambers of commerce
Salespeople
Exhibitions
Trade journals
Trade association
Exchange between other professionals

4. Supplier Performance – Possible Factors to Evaluate
Sourcing and the Management of Suppliers
Supplier Performance –
Possible Factors to Evaluate
Quality
Dealing with problems
Continuous improvement
Provision of spares
Responsiveness
Cost and price management
Communication
On-time delivery
IT systems
Provision of clarification
Management of contract change
Performance indicator
Weight + rating
Adjusted score
Price
20 x 4 80
Quality
40 x 3
120
Delivery
Customer service
20 x 3 60
XXX
340
1 – unsatisfactory
2 – marginal
3 – satisfactory
4 – very good
5 - outstanding

5. Policy Issues in Sourcing
Sourcing and the Management of Suppliers
Policy Issues in Sourcing
Supplier base optimatisation
Risks of a reduced supplier base
Sub-contracting vs outsourcing
Tactical, short-term approach – company retain core capabilities
Sourcing Policies
The
supplier base
Outsourcing or
make-or-buy
Sub-contracting
Partnering
Reciprocity
Intra-company
trading
Local
suppliers
Purchasing
consortia
Advantages/disadvantages
Larger-scale purchasing
„Single supplier“
Cost savings???
Economic climate (recession)
Type of product
Develop product and service quality
Price-competitive source
Outsourcing – specified inputs, costs, outputs.
Partnering - trust

6. Factors in industrial buying decisions
Sourcing and the Management of Suppliers
Factors in Deciding
Where to Buy
Factors in industrial buying decisions
Environmental
Organisational
Interpersonal
Individual
These are normally outside the buyer’s control and include:
the level of demand
the economic outlook
interest rates
technological change
political factors
government regulations
competitive development
Buying decisions are affected by the organisation’s system of reward, authority, status and communication, including organisational:
objectives
policies
procedures
structures
Involving the interaction of several persons of different status, authority, empathy and persuasiveness who comprise the buying centre
Buying decisions are related to how individual participants in the buying process form their preferences for products and suppliers, involving the person’s age, professional identification, personality and attitude towards the risks involved in their buying behaviour

7. Attributes of a good supplier
While a definition of a good supplier which would be acceptable to everybody would be difficult to write, there are a number of attributes which might be regarded as desirable for a typical relationship. The following list is given by way of suggestion only:
Delivers on time.
Provides consistent quality.
Gives a good price.
Has a stable background.
Provides good service back-up.
Is responsive to our needs.
Keeps promises.
Provides technical support.
Keeps the buyer informed on progress.

8.  
Supplier evaluation

9.  
Supplier evaluation (Continued)

10. Supplier evaluation (Continued)

11. Supplier associations: known in Japan as ‘Kyoryoku Kai’
Supplier were assisted in getting together by the customer...
Suppliers and their customers participate together
Supplier associations: known in Japan as ‘Kyoryoku Kai’

12. The principal characteristics of partnership sourcing
Source: Courtesy Partnership Sourcing

13. The principle of tiering suppliers

14. The shift in pattern of supply in high volume manufacturing

15. Outsourcing?
The shift in pattern of supply in high volume manufacturing (Continued)