Purchasing optimization

Purchasing optimization through outsourcing Effects on supplier risk and quality Research proposal presentation in partial fulﬁllment of the requirements for the MBA Purchasing optimization – Lars Schmidl – 01 November 2006

Agenda ‣ Motivation & ‣ Research ‣ Feasibility & Timeline Background Research problems Feasibility Motivation Research Timeline methodology Purchasing optimization Research aim Recent example Purchasing optimization – Lars Schmidl – 01 November 2006 2

Motivation & Background Motivation Purchasing optimization Recent example Purchasing optimization – Lars Schmidl – 01 November 2006 3

Motivation & Background Motivation The main reasons behind the choice of the research topic Important business function Work experience in – purchasing optimization Competitive advantage Purchasing Focus on cost Quality and supply risk reductions The aim is a combination of cost reductions in purchasing with supply risk and quality Purchasing optimization – Lars Schmidl – 01 November 2006 4

Motivation & Background Purchasing optimization Example: A company has revenues of €50m, 60% thereof are purchasing costs, 30% labour, overheads, etc. Y0 Y1 purchasing costs 5 8 -10% 15 proﬁt 27 15 30 +60% purchasing costs other costs profit Optimizing purchasing costs has a huge leverage on the overall performance of a company Purchasing optimization – Lars Schmidl – 01 November 2006 5

Motivation & Background Purchasing optimization Economist Intelligence Unit survey “Europe’s Supply Chain Challenge”, October 2006 - Identiﬁed areas for cost reduction 54% Reduced material costs 45% Reduced overall labour costs Greater flexibility in supply chain 43% Faster time to market 43% Companies still focus mainly on the costs of direct and indirect material Purchasing optimization – Lars Schmidl – 01 November 2006 6

Motivation & Background Purchasing optimization The purchasing cycle shows various areas of possible optimization in regard to price, quality and risk source bidding/ speci- supplier eva- identi- nego- handling payment ﬁcation selection luation ﬁcation tiation price quality quality risk risk Optimization in regard to price, quality and risk takes place in different parts of the purchasing cycle Purchasing optimization – Lars Schmidl – 01 November 2006 7

Motivation & Background Recent example With the wrong purchasing strategy, small incidents can have huge effects ‣ Philips semiconductors • Nokia shortly after the incident identified new suppliers and could • fire in a Mexico plant in 2000 - produce without disruptions production halt for months • Ericsson had started to simplify its • several thousand chips for mobile procurement and had chosen a single- phones destroyed sourcing strategy, where Philips was the only supplier for chips • main customers Ericsson and Nokia • had to find a new supplier Ericsson was not able to deliver a new series of handsets and sold its mobile business in 2001 Monitoring risks in the supply chain can save the existence of companies Purchasing optimization – Lars Schmidl – 01 November 2006 8

Research Research problems Research methodology Research aim Purchasing optimization – Lars Schmidl – 01 November 2006 9

Research Research problems What are the effects on supply risk and quality if purchasing of a company is optimized by a third party service provider? ‣ In order to answer this problem statement several sub-problems have to be addressed beforehand: • What is supply risk and quality and how can it be measured? • What are the dimensions of purchasing optimization? • How does the optimization through a service provider work? • What are the basic parameters for purchasing optimization? The systematic approach of the identiﬁed sub-problems will help to answer the basic research problem Purchasing optimization – Lars Schmidl – 01 November 2006 10

Research Research methodology A broad basis of information in theory as well as business-related will be used for the research report ‣ Extensive literature review as ‣ Interviews with relevant managers theoretical foundation and experts ‣ Investigation of current practices in ‣ Case Studies the purchasing strategy in German- ‣ Secondary data speaking Europe • Service providers • Purchasing managers of small and medium sized enterprises A combination of theory and applied knowledge from purchasing managers will answer the research problems Purchasing optimization – Lars Schmidl – 01 November 2006 11

Research Research aim A combination of academic theory and applied knowledge from practitioners should lead to an useful guideline for purchasing managers in order to assess the possibilities and risks connected to purchasing optimization through service providers. It will help to make decisions on a sound theoretical basis and give new ideas for practice. Purchasing optimization – Lars Schmidl – 01 November 2006 12

Feasibility & Timeline Feasibility Timeline Purchasing optimization – Lars Schmidl – 01 November 2006 13

Feasibility & Timeline Feasibility Necessary sources and infrastructure for the research ‣ Sources ‣ Infrastructure • • Literature Ofﬁce resources • • Interviews with purchasing managers Financial resources • • Interviews with purchasing experts Time • Case Studies • Secondary data All resources are either available or accessible through my employer Purchasing optimization – Lars Schmidl – 01 November 2006 14

Feasibility & Timeline Timeline Proposed timeline for the research report ‣ Introduction 31 January 2007 ‣ Literature study 28 February 2007 ‣ Research methodology 15 March 2007 ‣ Data analysis 15 April 2007 ‣ Interpretation of data 30 April 2007 ‣ Recommendations and conclusions 31 May 2007 ‣ Submission of ﬁrst draft 15 June 2007 ‣ Final submission of full report to be graded 31 July 2007 This timeline has to be reviewed by end of December 2006 after I have the project schedules for my work in 2007 Purchasing optimization – Lars Schmidl – 01 November 2006 15

Purchasing optimization through outsourcing Effects on supplier risk and quality Research proposal presentation in partial fulﬁllment of the requirements for the MBA Purchasing optimization – Lars Schmidl – 01 November 2006

Purchasing optimization

2 comments

Notes on slide 1

14 Favorites