Vendor Development Presented by Rakesh Ravindran Roll No. 21 IGTC 2008-10
<ul><li>Trend is to   </li></ul><ul><li>Buy instead to make </li></ul><ul><li>Outsource </li></ul><ul><li>Improve quality ...
<ul><li>Any activity that a buying firm undertakes to improve a vendor’s performance & capabilities to meet the buying fir...
Customer satisfaction depends on supplier performance   SUPPLIERS QUALITY COST DELIVERY QUANTITY OTHER
Purchaser-Supplier Matrix Chain Marginal Satisfaction Total Dissatisfaction Marginal Satisfaction Marginal Satisfaction Ma...
View of Buyer-Supplier Relationship TRADITIONAL <ul><li>Lowest Price </li></ul><ul><li>Specification Driven </li></ul><ul>...
assessment partnership alignment rationalization improvement Developmental Path to Partnership
Partner Selection <ul><li>Cost </li></ul><ul><li>Safety </li></ul><ul><li>Quality </li></ul><ul><li>Delivery </li></ul><ul...
Success Indicators of a Successful Partnership <ul><li>Improved formal communication process </li></ul><ul><li>Commitment ...
Strategic Alliance <ul><li>Both buyer and seller believe that it is in best interest of both to formalize the relationship...
Concerns about Partnership <ul><li>One partner might take over the preferred status </li></ul><ul><li>In a single-source r...
Supplier Development <ul><li>Prospective supplier must be persuaded to accept an order </li></ul><ul><li>Purchaser is awar...
 
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Vendor Development as Strategic Alliance- Rakesh Ravindran

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Vendor Development as Strategic Alliance- Rakesh Ravindran

  1. 1. Vendor Development Presented by Rakesh Ravindran Roll No. 21 IGTC 2008-10
  2. 2. <ul><li>Trend is to </li></ul><ul><li>Buy instead to make </li></ul><ul><li>Outsource </li></ul><ul><li>Improve quality </li></ul><ul><li>Lower inventories </li></ul><ul><li>Integrate Supplier-Purchase system </li></ul><ul><li>Create co-operative relationships </li></ul><ul><li>such as partnerships </li></ul><ul><li>Underline importance for outstanding supplier performance </li></ul>
  3. 3. <ul><li>Any activity that a buying firm undertakes to improve a vendor’s performance & capabilities to meet the buying firm’s supply need </li></ul><ul><li>Supply Chain Management Effectiveness </li></ul><ul><ul><li>Driven primarily by the organization’s ability to manage the internal and external links of customers, the buying organization & suppliers </li></ul></ul>Vendor Development
  4. 4. Customer satisfaction depends on supplier performance SUPPLIERS QUALITY COST DELIVERY QUANTITY OTHER
  5. 5. Purchaser-Supplier Matrix Chain Marginal Satisfaction Total Dissatisfaction Marginal Satisfaction Marginal Satisfaction Marginal Satisfaction DESIRED Complete Satisfaction Complete Satisfaction Purchaser Supplier ZONE
  6. 6. View of Buyer-Supplier Relationship TRADITIONAL <ul><li>Lowest Price </li></ul><ul><li>Specification Driven </li></ul><ul><li>Short-term, reacts to market </li></ul><ul><li>Trouble Avoidance </li></ul><ul><li>Purchasing’s Responsibility </li></ul><ul><li>Tactical </li></ul><ul><li>Little Share of Information </li></ul>PARTNERSHIP <ul><li>Total Cost of Ownership </li></ul><ul><li>End-Customer Driven </li></ul><ul><li>Long-term </li></ul><ul><li>Opportunity Maximization </li></ul><ul><li>Cross Functional Teams & </li></ul><ul><li>Top Management Involved </li></ul><ul><li>Strategic </li></ul><ul><li>Both supplier-buyer share </li></ul><ul><li>short- & long-term plans </li></ul><ul><li>Shared risk & opportunity </li></ul><ul><li>Standardization </li></ul><ul><li>Joint Ventures </li></ul><ul><li>Share Data </li></ul>
  7. 7. assessment partnership alignment rationalization improvement Developmental Path to Partnership
  8. 8. Partner Selection <ul><li>Cost </li></ul><ul><li>Safety </li></ul><ul><li>Quality </li></ul><ul><li>Delivery </li></ul><ul><li>Environment </li></ul><ul><li>Financial stability </li></ul><ul><li>Management stability </li></ul><ul><li>Continuing improvement </li></ul><ul><li>Technological accomplishment </li></ul><ul><li>Congruence of management values on issues concerning customer satisfaction </li></ul><ul><li>Concern for quality </li></ul><ul><li>Employee involvement </li></ul><ul><li>Supplier relationship </li></ul><ul><li>Personal compatibility between functional counterparts </li></ul>Partner Selection
  9. 9. Success Indicators of a Successful Partnership <ul><li>Improved formal communication process </li></ul><ul><li>Commitment to our supplier’s success </li></ul><ul><li>Mutual profitability </li></ul><ul><li>Stable relationship not dependent on few personalities </li></ul><ul><li>Consistent and specific feedback on supplier’s performance </li></ul><ul><li>Realistic expectations </li></ul><ul><li>Employee accountability for ethical business conduct </li></ul><ul><li>Meaningful information sharing </li></ul><ul><li>Guidance to supplier in defining improvement efforts </li></ul>
  10. 10. Strategic Alliance <ul><li>Both buyer and seller believe that it is in best interest of both to formalize the relationship beyond the standard ‘buying-selling model’ </li></ul>
  11. 11. Concerns about Partnership <ul><li>One partner might take over the preferred status </li></ul><ul><li>In a single-source relationship, supplier’s know that customers depend on them and they may abuse that relationship </li></ul><ul><li>Supplier Relationship management is important: understand and identify value (ultimate long-term, life-cycle cost and benefit to the user) </li></ul>
  12. 12. Supplier Development <ul><li>Prospective supplier must be persuaded to accept an order </li></ul><ul><li>Purchaser is aware of benefits to both the parties that supplier may not be aware of </li></ul><ul><li>Purchaser pre-determines prices and terms and conditions </li></ul><ul><li>Purchaser must understand supplier’s capability to ensure win-win proposal </li></ul><ul><li>Assures future source of supply </li></ul>

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