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Vendor Development as Strategic Alliance- Rakesh Ravindran
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Vendor Development as Strategic Alliance- Rakesh Ravindran

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Vendor Development to Strategic Alliance

Vendor Development to Strategic Alliance

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  • 1. Vendor Development Presented by Rakesh Ravindran Roll No. 21 IGTC 2008-10
  • 2.
    • Trend is to
    • Buy instead to make
    • Outsource
    • Improve quality
    • Lower inventories
    • Integrate Supplier-Purchase system
    • Create co-operative relationships
    • such as partnerships
    • Underline importance for outstanding supplier performance
  • 3.
    • Any activity that a buying firm undertakes to improve a vendor’s performance & capabilities to meet the buying firm’s supply need
    • Supply Chain Management Effectiveness
      • Driven primarily by the organization’s ability to manage the internal and external links of customers, the buying organization & suppliers
    Vendor Development
  • 4. Customer satisfaction depends on supplier performance SUPPLIERS QUALITY COST DELIVERY QUANTITY OTHER
  • 5. Purchaser-Supplier Matrix Chain Marginal Satisfaction Total Dissatisfaction Marginal Satisfaction Marginal Satisfaction Marginal Satisfaction DESIRED Complete Satisfaction Complete Satisfaction Purchaser Supplier ZONE
  • 6. View of Buyer-Supplier Relationship TRADITIONAL
    • Lowest Price
    • Specification Driven
    • Short-term, reacts to market
    • Trouble Avoidance
    • Purchasing’s Responsibility
    • Tactical
    • Little Share of Information
    PARTNERSHIP
    • Total Cost of Ownership
    • End-Customer Driven
    • Long-term
    • Opportunity Maximization
    • Cross Functional Teams &
    • Top Management Involved
    • Strategic
    • Both supplier-buyer share
    • short- & long-term plans
    • Shared risk & opportunity
    • Standardization
    • Joint Ventures
    • Share Data
  • 7. assessment partnership alignment rationalization improvement Developmental Path to Partnership
  • 8. Partner Selection
    • Cost
    • Safety
    • Quality
    • Delivery
    • Environment
    • Financial stability
    • Management stability
    • Continuing improvement
    • Technological accomplishment
    • Congruence of management values on issues concerning customer satisfaction
    • Concern for quality
    • Employee involvement
    • Supplier relationship
    • Personal compatibility between functional counterparts
    Partner Selection
  • 9. Success Indicators of a Successful Partnership
    • Improved formal communication process
    • Commitment to our supplier’s success
    • Mutual profitability
    • Stable relationship not dependent on few personalities
    • Consistent and specific feedback on supplier’s performance
    • Realistic expectations
    • Employee accountability for ethical business conduct
    • Meaningful information sharing
    • Guidance to supplier in defining improvement efforts
  • 10. Strategic Alliance
    • Both buyer and seller believe that it is in best interest of both to formalize the relationship beyond the standard ‘buying-selling model’
  • 11. Concerns about Partnership
    • One partner might take over the preferred status
    • In a single-source relationship, supplier’s know that customers depend on them and they may abuse that relationship
    • Supplier Relationship management is important: understand and identify value (ultimate long-term, life-cycle cost and benefit to the user)
  • 12. Supplier Development
    • Prospective supplier must be persuaded to accept an order
    • Purchaser is aware of benefits to both the parties that supplier may not be aware of
    • Purchaser pre-determines prices and terms and conditions
    • Purchaser must understand supplier’s capability to ensure win-win proposal
    • Assures future source of supply
  • 13.