Its related to indirect material strategy.

1. BY
PARISH PATHRABE
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2. 
 95% of total cost spend on materials
 Raw materials (RM)
 Component & assemblies
 Proprietary auto parts e.g. batteries
 Consumables e.g. paint, greases
 Standard item
DIRECT MATERIALS
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3. 
 Consumable-tool, cutting instruments, gas
,fuel,stationary,machine spares
 Machinary & equipment (Capital item)
 Service purchase e.g.conservancy,hosticulture
Indirect materials
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4. 
 Roadmap for development of sourcing initiative in-
line
 For turnaround, e-procurement is the good strategy
for cost reduction
 For Domestic growth,
1. Strengthening the sales and service network ( i.e.
meet new customers,good service,guarantee)
2. Product appropriate to market place
Strategy
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5. 
 Vendor supplied material quality
 Vendor rating
 ICR
 Vendor satisfaction
 People development
 Logistics improvement
Protection strategy
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6. 
 World class product
 Non vehicle business
 International business
 Globally benchmark process ( i.e. who done it best?)
International growth
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7. 
 Global sourcing/JV
 Early vendor involvement
 Strategic outsourcing
 Vendor base rationalization
 Vendor capacity up-gradation
 Category management
 Long term relationship with vendor
Strategy
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8. 
STRATEGIC LEVERAGE
BOTTLENECK
NON-
CRITICAL
Indirect material
sequence
S
P
E
N
D
I
N
G
SUPPLIER BASE
H
I
G
H
L
O
W
LOW HIGH 8

9. 
 High value engineering component
 Central contact
 Supplier collaboration
 Close relation with suppliers
 Chemical items
Strategic
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10. 
 Food & packaged goods
 Buyers are dominance
 Leverage buying power through reverse auctioning ,
tendering , contract compliances , drive vendor for
performance
Leverage
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11. 
 Customized part , long lead time
(vendor has dominance & critical to produce)
 Supply assurance
 Forecasts
 Inventory security & backup plan
 Stock & insure
Bottleneck
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12. 
 Office, suppliers & janitorial items
 Standardization
 Indent consolidation
 Catalogue purchases
 Reduce transaction cost
 Contract compliances
 VMI/JIT/Outsourcing
 Reduce vendor base
Non-critical
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13. 
For any query ,
parishpathrabe14@gmail.com
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Thank You