Sourcing and Materials Management

1. Procurement and Materials Management
MGT 4333.01
Kelsey Holmes
Nate Landreth
Sean McDermott
Jeremy Carter
April 26, 2010
SOURCING

3. Sourcing
Sourcing Stages
Examples
• Recreational Boating Industry
• CEVA Logistics
Summary

4. Sourcing
Sourcing Stages
Examples
• Recreational Boating Industry
• CEVA Logistics
Summary

5. Sourcing Stages
Discovery Evaluation Selection Development Management

6. Discovery Stage
Helpsbuyersdeterminepotentialsuppliers
 Supplier web sites
 Supplier information files
 Supplier catalogs
 Trade Registers &
Directories
 Trade Journals
 Phone Directories
 Filling of Mailing Pieces
 Sales Personnel
 Trade Shows
 Company Personnel
 Other Supply
Management
Departments
 Professional
Organizations
Discovery Evaluation Selection Development Management

7. Evaluation Stage
 3 Questions
 Is the supplier strategically important?
 Is the product or service being purchased considered
strategic?
 Are there other short-term alternatives available?
Discovery Evaluation Selection Development Management

8. Evaluation Stage - Evaluation Methods
 Supplier Surveys
 Financial Condition
Analysis
 Third Party Evaluators
 Evaluation Conference
 Facility Visits
 Capability Analysis
 Quality
 Capacity
 Management
 Service
 Flexibility
 Information Technology
Discovery Evaluation Selection Development Management

9. Evaluation Stage - Summary
 Summary Analysis
 Weighted-factor analysis
 development of the factors and weights
 assign a rating based on the findings
Discovery Evaluation Selection Development Management

10. Selection Stage
 Method
 Bidding
 Negotiations
 Combination
 Invitation for Bids or Request for Proposal
Discovery Evaluation Selection Development Management

11. Development Stage
 Most over looked
 Can have the greatest impact on the buyer
 Work together to improve
 Product
 Processes
 Quality
 Costs
 Profits
Discovery Evaluation Selection Development Management

12. Management Stage
 Ensures Performance
 Analyze and verify capabilities and results
Discovery Evaluation Selection Development Management

13. Sourcing
Sourcing Stages
Examples
• Recreational Boating Industry
• CEVA Logistics
Summary

14. RECREATIONAL BOATING INDUSTRY

15. Facts
 Average owner’s income is $100,000 a year
 Past Production motto of new boats was to “build
them as fast as possible they would sell”
 Industry thought it was immune from the
economic swings of “outside market”
 Rising cost of living
 Recession and less spending

16. Examplesof effecton industry
 Genmar - Ranger series
 28 percent decline between 2007 and 2008
 other boats lines were down 55 percent from normal
levels
 Brunswick manufacturer - Bayliner, Crestliner,
Lund, and Mercury boat motors
 Half of the factor shut down
 only ran about 50 percent of it marina operation in
2008
 National boat sales down 65 percent from the first
quarter of 2009 to the same quarter in 2008

17. What lead tocurrent boatshortages?
 Caused by Dealers and Sales Representatives
 Assumed people would buy in good and bad markets
 Bad forecasting and measurements of inventory
needed
 Lack of attention to demand, price, quality, cost of the
end product
 Lack technology advancement used in other
industries (SAP)
 Lack of feedback from consumers (CRM)
 Local legislation and environmental regulation

18. Results
 Increases production accuracy
 Less inventory, manufacturer and dealers
 Increase ability to meet consumer desires
(customer feedback)
 Lowers costs
 More affordable for consumers
 Increases sales
 Increases profit margins

19. Sourcing
Sourcing Stages
Examples
• Recreational Boating Industry
• CEVA Logistics
Summary

21. Freight Forwarding

22. Industry Norms
 Suppliers are selected based on price, quality, and
availability
 Suppliers compete for CEVA’s freight
 Guaranteed capacity can help CEVA attain low
contract rates

23. Chinas Supply Problem
 Freight forwarders are
competing for limited
airline space
 Customers demand on
time delivery
 Airlines can increase
rates

24. Solution
CEVA should consolidate shipments and guarantee
enough capacity every day to acquire low contract
rates with a single airline into China.

25. Plan of Action
 Accurately forecast demand
for future shipments
 Consolidate freight at a single
location for export
 Successfully distribute orders
at final destination
 Key Competencies for
Success
• Communication
• Coordination
• Cross functional teams
• Integration of purchasing
and operations managers

26. Sourcing
Sourcing Stages
Examples
• Recreational Boating Industry
• CEVA Logistics
Summary