This document outlines strategies for managing direct and indirect materials. It discusses that 95% of costs are related to materials, including raw materials, components, and consumables. It recommends e-procurement to reduce costs for domestic growth. Strategies include strengthening sales/service networks and ensuring products suit local markets. The document also discusses protection strategies like evaluating vendor quality and satisfaction. International growth strategies involve benchmarking best global processes. Long term vendor relationships and category management are recommended for strategic sourcing. Materials are classified as strategic, leverage, bottleneck, or non-critical based on spending and supplier importance.

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