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Criticality of Supplier FocusCriticality of Supplier Focus

Aniruddha Bagool 04

Ankita Bhawsinka 05

Archana Pandurangi 09

Hari Shankar Sharma 18

Nimit Vishnani 30

Rohit Desylva 37

• Relationships earlier between customers and suppliers – confrontational and adversarial.

• “Win-loose” philosophy.

• Overall customer dissatisfaction and disloyalty

• Adversely affected manufacturer’s competitive positions in the market.

• Capture some of each other’s profit margin.

Earlier…

Why focus on Suppliers?

What truly separates successful competitors from the "also rans" in today's global competitive race is suppliers.

Many companies that the years have thrown "everything" into the battle for competitive advantage are only now coming to admit that their best and strongest resources are their suppliers.

These are the silent partners who back them with the ideas, quality, and dependability that make them competitors, everyday.

Supplier Focus

Commitment to Quality

Flexibility and special services

Inventory Accessibility

Logistics/ Location

Financial stability

Timely service

Communication

Cost-competitiveness

Importance of Supplier Focus

Importance of Supplier Focus

Commitment to quality Product quality is regarded as an essential factor in selecting a

supplier. With a manufacturer it's important to have Quality Control people on the team to realistically appraise the supplier's control standards and methods of measuring quality.

Cost-competitiveness

Competitive pricing is another huge factor, especially for businesses that are smaller or experiencing financial difficulties

(contd…)

Communication Suppliers that do not maintain a policy of open communication—or

even worse, actively practice deception—should be avoided at all costs. The frustrations of dealing with such companies can sometimes assume debilitating dimensions. Moreover, constant exposure to such tactics can have a corrosive effect on internal staff.

Timely service

Businesses strategies are predicated on schedules, which in turn are based on receiving shipments at agreed-upon times. When those shipments slip, business strategies suffer. The blow can be particularly severe if the supplier is negligent or late in reporting the problem. "Reliable delivery is first among the basics of what they expect from suppliers. It doesn't have to be instantaneous—it just needs to get there when the suppliers promised it would.

(contd…)

Flexibility and special services Many purchasers express appreciation for suppliers that take extra

measures to satisfy their customers. These "perks" can range from after-hours accessibility to training or inventory support

Financial stability Businesses that allocate large sums for purchasing materials often

prefer to make long-term deals with suppliers that are financially stable. Such arrangements not only convey security, but they allow companies to learn about one another and gain a fuller understanding of each business's needs, desires, operating practices, and future objectives.

(contd…)

Logistics/Location Supplier capabilities in this area include transportation capacity,

sourcing capabilities, and 'just-in-time' performance.

Inventory Accessibility

With a manufacturer, emphasis has to be on inventory accessibility. If the supplier has a ‘just in time’ program with 24-hour assured delivery, it's in better condition than the manufacturer with a lot of raw material inventory and an eight-week lead time for raw material."

(contd…)

Ability to provide technical assistance

Suppliers with top research and development capacities can be quite valuable to buyers, providing them with significant savings in both price and quality

Market knowledge

Suppliers with extensive knowledge of market conditions and mastery of contemporary issues impacting your business can be immensely valuable in helping small companies chart a course to sustained financial success.

5 Forces of Market

Company BuyersSuppliers

Substitutes

New entrants

PRESENT SCENARIO

• Suppliers are viewed as partners

• No win-lose battle concerning price.

• Supplier relations are build on cooperation, collaboration, and trust.

• Rate suppliers on the basis of quality and reliability.

• Arrangement for alternate suppliers for contingency sake

Creating Better Relations

There can be a sense of commitment to the supplier. For example, if a vendor sells light bulbs, he can feel confident that the buyer will come to him the next time the company he represents requires a new shipment of light bulbs.

Another element of supplier relationships is

Buyers don't just communicate with suppliers when a procurement need arises; they also contact them in order to discuss their future needs and to determine how best to satisfy those needs by working together.

sense of commitment

advanced planning

(contd…)

Vendors that are deemed to be partners are encouraged to become knowledgeable about the company, its processes, its products, and its goals. The result is greater with the services provided by the supplier.

A study of IT directors found that vendors who were considered commodity providers delivered unsatisfactory service almost half of the time while suppliers who were thought of as partners delivered some of the time and good service most of the time.

buyer satisfaction

excellent service

(contd…)

The press routinely praises industry giants such as Wal-Mart, FedEx, American Honda and Dell for the innovative ways in which they manage suppliers and the impact these successful relationships have on their .

The implication is that all companies need partnerships with their suppliers, and the . Yet, is this true, or is the rush to partner hiding hidden costs and dangers? Does one size or model fit all or does the nature of the market or industry drive differences in supplier relationships?

company's bottom line

more the better

Honda suppliers are a critical part of the business and directly contribute to the ability to meet and exceed customers' expectations. With this is mind, the company regularly and strategically employ several outreach initiatives to attract, develop and retain ethnic minority suppliers at all business and manufacturing operating units.  

Professional purchasing/acquisition managers conduct these workshops to educate potential ethnic minority suppliers on Honda business operations, formulating strategic alliances and joint ventures, loan and venture capitalization, empowerment programs and other available resources. 

Honda regularly conducts "Fast Track Workshops" for first and second tier suppliers to share Honda's commitment to diversity and inclusion, describe how to do business with Honda and purchasing as well as acquisition policies and procedures.

 Honda procurement offices conduct monthly "open door" meetings with suppliers to learn about the goods and services provided by MBE suppliers in their local region and to assess opportunities for business relationships based on quality, cost, delivery and market competitiveness.

On the “upside”, it appears that the new-look Kraft will be wanting to expand its presence worldwide, creating a demand for new FMCG logistics capability in both established and emerging markets and providing opportunities for new logistics business.

However, the global nature of the expansion of Kraft and other FMCG companies indicates they will be looking for logistics partners with global reach and sophisticated capabilities. That suggests many smaller LSPs  will be squeezed, while the big leading LSPs, such as CEVA and DHL, will benefit.

Managing the supply chain

The cooperative was formed to bring together farmers. It was later recognised that professional managers and technocrats would be required to manage the network effectively and make it commercially viable.

Coordination Given the large number of organisations and entities in the supply chain and

decentralised responsibility for various activities, effective coordination is critical for efficiency and cost control. GCMMF and the unions play a major role in this process and jointly achieve the desired degree of control.

Buy-in from the unions is assured as the plans are approved by GCMMF's board. The board is drawn from the heads of all the unions, and the boards of the unions comprise of farmers elected through village societies, thereby creating a situation of interlocking control.

The federation handles the distribution of end products and coordination with retailers and the dealers. The unions coordinate the supply side activities.

These include monitoring milk collection contractors, the supply of animal feed and other supplies, provision of veterinary services, and educational activities.

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