supplier relationship process2

8/8/2019 Supplier Relationship Process2

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Group # 02Suhaib Ahmad Saeed 139Muhammad Asif 119Almas Fatima 104Aniqa Khalid 105Hafiz Riaz Husain 110


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Supplier RelationshipSupplier RelationshipManagementManagementSupplier RelationshipSupplier RelationshipManagementManagementSupplier relationship management isSupplier relationship management is

the supply chain managementthe supply chain managementprocess that provides the structureprocess that provides the structurefor how relationship with suppliersfor how relationship with suppliers

are developed and maintained.are developed and maintained.


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SRM is a mean of building closerelationship with selected strategicsuppliers, the purpose is to discover theadded features that could enhance therelationship while improving businessperformance as the firm works in thenetwork environment for mutual benefit.

Supplier RelationshipSupplier Relationship

ManagementManagement


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The supplier relationship management isreally important for example the product

development process needs the timelyavailability of material and parts accordingto the need of design of that product andat acceptable cost. If not then the product

development team cant do any thing.

Supplier RelationshipSupplier Relationship

ManagementManagement


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SRM Rati onaleThe cost of material as the percentage ofthe sale is estimated to be at 53 %. As thename suggests it is similar to CRM just

close relationship with key customerssimilarly relationship is maintained withsmall but key suppliers.Management defines the supplier group tobe targeted in firms business mission.


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Ben

efits from

SRM

Long life relationshipCost reduction

Quality maintenance


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Add iti onal feat ures of SRM/ Manufact ure r as cust ome r

Handling Customer complaints.Special request delivery.

DesignColorQuality

DiscountIncentive.Taking the inventory of customer


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Total cost of ownership

It represents theInvoice cost

Execution costInventory costQuality cost


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Total owner ship costmodel

Invoice cost

Executioncost

Inventorycost

Qualitycost


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Costs associated with

the different phasesI nvoice cost Exec uti on cost I nv ent ory cost Q ualit y costPart cost Purchasing Carrying cost InspectionFreight cost Accounts payable Warehousing

costwarranty

Deliverymechanism

obsolescence


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In the past the major focus was on thefirst phase of the model which means thatthe organization is seeking to get the valuethrough invoice price.But as we move higher on the model themajor other costs occur that needs the

attention. And the supplier relationshipprocess today and in future will focus onthat.


the different phases


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The major focus in SRM is on the totalvalue the supplier is producing for thefirm.

The inventory cost for example is themost dominant cost in supply chain. Thereally gray area of cost which needs jointattention and can be focused withJust in time inventory_ the new concept isto match the demand and supply ofmaterial. To cover demand without havingsafety stock.

Costs associated withthe different phases


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The quality cost, the highest block in theownership model. Now the supplier as a

partner of the buyer is to assure thatthere are no hidden cost associated withanalyzing the right goods at right time andwith no return.

This is the trust_ the height of any goodrelationship .


the different phases


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Comparison

Dimensions Supplier asadversary Supplier aspartnerno of suppliers many One or fewLength of

relationship

Brief Long term

Reliability Not high highquality Low Highlocation Widely

spread

Nearness for

short leadtime.Volume of

businessLow due tomany

suppliers

High


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Four steps for successful

SRMAnother need of the SRM that stems fromthe need of organizations to go for theoutsourcing like product design and aftersale service. A researcher called thisvirtualization.the first step is to integrate. A firm

cannot conduct SRM if it has notautomated its internal systems. The SRMdraws the information which wasgenerated throughout the organization.


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Pella corporation exampleThe Pella wanted to reduce the cost so itcreated the procure-to-pay system andgot significant results.


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How Pella did that?The supplier collaborated to make Pellado the following

Transaction time reduced 13 to 5minutes.Time per purchase orders reduced to 50percents

Number of calls from Pella purchasingdepartment reduced to 95 percent.

Pella corporation example


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Second the supplier needs to beconnected with the organization. Theymust be able to transact directly with

the buyers system.Thirdly the single view of relationshiphas been developed now the ways can bechosen to identify the opportunities forboth the parties. ( supplier and buyer)


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For example the 50 percent of theinventory is sold in the first week of themonth. The supplier is informed to

provide the additional stock henceenhancing their own revenues.Finallythe collaborative culture must beestablished to make this relationship as

competitive advantage not only restrictedto cost saving only.



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In the light of four steps the SRM is theneed of an hour to create speedy system

of transaction and such a friendlyenvironment that benefits both of theparties.



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New scenarioThe new concepts of liberalization has ledto remove the traditional boundaries

converting the world into global village inthis scenario the business need someother strategies to improve operations andmake close communication with business

partners


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Changing paradigm ofprocurement

TQMphilosophy

Technologyenablers

Globalcompetitiveness

ChangingParadigm of procurement


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Inclusion of I.T

The information technology has createdthe new business environment and in this

way the I.T has become the part of thecorporate strategy and supports thesupplier relationship management.


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Supplier relationship is the part of thesupply chain management which deals withthe entire relationship between theorganization and the supplier but the SRMdeals with the structure and the processesneeded to be discussed with the suppliers


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From I.T perspectiveJoint capability to resolve the issues and touse open internet based architecture to

disseminate vital dataThe vital data is used to predict exactdemand hence reducing the need for thesafety stock.

From the information the non-value addingsteps will be eliminated.


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Functionalities of SRME sourcingThis begins before any transactionstake place.The main goal is to make theprofessional buyers to find the exactsupplier based on price and othercriterion.Request for quotation

The request for the quotation system inhistory focused on the price alone forthe sale of goods transparently. But nowa days the focus is to take into account

multi dimensions like quality


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E- procurementThe technology has made theorganization able to broader the waythey transact, now they cover the

service procurement and the postprocurement stage like the invoicing andthe settlement.The Desk top purchasing system

produces more decentralized system inwhich employees are able to requestadditional materials through webapplication. But the company mustprepare the budget for its internalcustomer.

Functionalities of SRM


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Business process

outsourcingAnother trend in SRM is the BPO thatenables the companies to out source theprocurement process to an externalprovider that manages the procurementaccording to the criterion set by thecompany.This is really favorable for the smallcompany having the hindrance of financeand the large companies who have tofocus on the product innovation andenhancing the skills.


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Supplier relationship

processIdentify the supplierTransferring and developingShare learningSynergizing.


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1. Identifying the high

potential supplierThere is a certain criterion on which thesupplier is selected in Thailand the

criterion is quality, price, delivery andworking history but in developed nationsthe criterion is price (Degrave).


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2 .Developing high

potential suppliersIn this stage themanufacturer providestechnical knowledge tools andadvice on material. Here themanufacturer helps thesupplier to manage operationsin order to maintain qualityand quantity and to reducecost.


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3. Mutual learningThis stage is for mutual learning where thesupplier learns the local knowledge thatwhat is in demand.

In Thailand An auto manufacturer keptthe product design developmentinformation secret so that the keymanufacturer ( the relationship ismaintained with ) is able to maintaincompetitive edge.


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4. Partnering for

synergies.In this stage the supplier has developedthe capabilities and the trust has been

developed between both of the parties sothey share the intellectual property tobenefit each other.


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Roles Of Supplier:-

1. Equipment/material supplier2 . Solution provider

3. Performance provider

Supplier


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Roles Of Supplier:-1. Equipment/material supplier:-

These suppliers provide only activities,which directly support

equipment/material business.Key Activities:-

1. Software/Hardware maintenance2

. Emergency support3. Help desks, etc


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Roles Of Supplier:-2

. Solution provider:-These requires both the willingness &ability to take end-to-end responsibilityfor the installed system base. They looksat the total solution from the customersperspective, even if that takes thecompany beyond its traditional offering.Key Activities:-

1. Systematic competence development2 . Co-teams3. Workshops


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Roles Of Supplier:-3. Performance provider:-

These suppliers capable of identifyingcustomers future needs, manages

industrial processes & offers guaranteedperformance/results.Key Activities:-

1. Management of customerscore processes.

2 . Continuous optimization3. Leasing services


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supplier relationship process2

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