...Aligning Sourcing and procurement strategy to corporate strategy/strategic supplier selection analysis, Collaboration methods and mechanisms INTRODUCTION Organizations are operating in an environment characterized by continuous economic, social, natural and political disruptions to their sources of supplies and services/ consumers and markets. To survive in this turbulent and highly competitive market place, these organizations must continually monitor their competitive positions alongside their internally controllable functional strategies to ensure they are proactively aligned with the overall corporate strategy. To succeed therefore in this fact evolving global competitive business environment, an innovative business concept Supply Chain Management was introduced to help align the functional strategies with the overall business strategies and suppliers. During World War I and II, the success of a firm was not dependent on what it could sell, since the market was almost unlimited. Instead, the ability to obtain from suppliers the raw materials, suppliers and services needed to keep the factories and mines operating was the key determinant of organizational success. Consequently, attention was given to organization policies, strategies and procedures of the supply chain functions which resulted to activities termed logistics, souring, procurement, material management. By the open of 1970’s, organizations faced two most challenging problems: an international shortage of almost...
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...S ustainable sourcing and procurement Sourcing and procurement as driving forces for sustainable business b y Helen van Hoeven, Lean & Green Foreword President Obama recently said that there are only two kinds of car companies: those that sell hybrid cars and those that will sell hybrid cars in the near future. The same is true for sustainability in supply chains. There are companies that source and sell more sustainable products and there are those that will do so in the near future. With a world soon populated by nine billion people and over two billion new middle-class citizens, traditional sourcing and selling will simply be a no. You are either on the pathway to sustainable development or you are out of business. The challenge of sustainability is reshaping the relation ship between business and society. Industry needs to better manage natural resources and significantly lower its global ecological footprint. And companies need to engage much better with suppliers and workers in the emerging and developing economies. The mission of the Dutch Sustainable Trade Initiative (IDH) is to upscale and accelerate the mainstreaming of sustainability in international commodity chains. IDH joins the forces of business, non-governmental organisations, labour unions and governments. We bring diverse stakeholders together in focused and result-oriented sectoral coalitions that implement ambitious improvement programmes. These programmes tackle social, ecological and economical bottlenecks...
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... Kearney Diagnostic Summary: Strategy, Organization and Procurement Process are the key areas that should be addressed on a higher priority High priority areas 1 Logistics strategy: Focuses mainly on execution and cost reduction by meeting its SLAs and KPIs – limited value-add. Need a comprehensive strategy / roadmap Other areas 4 Supplier management: No established preferred supplier list leading to long lead time. Lack of supplier evaluation leading to lower quality 2 Logistics organization: Decentralized organisation with limited oversight from HO ~20% spend influence. Limited volume pooling and cost savings. 5 Procurement Strategy Procurement Organization Strategic Sourcing Operating process management Supplier Relationship Management Material management: Formal planning and communication could be improved. Lack of material categorisation to determine category level storage strategy 3 Strategic sourcing / Operating process: High time requirements, leading to suboptimal budget realization (80% PGN source-able(1) spend, compared to ~20% currently 1 Strategic Sourcing & Category Mgmt 1 Strategic Sourcing • Conduct strategic sourcing activity for center led categories 0 Category Management 13 1 Contract Management 1 • Establish sourcing plan and strategy for center led categories • Establish frame contracts for center led categories Strategic Sourcing team will progress to become Category Managers • Monitor price...
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...What are today’s hot topics in procurement that are mostly shared/discussed on the Internet and on social media sites like Twitter, LinkedIn, Facebook, YouTube, etc.? Introduction “The procurement function is constantly evolving, with many organisations going through significant transformations over the past decade. Now more than ever, there is a considerable emphasis on the integration phase and the focus has shifted to delivering the value proposition through collaboration and partnerships.” (http://www.procurementleaders.com/forum-zurich) Financial crises have been troubling our economies and it seems that every new crisis has a bigger impact than the one before. As a result, top management is looking more and more towards procurement with the goal to improve their bottom line. But lately procurement has shifted from strictly operational to a more strategic function. Hot topics are not only low cost sourcing, but also supplier integration to become more innovative, procurement technology’s contribution towards profitability and growth, and how social media affects talent management (http://spendmatters.com/uk/procurement-hot-topics-agenda-2014-part-2/). However, the measurement of procurement contribution is often a very sensitive subject. There are no clear boundaries between the various functions involved and thus tensions are bound to occur when it comes to target savings per function at the end of the year. Among today’s hot topics is also the identification...
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...Chance to Shine Procurement professionals today have a huge opportunity to make a powerful impact on business performance. By Marc Hochman and Robert Boll Marc Hochman is a Vice President and Robert Boll is an Engagement Director at A.T. Kearney Procurement & Analytic Solutions. They can be reached at marc.hochman@ atkearney.com and robert.boll@ atkearney.com. The business contribution expectations for procurement professionals are increasing; gone are the days of simply “I need a PO for this.” Successful transformation of the procurement organization hinges on enhancing its professionalism. The three key dimensions of the required transformation are: • Increasing responsibilities and higher value contributions. • Understanding and analyzing supply market dynamics. • Increasing support and alignment with business and functional strategies. Increasing responsibilities and higher value contributions. Customer demands on procurement and the supply chain overall are increasingly more diverse and complex. Procurement must be positioned to anticipate changes in business requirements, adapt to these changes, and accelerate change implementation to capture opportunities ahead of the competition. The capability to align customer segments with the right products/services and to develop adaptive supply chains are core elements of the value-added contributions that procurement is increasingly expected to deliver. A.T. Kearney’s recent Assessment of Excellence in Procurement (AEP) study determined...
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...and supply and demand planning (Commonwealth, 2007). Additionally it involves customer service, sourcing, production arrangement, packaging and procurement. There are three levels of planning and implementation that logistics management form part they include; tactical, operational and strategic level. Basically logistics management encompasses the process of amalgamation that ensures coordination between all activities that involve transportation and merging transport activities with other activities in business for instance marketing, information technology, manufacturing and finance. In this case it may be understood that logistics management is constituted in the control of supply chain processes of goods. These processes involves the arrangement, execution and control in an effective and efficient way product storage and services aimed at meeting expectations from customers (John and Langley, 2002). Activities of online logistics for instance operations that involve sourcing, international transportation as well as customs and quarantine and inspection clearance can greatly contribute to there being products of low costs and increased value to both time and place utility. This is an analysis of logistics management being a case study of an online store in the state of Australia. Low Cost Singaporean sourcing operations, supplier selection, evaluation and procurement, international...
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...Recognizing a need (3.2) Identifying a Supplier (3.3) Qualifying and Placing an order (3.4) Monitoring and managing the delivery process (3.5) Evaluating the purchase and the supplier (3.0) History of Purchasing. (4.6) Origins of purchasing/Procurement (4.7) Procurement developments in ancient history. (4.0) Purchasing Goals. (5.8) Broad purchasing goals (5.9) Different purchasing goals and their priorities (5.0) Importance of purchasing for an Organization. (6.0) New Trends in purchasing. (7.10) e-Purchasing (7.11) Values of e-Purchasing (7.12) Procurement outsourcing (7.13) Values of Procurement outsourcing (7.0) Conclusion. (1.0) What is Purchasing? For most organization purchasing means buying goods to resell or carry out operations or to manufacture products. “Purchasing (Procurement) aims at anticipating requirements, sourcing and obtaining supplies into the organization and monitoring the status of supplies as a current asset.” – defined by the Book LOGISTICS written by David J. Bloomberg, Stephen A. LeMay, Stephen LeMay Terms “Materials Management”, “Inbound Logistics”, “Procurement” give the similar meaning to...
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...ridden one or more strategic sourcing waves that have collectively saved their organizations billions of dollars. Yet even after having benefited from these initiatives, the average company still leaves on the table unrealized savings equaling 5 to 10 percent of its total spending. These savings are not lost because of ill-conceived strategies or organizational incompetence; rather, their loss is inherent in flawed or incomplete procurement operating models. There are many reasons that the operating models constructed to procure and pay for goods and services prove inadequate. They may not include the processes, tools, or resources needed to fully execute the sourcing strategy. They may not be properly connected to organizational decision making or sufficiently integrated into key corporate planning processes. Decisionmaking authority and accountability may not be clearly defined. Or the IT systems that enable them may be fragmented, impeding efficiency and clouding the visibility necessary to ensure compliance with overall purchasing policies and objectives. In order to mitigate these problems and deliver on purchasing’s cost, quality, and service commitments, companies must evaluate and design their procurement operating models along four fundamental dimensions: organization, processes, technology, and performance management (see Exhibit 1, page 2). Together, these four elements determine an operating model’s effectiveness at executing a company’s sourcing strategies. And because...
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...Supply Chain Management – Assignment (Wal-Mart & IKEA) Are they involved in strategic alliances with major trading partners? If so, how and for what purpose? Strategic Alliances Definition of Strategic Alliance: Strategic alliances are inter-firm collaborative business models that allow firms to create value by sharing resources, obtaining market influence or access novel markets. Simply put, strategic alliance allows for projects where companies can share their resources and risks for an agreed period or project. Resources such as distribution chains, development of products, technologies or services become communal amongst alliances. In recent times, the potential positive effects of alliances are highly regarded by firms, thus, leading to an increasing trend in entering into strategic alliances with the aim of constructing stable collaborations. While the successes of alliances are plentiful, there is also evidence of many undesirable business outcomes. This section of the research paper will discuss and analyze the applications of strategic alliance for global giants in the retail business: IKEA and Wal-Mart. IKEA’s Strategic Alliances: IKEA aims to provide consumers with low-price products through fostering long-lasting business relationships and networks with its main suppliers. These relationships are a pivotal part of the development of IKEA’s products and technologies. IKEA tends to push interactions with their suppliers as far upstream as...
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...Introduction………………………………………………………………………..……...3 The 3PL market…………………………………………………………………………...4 Procurement As competitive advantage…………………………………………………4 1. Center-led procurement…………………………………………………………..5 2. Strategic sourcing………………………………………………………………….5 3. Supplier integration……………………………………………………………….6 4. Enterprise spend management……………………………………………………6 5. Cross-industry benchmarking…………………………………………………….7 6. E – Procurement…………………………………………………………………...7 Advantages of Apple’s procurement……………………………………………………..8 Disadvantages of Apple’s Procurement…………………………………………………..9 Conclusion…………………………………………………………………………………10 Introduction: When Apple design guru Jony Ive wanted a new feature for the next MacBook: a small dot of green light above the screen, shining through the computer’s aluminum casing to indicate when its camera was on, the problem? It’s physically impossible to shine light through metal. Apple discovered it could use a customized laser to poke holes in the aluminum small enough to be nearly invisible to the human eye but big enough to let light through. Applying that solution at massive volume was a different matter. Apple needed lasers, and lots of them. Most of Apple’s customers have probably never given that green light a second thought, but its creation speaks to a massive competitive advantage for Apple: Operations. This is the world of manufacturing, procurement, and logistics in which the new chief executive officer, Tim Cook, excelled, earning him...
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...business function. Many researchers have identified various reasons to outsource an activity following a set process. The review proposed a well defined integrated outsourcing process model for effective outsourcing. Using an example of a global company this study detailed the benefits of externalization process and concluded that outsourcing is successful if activity selected is correct. Hire OUT-Sourcing 2 Global Procurement (BMO 5307) Assignment 1 Hire OUT -Sourcing A Literature Review Hire OUT-Sourcing 3 Contents Introduction ............................................................................................................................ 4 United Technology Corp. (UTC) ................................................................................................... 5 Rise of an Era - History & Evolution ......................................................................................... 5 Why Outsourcing? ................................................................................................................... 5 Procurement Outsourcing & UTC................................................................................................ 6 Where To Begin? ..................................................................................................................... 7 What UTC Was Willing To Achieve? ............................................................................................ 9 Pro et Contra ..........
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...Benefits of sustainable sourcing Sustainable procurement is a high profile matter for businesses today. It can help to save money, reduce waste, improve competitiveness and build a business’ reputation. As part of their sustainability programmes, many oil companies have invested in local transportation networks or built schools. They provide jobs and by sourcing supplies locally help to develop the local economy. The global oil industry has a responsibility to the countries in which it operates to manage its operations in as sustainable way as possible. A purchasing manager might want to consider whether the supplier behaves responsibly, for example, adhering to ethical standards or sourcing raw materials in an ethical way. For example, Shell is working with its existing suppliers to implement the Shell Supplier Principles. These set out the minimum standards which Shell suppliers need to meet. These include using energy and natural resources as efficiently as possible to minimise impact on the environment and covering health and safety issues. Efficiency Other aspects of sustainable business include managing waste effectively and reducing the company’s carbon footprint. This can be improved by choosing suppliers who also take their responsibilities towards environmental impact seriously. For example, Marks & Spencer made £70 million of efficiency savings during 2010/11. Alongside reductions in waste and packaging and increased energy efficiency, the company is working...
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...Procurement topics. 1. Negotiation as a cost reduction technique in material procurement 2. Role of inspection in product quality management drive in an organization 3. Effect of store design on materials handling 4. Impact of information technology on the supply function of an organization 5. Importance of inventory planning and control in material handling 6. Negotiation as a tool for effective material pricing 7. The impact of material handling cost reduction effort in public institution 8. An assessment of physical distribution in the performance of an organisation 9. Effect of material inspection on product quality in an organization 10. Impact of material sourcing in enhancing the organizational profitability 11. Variety reduction as a tool for effective materials control 12. The impact of material management on purchasing 13. Impact of public procurement act(Regulations) on the accountability of procurement officers in public sector 14. Inventory control and its impact on profitability. 15. Role of sourcing in the achievement of the profit objective of organization 16. An analysis of the procurement reforms act as a tool for cost savings and accountability in an organization 17. Impact of sourcing decision on material availability in an organization 18. Negotiation skills as a tool for enhancing timely delivery of material 19. Store coding and material identification and effect on store efficiency 20. Public procurement...
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...addressing and fulfilling the organization’s expectations is to examine policies and procedure requirements for an additional customer service. Home retail improvement products and services in the future will gain efficiencies from departments such as services that are policy written and business procedures through development of more new products demanding customizations from business partners to fit in within the company structure both in a domestic and global arena. Home Depot offers deepening commitment to develop every resource to create an effective competitive advantage and manage logistics within the supply chain. A solid foundation within the brand of home improvement establishes the expectations influence and creates effects on procurement strategies, policies...
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...two or more of their purchasing databases with different prices as well as different suppliers providing the same product, little or no visibility to buyer activity, little ability to tract requisitions or purchase orders, this being just the few of the many purchasing pains DCI currently encounters. In order for DCI to exceed and maintain its mission of “reduce cost”, “improve reliability”; DCI will need to implement strategic sourcing strategies as well as establishing a Hybrid purchasing organization. Strategic Sourcing Strategies To improve the purchasing process at DCI an Internet-based electronic purchasing system will need to be installed. The primary benefit of e-procurement include significant cost savings and the freeing up of time for purchasing staff to concentrate on more of the firms core business activities. An e-procurement system is more efficient when selecting and maintaining a list of potential suppliers, processing requests for quotation and purchase orders. Duplicate data entry on the purchase order is eliminated. E-procurement eliminates non-value adding collection and sorting activities as well as lower prices of goods and services since more suppliers can be contacted and reduced inventory costs due to the ability to purchase on a more frequent basis. Selecting the right supply partners and successfully managing these...
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