...The global sourcing challenges of IKEA Who does not know IKEA? Famous for its design and very affordable house furniture, IKEA is the leader on its market. Founded in 1943 by Ingvar Kamprad this business grew tremendous fast that it has become the reference in term of low-cost self assemble furniture in the world. The sourcing strategy of IKEA follows a manufacturing Code of Conduct towards its suppliers named “The IKEA Way in Purchasing Home Furnishing Products” (IWAY) . Besides this code, the strategy is rather well established especially regarding the relationships between the company and its suppliers from the economically developing countries. But the question is; are Ikea’s international procurements processes efficient? Can they be improved? This essay will focus on Ikea’s global sourcing’s tradeoffs and will highlight the way they can be enhanced. The first part of this essay will describe the regular sourcing process of IKEA including the strategy, the second part will emphasize how the sourcing should be done to be successful and the last part will provide recommendations about the processes according to the analysis. For a company, global sourcing is basically choosing different suppliers all around the world in order to use worldwide efficiencies and reduce costs. Global sourcing offers various advantages such as low cost materials and skilled labour, diminution of lead times, and also economical advantages like low taxes or low trade tariffs. These benefits...
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...rP os t Sw W12079 STRATEGIC SOURCING AT WHIRLPOOL CHINA: FINDING THE IDEAL SUPPLIER op yo Dr. Martin Lockstrom, Thomas E. Callarman and Shengrong Zhang wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2012, CEIBS Version: 2012-06-19 tC It was April 10, 2011, when Gianluca Castelletti, head of Whirlpool’s Asia International Procurement Office in Shanghai, was informed by his colleagues that the company was about to launch a new refrigerator model in just six months. With the current worldwide focus on energy saving, and as one of the biggest home appliances producers, Whirlpool China planned to introduce a new energy-efficient refrigerator. No Castelletti immediately spotted a challenge in Whirlpool...
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...Practicum Strategic Sourcing at Whirlpool China Q1. Whirlpool’s Global Sourcing Strategy (GSS) in China had many advantages as well as disadvantages. As the case explains, China had become one of the world’s largest household appliance makers, and relocation of Whirlpool’s Asian HQ to Shanghai helped the company’s products gain acceptance within the market. Furthermore, setting up an international procurement office in Shanghai helped to eliminate various factors that could make global sourcing a difficult process. Whirlpools Shanghai HQ decreased transportation delays and cultural and language differences and supported the company’s own manufacturing operations in Asia. Other advantages to global sourcing in China include: reducing capital investments, gaining market share, focusing on core competencies, and increasing flexibility in production. Although China may provide a cost advantage in regards to raw materials, disadvantages occurred in areas such as quality, reliability, a lack of capable service providers, and inadequacies in transportation and IT infrastructures. Q2. When it came to potential suppliers, Whirlpool set their standards high. In order to be considered a supplier of Whirlpool, quality requirements set forth by the Whirlpool Supplier Quality System had to be met. Most suppliers in China, however, found difficulty in reaching the minimum required score of 60/100 during the first round of audits. Whirlpool used the Sourcing Strategy Development (SSD)...
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...– Apr 2015 IMS People is an Offshore Recruitment Services firm whose customized services help companies and staffing firms source talent for opportunities at home and abroad. We tailor our services to each client’s needs by providing traditional recruitment services and creative, one-time solutions that help companies gain advantage in their market and drive their recruitment value chain. Achievement: Awarded Performer of the month for May-2014, Sep-2014. Awarded New Comer of the Year 2014. Duties: As a Recruitment consultant I am responsible for building and maintaining relationships with clients, colleagues and candidates. This enables me to research and generate new business opportunities. Duties Included; * Headhunting and sourcing candidates dependant on employer requirements * Regular business development calls with new and existing clients * Interviewing and screening candidates to create a strong pipeline * Marketing...
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...OF ENGINEERING, SCIENCE AND TECHNOLOGY www.ijest-ng.com www.ajol.info/index.php/ijest 2014 MultiCraft Limited. All rights reserved When ETO companies design the supply chain during new product development process R. Cigolini1, M. Pero1*, A. Sianesi1 1 * Department of Management, Economics and Industrial Engineering, Politecnico di Milano, ITALY Corresponding Author: E-mail: margherita.pero@polimi.it Phone: +39.02.2399.2819; Fax: .2700 Abstract This paper outlines the interface between product development process and supply chain configuration. It highlights the relevance of product features on the time the sourcing decisions are taken with respect to the product development phases. Multiple case studies in Engineer-To-Order (ETO) industries have been performed to investigate how companies configure the product development process and choose the timing of sourcing decisions along the process. Results suggest that the time companies take supply chain configuration decisions varies according to product features: high techno-logical complexity pushes companies to re-think their supply chain in the early phases of product development process, e.g. in terms of make-or-buy decisions and suppliers selection. The proposed framework helps decisions makers arrange the product development process by defining when supply chain configuration should take place. Keywords: Supply Chain, New Product Development, Engineer To Order, Supply Chain Design.. DOI: http://dx.doi.org/10.4314/ijest...
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...Purchasing The Low-cost Learning curve t might not be the best habit, but people have a tendency to categorize everything. The same often happens with low-cost country sourcing, which lumps totally diverse countries scattered all over the world into the same category of inexpensive procurement opportunities. Many still debate whether the process itself actually varies that much from country to country. Is the strategy for sourcing from China really any different than it is from India, Turkey or Brazil? For David Hoover, vice president of strategic procurement for HNI Corp., the answer is, “No, it’s not.” Of course, there’s a little more to it than that. “In the end, human beings are always the ones doing the business. And everyone has an interest,” notes Hoover. “The challenge, in any supplier relationship, is to understand what the other party’s interests are, so that you can help satisfy them. When you do that, they will be compelled to help satisfy yours.” A few years ago when HNI, a global office furniture manufacturer, started evaluating the potential cost benefits of sourcing in China, the company took an approach that utilized its decentralized business model called “split and focus.” However, while the model proved very effective on the customer side of the business to accommodate different product markets and consumer bases, the company quickly learned that the approach needed a few minor adjustments to be as successful on the supply side. “[Initially] we were sending...
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... A reverse auction is a type of auction in which the roles of buyer and seller are reversed. In an ordinary or forward auction, buyers compete to obtain a good or service by offering increasingly higher prices. But in a reverse auction, the sellers compete to obtain business from the buyer and the participants place lower and lower bids, until the lowest bidder wins. A reverse auction is similar to a unique bid auction as the basic principle remains the same, however a unique bid auction follows the traditional auction format more closely as each bid is kept confidential and one clear winner will emerge at the completion of the auction. . The reverse auction has been widely used by many organizations and is aimed at reducing costs and sourcing services or products at the lowest possible price from the participating suppliers. Some of the benefits are: A reverse auction provides buyers with the most competitively priced solution to their needs by pitching suppliers against each other to be the one offering the lowest-priced bid. It saves time in the procurement process and also streamlines the procurement process as well as reduces the need to send a different request for proposal to each potential supplier. It equally has some disadvantages that makes it a bad method like creating problems when proper controls are not put in place. Competition for the lowest price can make some suppliers to cut corners to maximize benefit or even send them out of business when the project turns...
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...now. The co-founder is actually Michael Marks and later joined by Thomas Spencer in 1894 to create Marks & Spencer. The main product which produced by Marks & Spencer is clothing line and then expand to food industries. Marks & Spencer are successful because of they know how to apply the sourcing strategies within their supplier around the world. There are two types of strategies implemented by Marks & Spencer, combination of in-house and third party manufacturing for food s line and third party contracting or sourcing for clothing section. Tesco is the choice from us to compete with Marks &Spencer; Tesco had their own sourcing strategy to compete with their rival within the same industries line such as group food sourcing (GSF) and regional supply base making the right product at affordable pricing. Tesco do developed its own brand which is cheaper in price and better qualities control. The last sourcing Strategies is Sourcing global, which they have contract with the supplier around the world. The sourcing strategy for Marks and Spencer has disadvantages and advantages which affect the company performance. Lastly, we recommended enhancement in their sourcing strategy by comply with China supplier in Clothing line or green field investment in China. Company Background (Mark & Spencer) The years of Marks & Spencer established was in 1958, and it has since become an icon of quality and style. At the beginning, Marks & Spencer were trading under...
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...Marketing Subject Ms. Phyllis Katz Marketing Cluster In crowd sourcing, you can outsource the task to not only a small group of person, but also tens of thousands of people. That’s the genuine advantage of the crowd sourcing, bringing in mass intelligence to solve problems of all kinds with affordable price. Jeff Howe coined the term “crowd sourcing” back in 2006, in a Wired article, which described a new way of sourcing people who are willing to help or work on a project. Enough people with sufficient time can transform into a lot of available manpower. For small, manual tasks such as tagging vast amounts of photos, instead of outsourcing to a large company, it’s more feasible and affordable to use a crowd-sourcing marketplace. Crowd sourcing is often used for translation service. For instance, Face book has been using crowd sourcing to translate its website into different languages since 2008. Wikipedia can be categorized as crowd sourcing as well: an encyclopedia written by people from all over the world, professionals and amateurs alike. Crowd sourcing has been with us for a while and now, it just got a catchy name. Companies nowadays not only employ Research and Development (R&D) teams, but also list the problems they’re working on to the public as an attempt to get help from anyone. Certain companies even offer huge prizes for solving a problem on crowd sourcing site like InnoCentive, and the cost is fairly cheap compared to employing a huge R&D team...
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...GLOBAL SOURCING Strategic Soucing at Whirpool China Finding the ideal supplier CASE ANALYSIS Assignment 1 STRATEGIC SOURCING AT WHIRLPOOL CHINA FINDING THE IDEAL SUPPLIER CASE ANALYSIS 1. What are the key problem areas for Whirlpool? Finding the right supplier. 2. What is the importance of strategic sourcing? Sourcing the right components is the first step in launching the new product. 3. What are the pros and cons of Whirlpool’s global sourcing strategies? Cons: Payment terms. Pros: To avoid delays in launching the new product. 4. How are suppliers identified, evaluated and selected? It was necessary to define the commodity and allocate responsibilities and resources through co-ordination of global and regional activities. Using the Sourcing Strategy Development (SSD) process in 4 steps: Step 1: internal analysis, identified and prioritized the process –partner requirements, then evaluated the performance of the existing supply base and reviewed the existing supply base, it also identify the switching costs. Step 2: external analysis, which includes analysing the supplier industry and competitors and evaluating competitor performance and strategies. The evaluation process makes use of SWOT (Strength, Weakness, Opportunities, Threat). Step 3: strategy development, is to analyse the competitiveness and their financial impact. Preliminary negotiations could be carried out, a suitable strategy and suppliers should be selected and...
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...Global Production and Sourcing. Introduction: For this project I will be looking into the specific requirements TU at Sainsbury’s require around specific product types. I will be looking into Sainsbury’s TU toddler boy’s jersey wear. Researching into two countries of origin I will be looking into what management conditions, technological and economic issues that surround the choice from where Sainsbury’s choose to and how they are sourced and manufactured. Sainsbury’s was founded in England, London in 1869 by John James Sainsbury, and grew rapidly during the Victorian era. Sainsbury’s grew to become the largest grocery retailer in 1922, pioneered self-service retailing in the UK, and had its peak of success during the 1980s. However in 1995 Tesco overtook Sainsbury’s to become the market leader, and Asda became the second largest in 2003, putting Sainsbury’s into third place. (Museum of London. Unknown. The Sainsbury’s archive [Online] 22.03.2012) Sainsbury’s launched its TU fashion range in 2004, and is now housed in over 300 stores nationwide. Over the past six years, the retailer has seen its share of the £9.9bn value fashion market more than treble. The TU clothing range remains the UK’s seventh largest clothing brand by volume, TU kidswear however has gone from seventh place in 2011 to the UK’s sixth largest in 2012. (Drappers online, 2012, Sainsbury’s expected to reveal further gains in clothing market share. [Online] 22.03.2012) The Sainsbury’s TU clothing...
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...personal computer (PC) maintenance, and systems maintenance will experience tremendous growth, while data center operations, systems development and Telecommunications/LAN will experience very healthy growth. PC acquisition and project primarily management will experience a lesser expansion. This growth will be led by what are now large IT departments. This result have implications for IT professionals and firms across the US and around the world.ananlysis of change in financial characteristics reveals an increase in long-term debt and financial leverage and declining growth rates prior to the outsourcing event. We argue that firms enter into large-scale IS outsourcing agreements to reduce costs and to generate cash Introduction: Out sourcing is nothing but In today's world, outsourcing is defined as the strategic means through which companies make contract with outside vendors to perform various IT functions or services such as data access, data center operations, software testing and maintenance, IT consulting,, call centers and telemarketing, network administration and operations, etc. in order to obtain high quality service, reduced production cost and implementation time, rather than just using it as a source for cost-saving to perform some specific functions. Vendors may be individual IT professionals,...
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...Strategic Sourcing What specific action should the company take in the area of inventory control? Support your proposal with an analysis of its strengths and weaknesses (15 points). The company should implement a plan. As stated in the case, there was no real plan or policy in action that supported this role within the company. This has to be done if the company wants to continue to grow. They are a growing company and have a number of different products. This is strength because they offer their customers a variety of products to choose from. Another strength would be that they have commonality amongst their products. It stated in the case that they have several products that share materials. This is a good thing because strategic sourcing strategies can be implemented here. One of their main weaknesses was the lack of inventory control. This affected their raw materials all the way to their finished goods. They lost orders, had to make smaller quantity orders to meet production needs, and have growing transportation cost. They need to make use of an ERP system like SAP in order to track all of their inventory and finished goods problems they were experiencing. Having a system like this in place will let them know, when they need to re order product, the different salvage dates and cost, and other inventory management problems that they may need to solve. What is your reaction to the argument of those who oppose tighter controls? (5 points) Tighter controls need to...
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...classifying and analyzing expenditure data with the purpose of reducing procurement costs, improving efficiency and monitoring compliance. It can also be leveraged in other areas of business such as inventory management, budgeting and planning, and product development. There are three core areas of spend analysis - visibility, analysis and process. By leveraging all three, companies can generate answers to the crucial questions affecting their spending, including: ▪ What am I really spending? ▪ With whom am I spending it? ▪ Am I getting what’s been promised for that spend? Spend analysis is often viewed as part of a larger domain known as spend management which incorporates spend analysis, commodity management and strategic sourcing. Companies perform spend analysis for several reasons. The core business driver for most organizations is profitability. In addition to improving compliance and reducing cycle times, performing detailed spend analysis helps companies find new areas of savings that previously went untapped, and hold onto past areas of savings that they have already negotiated. Benefits of Spend Data Management: [pic] 2. Goods Spend Analysis: How is it conducted? 3 major components of a spend analysis: |Component |Activity |Typical deliverable | |(a)Opportunity assessment |Collect and validate category spend data/diagnose...
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...Home Depot Service In 1978 Home Depot organization opens the first retail home improvement store in Atlanta Georgia. The organization developed strategic product analysis delivering a variety of assortments to customers. Innovative merchandise targets internal and external customers of the organization for do it yourself projects, professional contractors, free how to clinic and children workshops are available for customers to complete construction projects on different job sites. Home Depot evolved into internationally recognized specialty retailer that markets and delivers 40,000 different building materials, lawn and garden products, home improvement supplies, appliances, and more than 250,000 other products that can be especially ordered (The Home Depot U.S.A., Inc., 2003-2006). It has been noted that “The Home Depot has convenient locations throughout the United States. Stores average 105,000 square feet with approximately 23,000 additional square feet of outside garden area” (The Home Depot U.S.A., Inc., 2003-2006, Our Company, Stores and Product section). A possible solution for 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...
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