Chapter 7: Supplier Relationship Management Flashcards
Basic Activities of Purchasing:
Sourcing Value Analysis Supplier Development Internal Integration Supplier Scheduling Contracting Cost Management Purchasing & Receiving Performance Measurement
Purchasing Function defined…
The body of integrated activities that focuses on the purchasing of materials, supplies, and services needed to reach organizational goals.
In a narrow sense, purchasing describes the process of buying.
In a broader context, purchasing involves determining the need; selecting the supplier; arriving at the appropriate price, terms, and conditions; issuing the contract or order; and following up to ensure delivery.
Supplier Relationship Management (SRM)
The nurturing of continuously evolving, value-enriching relationships between supply chain buyers and sellers that requires a firm commitment on the part of all trading parties to a mutually agreed upon set of goals and is manifested in the collaborative sharing and timely and cost-effective networking of sourcing and procurement competencies to facilitate the entire material replenishment life cycle from concept to delivery.
Adversarial nature of purchasing in the past has given way to SRM today due to:
- Increasing requirements for supply chain collaboration partnerships.
- Increased demand for risk-sharing.
- Enabling power of internet technologies.
- Changing business infrastructures.
- Focus on continuous improvement, cost control, quality improvement, innovation.
SRM enables enterprises to effectively…
- Stratify the supplier base.
- Construct a governance structure and process for the supplier relationship.
- Determine the process of supplier development, leading to closer networking and process visibility.
- Establish appropriate performance measures.
SRM Components:
Strategic Sourcing & Supply Management:
-Philosophy to find and cement close relationships with key trading partners.
Enabling Technologies:
-mail, telephone, fax, EDI, XML, E-Procurement, E-Sourcing
Customer-Centric Infrastructure & Operations:
- Resources to build new processes that rapidly respond to changes in customer requirements.
Potential Benefits of Internet-Driven SRM
- Increased Market Supply and Demand Visibility
- Price Benefits from Increased Competition
- Increased Operational Efficiencies
- Enhanced Customer Management
- Improved Supply Chain Collaboration
- Synchronized Supply Chain Networks
B2B Exchanges and Marketplaces Major Types
Independent Trading Exchange (ITX)
Private Trading Exchange (PTX)
Consortia Trading Exchange (CTX)
Development Period of Technology Supporting e-SRM
- Internet Foundations:
- 1960-2000
- Basic catalog and RFQ/purchasing transactions - Rise of Collaborative Commerce:
- 2000-2005
- Thousands of B2B exchanges started up
- 50%+ of B2B exchanges founded in early 2000s were dead by a couple years. - Growth and Failure of Networked B2B Exchanges:
- 2005-2014
- Service oriented technologies (XML based web services)
- Surviving B2B exchanges were found to be associated with industry consortia and supply chain collaboration.
Today, e-SRM implementations seek to expand reach of collaborative supply commerce…
- Expand the scope of procurement
- Provide for deep integration of processes
- Facilitate direct collaboration with suppliers
- Enable increased speed and flexibility across the entire supply chain
Implementing e-SRM Involves Standard Process Reengineering Steps
- Develop e-SRM Vision
- e-SRM Value Discovery
- Infrastructure Analysis and Organization Readiness
- Preparing for Organization Change and Possible Pitfalls
- Spend Analysis to Identify Degree of Supplier Fragmentation
- Item/Service Analysis to Identify Volume vs. Fragmentation
- Make an e-SRM Technology Choice
- Performance Measurement vs. e-SRM Project Targets - Total Cost Management
