Lecture 7

Question 1

Suppliers relations in practice: multiple perspectives

Answer 1

Main decisions:

• long term/ short term
• single/ dual/ multiple sourcing
• high involvement/ low involvement buying firm

Question 2

Contingencies driving decisions on suppliers relations

Answer 2

• position of the relevant spend category on the sourcing portfolio
• performance objectives for the specific category
• different ranks of suppliers within a category’s supply base

Question 3

Supplier relationship management (SRM)

Answer 3

system of differentiated supplier performance management
goal to build tight relationships with certain suppliers
spend efforts in line with expected outcomes

Question 4

SRM strong reliance on relational governance

Answer 4

• promoting information exchange
• enhancing trust
• build commitment

Question 5

promoting information exchange

Answer 5

via means such as
- supplier days
supplier account teams

Question 6

enhancing trust

Answer 6

• employee exchange
• supplier reward programs
• supplier satisfaction measurement

Question 7

building commitment

Answer 7

supplier training and development

Question 8

effective and responsible procurement in times of crisis

Answer 8

• supply chain risk assessment
• smart and fair payment
• innovations in contracting
• joint business development

Question 9

supply chain risk assessment

Answer 9

• price differences trigger low cost country sourcing
• risk estimates are conservative
• SC transparency extends seldom beyond tier 1 suppliers
• low cost items rarely subject to extensive risk assessment

Question 10

SC risk assessment remedies

Answer 10

• supply chain mapping
• risk mitigation
  
  • higher inventories
• regional sourcing
• second or backup sources
• extreme reshoring is not the answer

Question 11

Smart and fair pricing

Answer 11

• extended payment terms have immediate effects on liquidity
• suppliers benefit on good times but volumes go down
• if supplier cost is capital is high –> no economic benefits
• fewer suppliers in the long run
• legal restrictions apply

Question 12

payment methods for healthy SC

Answer 12

• actual deliveries
  pay on time
  invest in inventory where you can ramp up
• postponed deliveries
  pay in advanced
  pay for production cost build up, or buy raw materials from suppliers
• cancelled deliveries
  pay for production cost build up, when no alternative

Question 13

joint business development

Answer 13

help suppliers find new customers

Question 14

Phillips three pillars for healthy people, sustainable planet

Answer 14

Sustainable solutions
Sustainable operations
Sustainable SC

Question 15

Sustainable solutions

Answer 15

create value for customers

eco design solutions, circular solutions

Question 16

sustainable operations

Answer 16

lead by example

carbon neutrality, operational waste

Question 17

sustainable SC

Answer 17

multiply our impact

supplier sustainability compliance, responsible sourcing, green supply chain, supplier sustainability performance

Question 18

Philips performance program

Answer 18

segments suppliers based on sustainability maturity and relationship

Question 19

low maturity - commercial supplier

Answer 19

compliance only

Question 20

low maturity - strategic supplier

Answer 20

supplier sustainability improvement program

Question 21

high maturity - strategic supplier

Answer 21

best in class

Question 22

high maturity - commercial supplier

Answer 22

do it yourself

Question 23

new process to review sustainability performance

Answer 23

select –> identify –> agree –> implement

Question 24

select

Answer 24

introduce and set expectations

Question 25

identify

Answer 25

assessment survey

validate survey outcomes and evidence

Question 26

agree

Answer 26

agree improvement plan

Question 27

implement

Answer 27

execute agreed actions

Question 28

incentivization mechanisms

Answer 28

- contract termination 
financial penalties 
carbon reduction clauses 
decarbonization criteria 
carbon price 
beneficial payment terms 
higher production prices 
longer term investment 
capability building 
co branding 
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