không vgddfggjhgghhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhjjjjjjjjjjjjjjjjjjjjjjjjjjj bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbjjjjjjjjjjjjjjjjjjj mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm
Contents I SUPPLIER EVALUATION & SELECTION Recognize the Need for Supplier Selection .5 Identify Key Sourcing Requirements .6 Identify Potential Supply Sources 3.1 Current Suppliers .7 3.2 Sales Representatives 3.3 Internet Searches and Social Media 3.4 Informational Databases 3.5 Organizational Knowledge 3.6 Trade Journals, Trade Directories & Trade Shows .9 3.7 Professional Associations and Published Information .10 3.8 Internal Sources .10 3.9 Supplier-Provided Information 11 Determine Sourcing Strategy .11 4.1 Consider Sourcing Alternatives 12 4.2 Categorize Suppliers for Multiple or Single or Sole Sourcing 13 4.3 Evaluate Critical Selection Issues 14 Limit Suppliers in the Selection Pool 17 5.1 Supplier Risk Management .17 5.2 Evaluation of Supplier Performance .18 5.3 Third-Party Provider Information 19 5.4 Supplier Visits 19 Conduct a Detailed Review of Supplier Evaluation Criteria 20 6.1 Management Capability 20 6.2 Employee Capabilities 21 6.3 Cost Structure 21 6.4 Total Quality Performance, Systems, and Philosophy .22 6.5 Process and Technological Capability .22 6.6 Sustainability and Environmental Compliance .23 6.7 Financial Stability 24 6.8 Scheduling and Control Systems 25 6.9 E-Commerce Capability 26 6.10 Supplier’s Sourcing Strategies, Policies, and Techniques 26 6.11 Longer-Term Relationship Potential 27 Select Supplier and Reach Agreement 28 ER – Developing a Quantitative Supplier Evaluation Survey .28 8.1 Identify Supplier Evaluation Categories 29 8.2 Assign a Weight to Each Evaluation Category 30 8.3 Identify and Weigh Subcategories 30 8.4 Define a Scoring System for Categories and Subcategories 30 8.5 Evaluate Supplier Directly 31 8.6 Review Evaluation Results and Make Selection Decision 32 8.7 Review and Improve Supplier Performance Continuously 33 ER – Reducing Supplier Evaluation and Selection Cycle Time .33 9.1 Map the Current Supplier Evaluation and Selection Process 33 9.2 Integrate with Internal Customers 33 9.3 Data Warehouse Software with Supplier Information .34 9.4 Third-Party Support 34 9.5 Integrating Technology into Organizational Design 34 9.6 Supplier Categorization 34 9.7 Electronic Tools .35 9.8 Predefined Contract Language and Shorter Contracts 35 II SUPPLIER QUALITY MANAGEMENT 35 What Is Supplier Quality? .35 Why Be Concerned with Supplier Quality? 38 2.1 Supplier Impact on Quality .38 2.2 Continuous-Improvement Requirements 38 2.3 Outsourcing of Purchase Requirements 38 Factors Affecting Supply Management’s Role in Managing Supplier Quality 39 III SUPPLIER MANAGEMENT & DEVELOPMENT 40 Supplier Performance Measurement 40 1.1 Supplier Measurement Decisions 41 1.2 Types of Supplier Measurement Techniques 44 Rationalization and Optimization: Creating a Manageable Supply Base 50 2.1 Advantages of a Rationalized and Optimized Supply Base 50 2.2 Possible Risks of Maintaining Fewer Suppliers .53 2.3 Formal Approaches to Supply Base Rationalization .55 2.4 Summary of Supplier Rationalization and Optimization 57 Supplier Development 58 3.1 Roadmap 59 3.2 Overcoming the Barriers to Supplier Development 62 3.3 Lessons Learned from Supplier Development 68 CHAPTER – SUPPLIER RELATIONSHIP MANAGEMENT I SUPPLIER EVALUATION & SELECTION One of the most important processes that organizations perform is the evaluation, selection, and continuous measurement of suppliers Traditionally, competitive bidding was the primary method for awarding purchase contracts In the past, it was sufficient to obtain three bids and award the contract to the supplier offering the lowest price Enlightened purchasers now commit major resources to evaluating a supplier’s performance and capability across many different areas The supplier selection process has become so important that teams of cross-functional personnel are often responsible for visiting and evaluating suppliers A sound selection decision can reduce or prevent a host of problems Another trend affecting supplier selection today is the use of fewer suppliers For example, when a firm has reduced its supply base and awarded the remaining suppliers longer-term contracts, the willingness or ability to switch suppliers diminishes This makes selecting the right suppliers an important business decision Most purchasing experts will agree that there is no one best way to evaluate and select suppliers, and organizations use a variety of different approaches Regardless of the approach employed, the overall objective of the evaluation process should be to reduce purchase risk and maximize overall value of the selected supplier(s) to the organization An organization must select suppliers it can business with over an extended period The degree of effort associated with the selection relates to the importance of the required good or service Depending on the supplier evaluation approach used, the process can be an intensive effort requiring a major commitment of resources (such as time and travel) This section addresses the many issues and decisions involved in effectively and efficiently evaluating and selecting suppliers to be part of the purchaser’s supply base Exhibit 7.1 highlights the seven critical stages involved in the supplier evaluation and selection process Recognize the Need for Supplier Selection The first stage of the evaluation and selection process usually involves recognizing that there is a requirement to evaluate and select a supplier for an item or a service A purchasing manager might begin the supplier evaluation process in anticipation of a future purchase requirement Purchasing may have early insight into new-product development plans through participation on a product development team In this case, engineering personnel may provide some preliminary specifications on the type of materials, service, or processes required but will not yet have specific details This preliminary information may be enough to justify beginning an initial evaluation of potential sources of supply Finally, the outsourcing phenomena has created new challenges for purchasers to evaluate providers of services that often involve many less tangible and more perceptual views of quality such as consulting engineers The recognition that a need exists to evaluate suppliers can come about in many different ways Exhibit 7.2 identifies the origins that result in a need to evaluate and select sources of supply As is shown in the exhibit, purchasers will encounter new, modified, or straight rebuys when making sourcing decisions Progressive purchasing groups increasingly anticipate rather than react to supplier selection needs The complexity and value of a required purchase will influence the extent to which a buyer evaluates potential supply sources A new and growing area for purchasers are service buys Evaluating service providers requires analyzing if the supplier has the resources necessary to assure the reliable on-time delivery of their services This could include a one-time report from an engineering consulting firm to a continual service such as pest control or maintenance of cloud storage services Identify Key Sourcing Requirements Throughout the supplier evaluation and selection process, it is important to understand the requirements that are important to that purchase These requirements, often determined by internal and external customers within the value chain, can differ widely from item to item A later section discusses the various supplier performance areas where a purchaser should determine its critical sourcing requirements Although different requirements may exist for each evaluation, certain categories—supplier quality, cost, and delivery performance—are usually included in the evaluation Once the key sourcing criteria are determined, purchasers will have to engage in an information search The degree to which a buyer must search for information or the effort put forth toward the search is a function of several variables, including how well existing suppliers can satisfy cost, quality, or other performance variables The strategic importance or technical complexity of the purchase requirement also influences the intensity of the search The following offers some guidelines regarding the effort and intensity of search required during supplier evaluation: • Minor information search = High capability of current suppliers + Low strategic importance of requirement • Minor to moderate information search = High capability of current suppliers + High strategic importance of requirement • Major information search = Low capability of current suppliers + High strategic importance of requirement • Minor to moderate information search = Low capability of current suppliers + Low strategic importance of requirement Identify Potential Supply Sources As stated earlier, the extent of the search for potential sources will vary based on the particular purchase requirement The following provides a discussion on the various resources that should be considered when seeking to identify potential suppliers 3.1 Current Suppliers A major source of information is current or existing suppliers Buyers often look to existing suppliers to satisfy a new purchase requirement The advantage of this approach is that the purchaser does not have to add and maintain an additional supplier Also, the buyer can business with an already familiar supplier, which may limit the time and resources required to evaluate a new supplier’s capabilities On the negative side, using existing suppliers, although perhaps easier and quicker, may not always be the best long-term approach A purchasing manager may never know if better suppliers are available without information on other sources For this reason, most organizations are continuously seeking new sources of supply and are expanding this search to include global suppliers Selecting an existing supplier for a new purchase requirement may be an attractive option if a list of preferred suppliers is maintained Designation as a preferred supplier means that a supplier consistently satisfies the performance and service standards defined by the buyer and responds to unexpected changes A preferred supplier status conveys immediate information about the supplier’s overall performance and competency However, the buyer must still determine if a preferred supplier is capable of providing the new purchase requirement 3.2 Sales Representatives All purchasers receive sales and marketing information from sales representatives These contacts can prove to be a valuable source of information about potential sources Even if an immediate need does not exist for a supplier’s services, the buyer can file the information for future reference Detailed information on sales representatives and their product and service capabilities is available on the Internet Information about sales representatives can be easily viewed on social media sites such as LinkedIn and Facebook 3.3 Internet Searches and Social Media Today, buyers routinely use the Internet to help locate potential sources that might qualify for further evaluation Correspondingly, most sellers of all sizes have an Internet presence as part of their overall marketing efforts Buyers are able to view pictures of the facility, find information about the management team and oftentimes a customer list Additionally, LinkedIn, Facebook, and Twitter provide an additional resource to extract information on a potential supplier and its key employees LinkedIn is particularly useful to locate background information about key managers at a particular supplier There are also various interest groups by commodity or category For example, the “Construction Purchasing Agents, Subcontractors and Suppliers” group consists of over 3,000 members The “Metal Casting Design and Purchasing” group consists of over 2,900 members 3.4 Informational Databases Purchasers of today suffer from information overload The use of mobile devices and increased visual capabilities of Web 2.0 provides immediate access to information about suppliers Web 3.0 is now a third generation of Internet-based services that is being called “the intelligent Web” and will enable data mining, machine learning, and artificial intelligence This machine-facilitated learning will enhance the purchasers’ understanding of information and improve their productivity The challenge is managing this vast array of information Supply organizations must decide what information should be downloaded from the Internet and how it should be captured and stored in internal data warehouses or enterprise requirements planning (ERP) systems Newer automation technologies such as robotics and artificial intelligence provide more sophisticated data analysis techniques, but require adjustments in skill requirements There are several companies that can assist with providing databases where the supply organization can store information about their suppliers These systems are also capable of providing inputs to assist in strategic sourcing or monitor if the organization’s purchases are contract compliant For example, IBM’s Business Process Services Group provides software to assist buyers automate their business processes through more intelligent workflows using automation, artificial intelligence, the Internet of Things (IoT) These technologies will support real-time supplier databases that allow the buyer to quickly perform “what if ” scenarios to locate the best suppliers as well as drive other efficiencies into the sourcing process.1 Databases allow the purchaser to quickly identify suppliers potentially qualified to support a requirement The database may contain information on current products, the supplier’s future technology roadmap, process capability ratios, and past performance It is important to constantly review, update, and modify these databases to insure information accuracy If additional suppliers are required, databases of potential supply sources are also available for purchase from external parties 3.5 Organizational Knowledge Knowledge management is the process of capturing the sourcing knowledge and experience of an organization’s purchasers in a database This knowledge can then be shared throughout the organization Experienced purchasing personnel usually have strong knowledge about potential suppliers A buyer may have worked within an industry over many years and may be familiar with the suppliers One argument against rotating buyers too frequently between product lines or types of purchases is that a buyer may lose the expertise built up over the years Capturing this knowledge about decision processes can improve the sourcing process for newer or less experienced purchasers 3.6 Trade Journals, Trade Directories & Trade Shows 3.6.1 Trade Journals Most industries have a group or council that publishes a trade journal or magazine that routinely presents articles about different companies These articles often focus on a company’s technical or innovative development of a material, component, product, process, or service For example, Chemical Week (https://chemweek.com/CW) provides both market and technical information on the chemical industry suppliers also use trade journals to advertise their products or services Since most trade journals are available in electronic format, buyers can easily access and follow them 3.6.2 Trade Directories Almost all industries publish directories of companies that produce items or provide services within an industry Such directories can be a valuable source of initial information for a buyer who is not familiar with an industry or its suppliers A very popular directory for domestic buyers is the ThomasNet maintained by Thomas Publishing Company, whose mission for over 100 years has been to disseminate industrial product information This directory can be located at www.thomasnet.com 3.6.3 Trade Shows Trade shows may be an effective way to gain exposure to a large number of suppliers at one time Groups such as the Society of Chemical Manufacturers and Affiliates (https:// www.socma.org/) and the Precision Metalforming Association (PMA) often sponsor trade shows PMA offers FABTECH that is advertised as North America’s largest metal forming, fabricating, welding, and finishing event In 2018, more than 35,000 attendees and over 1,500 exhibiting companies participated in the trade show 10