SUPPLIER RELATIONS

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 INTRODUCTION

el involved (for example, plant machinery and equipment, computer equipment, travel

nization’s purchasing department (also known as Procurement, Sourcing, or Material

r relations on this foundation need not read any further.

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TRADITIONAL ROLE OF PURCHASING

rofit margin.” If a supplier change was made, little consideration was given to an

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 QUALITY REVOLUTION

onsumer electronics, and optical goods, lost market share to imported goods, espec

etween partners trying to satisfy their common customer, the end user of the fini

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Sec 21 SUPPLIER RELATIONS
SUPPLIER RELATIONS CONCEPTS DEFINED

“supply-chain management.” Purchasing personnel find the scope of their job expan

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Sec 21 SUPPLIER RELATIONS
 SUPPLIER RELATIONS CONCEPTS DEFINED

nd their needs. Value is the relative cost of acquiring quality. If two different

ance, and retirement of a good or service.

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ALITY INCORPORATED INTO TRADITIONAL PURCHASING

s increasingly being recognized as a strategic function—an opportunity for proce

ramatic. They are summarized in the Table. The differences require some significan

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Sec 21 SUPPLIER RELATIONS
 SUPPLY - CHAIN OPTIMIZATION

considered, including indirect suppliers, manufacturers, distributors, and end user

lue in the supply chain. On the supplier side, participation in such an initiative

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 SUPPLY - CHAIN OPTIMIZATION

ality into each component and service, with measurable results.

and perform various processes.
revention, inspection, and failure resulting from poor quality.
pre-procurement, acquisition, operation, and disposal costs, rather than price alon

upply chain.
s entity, rather than a set of discrete processes. Members of the supply chain es

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RGANIZING FOR SUPPLIER RELATIONS — INTERNAL

itate the ongoing interface between suppliers of goods and services and the end u

e and more, companies are identifying the tasks, activities, events, and processes

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RGANIZING FOR SUPPLIER RELATIONS — INTERNAL

projects or downsizing initiatives, is the shift from function-based to process-based

tions can result in a slow, bureaucratic decision-making apparatus, as well as the crea

aditional function-based organization, making it easier to create cross-functional tea

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RGANIZING FOR SUPPLIER RELATIONS — INTERNAL

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RGANIZING FOR SUPPLIER RELATIONS — INTERNAL

zation can evolve, which can result in inefficiencies and organizational redundanc

at the operations plant level.

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RGANIZING FOR SUPPLIER RELATIONS — INTERNAL

he total cost of ownership, the identification of opportunities for increased valu

es across strategic business unit boundaries wherever feasible.

n business units, a decision-making process based on facts, and a measurement syst

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RGANIZING FOR SUPPLIER RELATIONS — INTERNAL

sus building, and creativity skills. Increasingly, Purchasing professionals are as

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RGANIZING FOR SUPPLIER RELATIONS — INTERNAL

y the Center for Advanced Purchasing Studies, identified the top 10 skills requir

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RGANIZING FOR SUPPLIER RELATIONS — INTERNAL

ve resulted in sudden, and often dramatic, shifts, changes, and reductions in the w
giving teams of individuals, as well as individuals themselves, greater accountab
ality, or both. Generally, outsourcing is confined to utility processes (processes

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RGANIZING FOR SUPPLIER RELATIONS — EXTERNAL

w suppliers align and champion the process of managing and reducing total systems

For example, raw materials or contract labor might be regarded as highly critical

sely, a consulting company would likely have no amount of expenditure on pipes, va

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RGANIZING FOR SUPPLIER RELATIONS — EXTERNAL

s little opportunity for generating competitive advantage, but can generate a high

ttings, miscellaneous electrical supplies, or contract labor. At the very least, Ma

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Sec 21 SUPPLIER RELATIONS
RGANIZING FOR SUPPLIER RELATIONS — EXTERNAL

o the infrequency of their purchase. The infrequent, low aggregate value of these ac

rategic purchasing facilitates this end-user/supplier relationship so that potential

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Sec 21 SUPPLIER RELATIONS
URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

uality Control, and Quality Improvement can be applied to the supply chain. The re

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

ions is the activity of identifying customer needs and analyzing and developing a

ourcing needs
ative processes available to satisfy these needs.
lar to the following:
procurement activity.
represents both high expenditure and high criticality to the business (quadrant
team’s mission is to define the customer’s sourcing need for this commodity and t

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

customer through data collection, survey, and other needs assessment activities.
ture, capabilities, and trends.

commodity’s total cost of ownership.

sourcing process which will satisfy the customer and provide the opportunity to

ansfer the sourcing strategy into operation. Implement it.

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

formance and selecting the vital few suppliers capable of optimizing performance.
xtensive, ongoing data collection and evaluation of the performance of the supplie

ion of the performance of the supply-chain process established by the planning te

anning phase.

ncial, legal, and environmental considerations. Some minimum acceptable quality sta

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

s activity to suppliers who do achieve those performance standards.

ment of the performance of the remaining suppliers. This typically involves evalua

nts ensure conformance to quality and performance standards and establish a basel

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Sec 21 SUPPLIER RELATIONS
URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

s the supplier currently has in place. It requires a visit to the supplier site b

as an ongoing business entity to meet the end user’s current and future business

f the product or service being supplied. The focus is on quality, delivery, and se

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

ctive of the improvement phase is to develop a supply chain which acts as a singl

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

uppliers have identified and flow charted the entire supply chain. The continuous

tablishment of a joint (end user/supplier) team. Although the team could have sever

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

ier or customers of the end users. Proactive managing of the supply chain begins a

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

han as a set of separate ones. At this point, the team needs to flow chart the act

y shared and more widely distributed throughout the chain.

anies have been eliminated. Fewer are working in corporate silos; the supply chain

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

upplier Relations . The improvement phase includes:

ly - Chain Management .

report the impressive results of some supply-chain optimization efforts selected

ity: 20 to 70 percent reduction in variability

e-time: 30 to 90 percent reduction
e: 15 to 30 percent reduction in cost of poor quality
nology: R&D resources increased by a factor of 3 or more
: overall reduction of hazards/obstacles through sharing

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

ided into public law (those areas dealing with the relationship between individua

s to manage and facilitate supplier relations.

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URAN TRILOGY AS IT APPLIES TO SUPPLIER RELATIONS

rohibitive warranties, force majeure clauses, termination clauses, and other restr

ontract is preferred as easier to establish and administer. This approach may not

, eliminated.

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