Managing Suppliers

Supplier management involves multiple partners in the supply chain with evolving expertise. Suppliers are the source of components, raw material, finished products, services and, more importantly, new knowledge creation. They can help companies in improving supply chain performance in cost, quality, revenues, responsiveness, and reliability. 

However, not all suppliers are equally capable in all performance dimensions. Individual suppliers must decide what capabilities they would build, given changing customers needs (discussed in Chap. 2). Examples of such capabilities would be lean-processes, collaboration, procurement, agility, information transparency, responsibilities as tier-1 supplier, and innovation. The buyer, therefore, must carefully build a portfolio of suppliers that maximizes the fit between what it needs and what the suppliers can provide. 

It follows that the two factors - supplier s capability and the interface between the supplier and the buyer -determine the supply chain effectiveness. The interface governs the relationships between the supplier and the buyer, and helps operationalize the business models of collaboration. The supplier and buyer must be able to formalize such collaboration by leveraging the individual supplier capabilities. Clearly, the buyer would be effective if s/he can build a dynamic supply network that is responsive to the needs of consumers, including rapid fulfillment of orders. The buyer may also need expertise to manage relationships with offshore suppliers. 

The interface and supplier-capability are shown in Fig. 4.1. It should be noted that the interface issues of fulfillment, collaboration, network, and outsourcing are intricately related to the supplier s capabilities of procurement, quality, cost, and tier-1 responsibility. 

Chakravarty, Supply Chain Transformation, Springer Texts in Business and Economics, DOI 10.1007/978-3-642-41911-9 4, 

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Supply management has to ensure a smooth and uninterrupted supply of raw materials by defining dear service level agreements with suppliers, planning raw materials, issuing procurement orders, and tracking and managing supplier performance. 

Project Document User Manager Supplier Oversight Quality... 

Outsourcing tends to be encouraged by many pharmaceutical and healthcare companies to reduce the number of full-time employees in a company. The Validation Department is also included in this because it uses individual contractors or managed supplier project capabilities. There is nothing wrong with outsourcing, but the pharmaceutical or healthcare company must maintain a... 

Effectively manage supplier relationships to ensure the highest quality materials at the lowest cost. 

Interaction Points 2.3.1. Contracts Management Supplier Relationship Management Customer Relationship Management Product Configuration Management Product Data Management... 

Manage supplier partnerships that allow for quick response and continuous improvement... 

Successful businesses tod realize the importance of supplier relationships and customer satisfaction. Those businesses that don t manage supplier relationships m wonder where their business has gone. 

Step 3. If the decision in Step 2 is to proceed with fifing an application for an LVE or LoREX exemption, the MRC shall gather information sufficient to describe the substance s chemical identity, physicochemical properties, manufacturing, processing and use information, test data, other data, and optional pollution prevention information. The MRC shall request information from the Product Manager, Production Manager, suppliers in the case of LVE or LoREX substances to be imported, suppliers and manufacturers of precursors and in-house or external chemists as necessary to conclusively determine... 

As companies rely more on their suppliers to decrease overhead and asset levels, managing suppliers is now an important capability. To get a sense of the magnitude of the suppliers role, consider that, in the automobile industry, estimates suggest that Chrysler outsources over 80% of the parts it assembles into cars Ford, over 65%, and GM, over 55%. In the electronics industry, Cisco System partners provide final assembly for almost half of its switches and routers ([51]). Table 3.1 (from [51]) shows that suppliers and buyers have closely intertwined relationships with one another across a range of industries, from automobiles to banking and electronics to pharmaceuticals. 

An important consideration is the supplier capacity availability to support production needs. Discussions with suppliers about their planning process, planned investments, and so on enables RR to be comfortable about supplier capacity availability. A key consideration for RR was whether the culture and philosophy of the supplier organization matched RR s culture and philosophy. A better match between RR and its suppliers philosophy reduces the risk in new product development. Studies surest that outcome-based management works best when risk is minimal for the product. However, behavior-based management focuses on approaches to decrease risk that then minimize the probability of problems arising. ESI plays the role of enabling the latter approach to managing suppliers. 

Suppose there are suppliers 1-7 and a dummy supplier 8, whose costs are provided in Table 3.2. These costs are unknown to the procurement manager. Supplier 8 provides any leftover demand and charges the retail product price. 

Competitiveness of the purchasing function involves measures such as cost, delivery performance, innovation, inventory levels, and so on. In the presence of supplier competition, buyers can use auctions as a filtering mechanism to improve performance. Solving the agency problem effectively is a key issue when managing suppliers. 

ColorMatrix Europe supply additive and colorant masterbatch for use in the manufacture of polymeric materials and articles intended for various applications such as food contact packaging, and toys. ColorMatrix Europe products may be manufactured at different manufacturing locations (USA, Europe, and Asia). The Global regulatory department based within Europe keeps an inventory of raw materials used across all global locations and manages supplier information, chemistry information and so on. ColorMatrix Europe s global inventory contains hundreds of raw materials however the majority of these are classified as non hazardous. 

The enterprise should perform appropriate production inventory and control activities production, assembly, integration, and acceptance test activities and packaging, handling, storage, delivery, and installation activities to provide system products to consumers and support organizations. The enterprise should manage suppliers to ensure the timely delivery of products, materials, and services needed to carry out production activities. 

The other tools that are used with JIT are often used with many other systems and are discussed separately. Some of these include total quality management, supplier certification/management, and supply chain management. 

These four components are the foundation for a purchasing firm s drive to have long-term partnering relationships with its suppliers. Personal relationships are a key to managing supplier development. They require individuals who can work internally as team members, be able to understand the supplier s process, communicate the supplier s problems back to their own firm, and allow the supplier to own the need to improve. Typical steps in a suppHer development program are described below. 

Manage supplier agreements, the second, oversees existing purchase orders or supplier contracts such as the partnership agreement articles listed in Table 17.1. The third, manage customer returns, defines and maintains the business rules, data, information systems, procedures, and transportation for returned products. 

Burt, David N., Managing suppliers up to seed. Harvard Business Review, July-August 1989-... 

Dun and Bradstreet (www.dnb.com) have a "Supplier Risk Manager" product that is offered to help their customers "effectively manage suppliers and mitigate supply risks."... 

Kannan VR, Handfield RB (1998) Supply chain management supplier performance and firm performance. Int J Purchasing Mater Manag 34(3) 2-9... 

Supplier management Supplier consolidation, optimal direct-from-manufac-turer implementation, compliance with GPO agreements 0.5-2 %... 

The aim of SCO Guide CM3 is to emphasize the role that suppliers play in a firm s planning process. The differenf mefhods fo analyze buyer-supplier relationships are implemented and methods to analyze the relationship with regard to the purohasing prooess are made known. Lastly alternative ways of managing suppliers with the ABC analysis are proposed. 

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