Supplier Management Options

There are two approaches for implementing supplier development projects direct and indirect. In the direct approach the buyer conunits relationship-specific resources to a supplier. In the indirect approach the byer offers incentives and communicates with the suppliers how they might improve. 

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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... 

Informal sensory assessment is a very common situation in many FMCG companies. During project meetings, team members often evaluate sets of prototypes, of varied recipes in order to select different options (to set process parameters, to select ingredients, etc.). Important decisions can be made on the basis of these evaluations. Participants may include R D team members as well as members from other departments (marketing, quality, purchasers and top management). Sometimes, suppliers also participate in such evaluations (e.g. from flavour houses). 

SMI is different from consignment stocking in that it can be initiated by the supplier (see also supplier development above). The following options are all open to consideration in its management of goods ... 

There are various options on how to establish a relationship between buyers and suppliers (Gereffi et al. 2005). Here, however, the focus lies on a relationship management framework depicted in Fig. 7.2 based on the work of Stuart (1997). The author stresses the importance of the suitable choice of the relationship to be developed between firms in order to achieve success within critical strategic elements. The framework is important in the context of supply chain management in order to identify and invest in the right relationships for the right partners. 

What has not yet been made subject of discussion to an adequate extent is the transfer of information between supply chain partners. This issue is closely related to the previous sections in which the diverse options of managing a firm s buyers and suppliers have been examined. As already indicated, the differences in the relationship types discussed in the previous sections do in fact also affect the character of the information exchange between the collaborating firms. 

If bottlenecks are the cause of the problem then decisions will have to be made about the options. Can the bottlenecks be removed Can they be reduced by adding capacity or by holding inventory Sometimes the bottleneck may be a key supplier that is capacity constrained. If alternative sources are not available at short notice then it will be necessary to manage the bottleneck by carrying strategic inventory to enable the flow through the downstream nodes to be maintained. 

The company will need to manage three groups of suppliers if the phase-out option is chosen. Suppliers of components that are not used in the new product must draw down their capacity or look for new customers. As these suppliers are negatively impacted, the company can explore opportunities to transition them to supplying some of the components of the new product. Suppliers of common components must increase capacity immediately, and then reduce it gradually as the current product phases out, and reach a steady state when only the new product is in production. Finally, new suppliers must be sourced for components unique to the new product. As new specialized capacity may be needed, the company would need to start working with potential suppliers much earlier than when the new product is introduced. 

The third option would be for the buyer to diversify by earmarking multiple suppliers for the same item, and purchasing online from electronic marketplaces. One way of managing demand volatility is to place a small order and then follow it up with additional orders if demand picks up. The availability of multiple suppliers greatly simplifies placement of follow-up orders. Multiple suppliers also help protect against supply uncertainty. 

Vendor managed inventory, where the supplier is responsible for replenishment of inventory with an agreed upon service level, would be the fourth option for the buyer. Because of the unstable supply, suppliers price premium for VMl would be high. The buyer has protection against demand volatility, as it only pays for the items used, not the items inventoried. 

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