Impact of global procurement on supply chains. Cristinel Vasiliu Academy of Economic Studies from Bucharest

Transcription

1 Impact of global procurement on supply chains Cristinel Vasiliu Academy of Economic Studies from Bucharest

2 The Procurement Cycle Disposal 10. Evaluation 1. Identify needs 2. Define requirements Sourcing 9. Payment 8. Receiving and inspection Procurement cycle 3. Make or buy 4. Investigate and select sources 7. Follow-up & expedite Transportation and Warehousing 6. Order placement 5. Determine price and conditions Negotiation

3 A good purchase is that optimizes 7 procurement parameters, namely: Quality Quantity Time Place Source Service Cost

4 Examples of supply chain management related arbitrations A single source permits simplifying management process, allowing a reduction of volumes Local suppliers are able to respond more quickly to customer requests. Local suppliers management reduces complexity associated to international purchase A single location (factory or warehouse) can generate economies of scale Number of providers Origin of suppliers Number of sites Multiple sources avoid organization dependence, can generate long-term price reductions Foreign suppliers may offer terms (price or quality) higher than those offered by local suppliers Multiple sites (factories and warehouses) can be located closer to areas of consumption, which enables improved services, reducing delivery times

5 goods services direct materials Purchasing may refer to indirect materials consumer goods immobilizations spot repetitive

6 Four dimensions of purchase Technical dimension Commercial dimension Purchase Logistical dimension Administrative dimension Source: van Weele, 2000

7 Unit logistics cost Relationship between packaging and transport costs Total cost Transport Packaging Inssurance Packaging quality

8 Total cost parameters Price Total cost Purchasing cost cost of searching for suppliers cost of negociatiation cost of management contracts cost of launch orders stocks management Using cost maintenance cost energy cost cost of scrap preparing for use

9 Total Cost Visible - Price Invisible - Costs Immobilizations Service Accounts suppliers Energy Stocks Handling Distribution

10 Two major approaches of supplier relationship management Duration of relationship Antagonist Short term Collaborate Long term Aimed objectives Price cutting Total cost cutting Suppliers' involvement Strategic information sharing Suppliers market conditions Null Null The presence of numerous sources of supply In the activities with bigger added value Towards strategic information Providers willing to assume more responsibility

11 Contractual relations 100% owned subsidiary Joint participating subsidiary Control need Joint venture Long-term contract Short term contract Flexibility need Source: Quinn and Hilner, 1994

12 Features of some countries/regions Country/region Products Advantages Inconvenient India China South Korea Engineering, pharmacy, textile, data treatment Automotive, textile, household appliances, mechanical, electronic Information technology, shipbuilding, semiconductors, household appliances English widespread, high training engineers, low cost labor Low costs of labor, specialization in large quantities, infrastructure Large investments in R & D, outsourcing in China Administrative delays, logistical bottlenecks, ethical risk Fakes, deficient management Costs of labor close to the western countries Turkey Automotive, textiles, raw materials, household appliances Strong export experience, low cost labor Political instability Maghreb Eastern Europe Call centers, textile, electronics and household appliances subcontracting Automotive, consumer goods, mechanical subcontracting Francophone, potential of raw materials untapped Strong mechanical know-how, labor costs still low. Few suppliers of raw materials, local market sluggish Multiplication of languages, corruption

13 Outsourcing approach L activité Is the activity est a - elle strategic stratégique? one? NO L activité Is an essential est -activity? elle essentielle? NO Obtenir Obtain des proposals propositions YES Les The propositions external proposals externes sont are they more - elles attractive plus attrayantes que than celles internal? à l interne? YES Peut Can we - on improve améliorer the l activité internal interne? activity? NO Négocier Negotiate un a contrat contract OUI YES OUI YES NON OUI YES Conserver Keep internal à l interne Conserver Keep internal à l interne Conserver Keep internal à l interne Conserver Keep internal à l interne Source : Leenders et al., 1998

14 Organizational competencies positioning matrix High Dilemme Dilemma Essentielle Essentials Internaliser Internalize Risk Parasite Fondamentale Fundamentals Distinctive Low Externaliser Outsourcing De Ricochet ricochet Low Efficiency High Source : Cordon et al., 1999

15 Investment and disinvestment matrix Activity importance Highly Medium Low Highly Maintain Maintenir Investir Invest Competitive Impact impact Medium Low Se Link lier to partners à des partenaires Impartir Outsource Source : Tarondeau, 1994

16 Estimation of hourly rates in manufacturing (in 2003) Pays Countries Bulgarie Bulgaria Chine China Mexique Mexico Brésil Brazil Taiwan Hong Kong Singapour Singapore Angleterre England États United -Unis States Germany Allemagne Taux Hourly horaire rates (en (in US$) 0,60$ 0,70$ 1,80$ 4,50$ 5,00$ 5,60$ 7,60$ 16,00$ 19,10$ 28,80$ Source : Hurteau, 2009

17 The purchases portfolio High Leverage Critical Purchase importance Non critical Bottleneck Low Low Dependence on the supplier market High

18 Relationship portfolio High The logic of competing The logic of collaboration Purchase importance The logic of outsourcing Long-term logic Low Low Dependence on the Supplier market High

19 Analysis of power sources General context of business area Context Context Power sources Enterprise A Interaction area Power sources Enterprise B

20 Reasons for using 3PL s Reduce costs Focus on critical activities Improve operational efficiency Flexibility Acquire expertise Customer service

21 3PL s: Services offered Transportation Warehousing Consolidation Consulting Carrier selection Packaging and labelling Information systems Tariffs negotiation Fleet management Reverse logistics

22 Levels of collaboration in the supply chain Suppliers selection Changes nature Designs, brevet, plan, objectives, specifications Joint operation management relationship Co-design relationship Master production plan, capacity, stocks levels, final client needs Delivery timeframe Tests of the quality control Joint stock management relationship Transactional relationship Relation d échange Information exchange d information relationships Exchange of transactional information Low Intensity collaboration Strong Source : Frayret et al., 2003

23 Consequences of global procurement Reducing production and supply costs Increasing costs of transportation, storage and stocks management Increased purchasing from countries with low costs lead to opening new distribution centers in developed countries Increased customer and consumer requests by: Reducing production cycle times Increasing complexity - variety of products and packaging Request greater flexibility, higher quality services, ISO standards etc. Unique services mass customization

24 The influences of global supply supply chains with slower reaction time, leading to growth stocks fragility of global supply chains, higher risk with consequently growth stocks increased use of highways, which cause traffic jams need to build new distribution centers