Global Sourcing Strategies &

Applications
MGSC 487
Team Selection
Case Study – Ford ABF
 Background
◦ Organization
◦ Players
◦ Situation
◦ Key Elements of ABF

 What types of issues?

 Central Issue?

 What conclusions?

 What next steps?

Ford ABF
Q’mont Mining
 Background?
 Scenario?
 General Issues?
 Central Issue?
 What would you do?
Supply
 Supply
◦ The exchange of money for goods & services

 Business Partner Concept

◦ Managing the supply chain process
◦ Understanding how the process interfaces
with the organization
◦ Know how and when to apply IT Solutions
Business Interfaces
 Creating Value
◦ Raw Material to Finished Goods
◦ Concept To Launch
◦ Order To Cash

 Key Question:
◦ Which processes can be made efficient and
effective
Supply Process
1. Recognize the Need
2. Describe the need
3. Identify Potential Sources
4. Select Supplier / Establish Terms
5. Prepare and place PO
6. Follow Up and Expedite
7. Receive and Inspect
8. Clear Invoice and Pay
9. Maintain Records and Relationships
1. Recognize the Need
 What?
 How Much?
 When?

 Early Supplier Involvement (Ford ABF)

◦ Cost avoidance
◦ Time to market
◦ Competitive advantage
2. Describe the Need
 Know exactly what the internal customer
wants

 Bill of Materials (BOM)

◦ Exploded BOM
3. Identification of Potential Sources
 Qualified Sources

 Assessing the probability that a purchase agreement will

result in (i.e. managing risk):
◦ On time delivery
◦ Satisfactory product or service
◦ Appropriate before/after sale service
◦ Lowest total cost of ownership

 Issue RFx
◦ RFI
◦ RFQ
◦ RFP
◦ RFB
4. Supplier Selection
 Simple – comparing bids of multiple
suppliers

 Complex – negotiation

 Once selected, PO can be issued

5. Prepare & Place PO
 Cardinal Rule: In no instance should
material be bought without
documentation

 Types of PO
◦ Blanket
◦ Open
◦ Service Agreement
6. Follow Up & Expedite
 Follow Up = Routine

 Expediting = applying pressure on

supplier to:
◦ Meet original promise
◦ Deliver before original promise
◦ Speed up something already late

 Expediting is often a result of the Buyer’s

issue (e.g. poor planning)
7. Receipt & Inspection
 Confirmation of receipt
 Verification of quantity, quality
 Release for use
 Verification of documentation
8. Invoice Clearing & Payment
 Invoice is a legal claim against purchaser

 Process Efficiency
◦ Decision rules
◦ Prepayment
◦ Progress Payments

 3 Way Match
◦ Data from PO
◦ Data from Invoice
◦ Data from Receiving
9. Maintain Records & Relationships
 Records
◦ PO is a legal contract
◦ Record Retention (7 years?)
◦ Westinghouse = 60 years

 Relationships
◦ Performance Scorecards
◦ Problem Reporting and Resolution
The Supply Process (again)
Where did Q’mont Mining Struggle?
1. Recognize the Need
2. Describe the need
3. Identify Potential Sources
4. Select Supplier / Establish Terms
5. Prepare and place PO
6. Follow Up and Expedite
7. Receive and Inspect
8. Clear Invoice and Pay
9. Maintain Records and Relationships
Technology as an enabler
 Enable efficiency & effectiveness
◦ Make data transparent, accurate & available
◦ Relieve decision makers of lower value adding
tasks
 eProcurement
 Online Catalogs
 EDI (electronic data interchange)
 RFID (radio frequency identification)
 Online reverse auctions
Technology Triangle