Supplier

Partnership
Organizations and supplier have the
same goal ---- to satisfy the end user
 Success with
“Triple Role”

Requirements

Supplier Producer Customer

Requirements
 Sourcing

Three types of sourcing

1. Sole source
2. Multiple source
3. Single source
 Sole Source
 A sole source of supply implies that the
organization is forced to use only one
supplier.

This situation is due factors such as

patents, technical specification, raw
material location , monopoly
 Multiple source

 Multiple sourcing is the use of two or

more suppliers for an item.
 Single source

 Single sourcing is a planned decision by

the organization to select on supplier for
an item when several source are available.
 Supplier Partnering
Supplier Relationship Management
Systems (SRMS)
Much like CRMS
1. Identify critical products and services
2. Identify critical suppliers
3. Meet with supplier top-management
4. Form cross-function teams
5. Identify key projects
6. Define details of agreement
7. Monitor status and modify strategies
 Partnering
 Long term Commitment
 Trust
 Shared vision
 Work Together on Specification
 Use MBWA and Other Forms of Two Way
Communication
 Giving Recognition and Sometimes a Bonus
 Promise Continued Business

 Help Each Other to Do a Good Job

I. Helped a small vendor
II. Help train supplier's employees
III. Ask supplier for help
 Principles of customer
supplier Relations

 Both the customer and supplier

are fully responsible for the
control of quality
 Both the customer and supplier
should be independent of each
other and respect each other’s
independence
 The customer is responsible for
providing the supplier with clear
and sufficient requirements so
that the supplier can know
precisely what to produce
Both the customer and supplier
should enter into non adversarial
contact with respect to quality,
quantity ,price ,delivery methods
and terms of payments
 The supplier is responsible for
providing the quality that will
satisfy the customer and
submitting necessary data upon
the customer’s request.
 Both the customer and supplier
should decide the method to
evaluate the quality of the
product or service to the
satisfaction of both parties
 Both the customer and supplier should
establish in the contract the method by
which they can reach an amicable
settlement of any disputes that may arise.
Both the customer and the supplier should
continually exchange information,
sometimes using multifunctional teams , in
order to improve the product or service
quality.
 When dealing with business
transactions, both customer and
supplier should always have the
best interest of the end user in
mind
Conditions for selection and
evaluation of suppliers
 The supplier understands and
appreciates the management
philosophy of the organization.
 The supplier has a stable management
system. In determining this condition
several questions should be asked: Is
there a quality policy statement that
includes objectives for quality and its
commitment to quality?
 The supplier maintains high
technical standards and has the
capability of dealing with future
technological innovations.
 The supplier can provide those raw
materials and parts required by the
purchaser, and those supplied meet the
quality specifications.
 The supplier has the capability to
produce the amount of
production needed or can attain
that capability
 The supplier has an effective
quality system and improvement
program such as ISO 9000.
 The supplier has a track record
of customer satisfaction and
organization credibility.
 There is no danger of the
supplier breaching corporate
secrets.
 The price is right and the delivery dates
can be met. In addition, the supplier is
easily accessible in terms of
transportation and communication. There
must also be a system to trace the
product or lot from receipt and all
changes of production delivery.
 The supplier is sincere in implementing
the contract provisions. Does the supplier
have a system for contract review, and
does that system include a contract review
of requirements and how differences
between the contract and / or accepted
order requirements should be resolved?
 Relationship development
 Inspection
Four phases of inspections
 100% inspection
 Sampling
 Audit
 Identity check

 Training
 Team approach
 Recognition (incentive )
Acceptance sampling might be needed
when:
Dealing with unproven suppliers
During start-ups and when building new

products
When products can be damaged during

shipment
When problems with a certain supplier

have been noticed

What is Supply Chain Management
 Supply chain management is a set of
approaches used to efficiently integrate
suppliers, manufacturers, warehouses,
and customers so that merchandise is
produced and distributed at the right
quantities, to the right locations, and at
the right time in order to minimize system
wide costs while satisfying service-level
requirements.
What Is Supply Chain Management?
 The Importance of Supply
Chain Management
 Millions of dollars at stake!
 Excess Inventory costs
 Excess freight charges
 Lost sales / Stock outages
 Wasted time and energy
 Extra staff
 Customer dissatisfaction -
 Benefits of JIT

 Reduced inventory  Greater flexibility

 Improved quality  Better relation with
 Lower costs suppliers
 Reduce space  Simplify scheduling
requirement and control activities
 Shorter lead time  Increase capacity
 Increase productivity  Better use of human
 More product variety resources
Value chain