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CHAPTER 4 Supply Management Integration for Competitive Advantage -…
CHAPTER 4
Supply Management Integration for Competitive Advantage
Cross-Functional Sourcing Teams
Overall
Consist of various internal functional areas and, increasingly, suppliers
Specific tasks
Supplier selection
Product design
General tasks
Reducing purchased item costs
Improving quality
Drawbacks
Use does not guarantee success
Team process loss
Poor team decisions
Negative effects on individual members
Benefits
Reduced time to complete tasks
Increased innovation
Joint ownership of decisions
Enhanced communication among functions or organizations
Realizing synergies by combining individuals and functions
Better identification and resolution of problems
Need to build internal relationships
When?
Facing a complex or large-scale business decision
To make better quality decision
Assignment directly affects firm’s competitive position
No single function has sufficient resources to solve problem
SC Integration
Definition
Professionally managing suppliers
Develop close working relationships with different internal groups
Internal Integration
Consists of many communication flows increasing exponentially
Purchasing
Quality Assurance
Operations
Accounting and Finance
Suppliers
Marketing
Legal and Environmental Safety
Engineering
Need to develop global agreements
Issue of global outsourcing of internal functions and activities
Identifying global requirements for success
Achieve Integration
Cross-functional teams & committees
Information systems
Integrated performance objectives & measures
Process-focused organizations
Co-location of suppliers and customers
Buyer or supplier councils
Steering committee
External Integration
Face of organization to its supply base
Acts as liaison on multiple fronts
(Materials, New technology, Market information, Services)
Suppliers
Government
Local communities
Collaborative Buyer-Supplier
Relationships
Bilateral
Focus on deliverables at product level
Well-defined, compelling business case
Closer Relations
Advantages
Trust
Long-term contracts
Obstacles
Confidentiality
Limited interest by suppliers
Legal barriers
Resistance to change
Integrating Supply Management,
Engineering, and Suppliers
Include suppliers early in process
Design assistance
Development of material specifications
Perform early evaluation of supplier capabilities
Existing technologies
Future technologies
Consideration
Targets
Ramp-up
Innovation and technical
Training
Timing
Resource commitment
Supplier Involvement in
Design
White box
Supplier is given blueprints and told to
make product from them
Gray box
Supplier’s engineers work cooperatively
with buyer’s engineers in joint design
Black box
Suppliers are provided functional specifications and create design
Education
and Training
Unwillingness of internal design personnel to relinquish responsibility
Concerns over sharing proprietary information – both parties
Lack of integrative business processes
Lack of cultural alignment
Customer
Order Fulfillment
Supplier suggestion programs
Buyer-supplier improvement teams
On-site supplier representative