Please enable JavaScript.
Coggle requires JavaScript to display documents.
Course 4: Supplier Management - Coggle Diagram
Course 4: Supplier Management
Supplier Selection and Management
company need to evaluate and select supplier
When the company wants to do a new project, a new product
Supplier performance
When the market has fluctuations in price
When bidding, select potential suppliers need to evaluate and choose the right one
In the current process need to evaluate the supplier
12 vendor selection criteria
Substantial catalogue of products or range of
services
Testimonials and references
Flexibility to allow changes in orders or product
lines
Sustainability and financial stability
Ability to supply all the products required or the
complete solution
Prices
Years in business
Delivery times
Ability to constantly supply products or services
Terms of business
Appropriate supply of internal experts that can
answer questions you may have
Customer service
Supplier Evaluation
Understand where automation can scale and support your processes
Determine approaches and metrics
Identify actionable supplier opportunities for improvement
Make the business case for supplier evaluation
Close the loop and get results
Recognize and uncover hidden cost drivers in the customer-supplier relationship
Understand the merits and shortcomings of various approaches
Contract management
Fixed-frice contract
Fixed-frice contract with escalation
escalation clauses allow etheir price increase or decrease of base price
should be tied to independent, well-established published third-party index
used for long-term contract
Fixed-frice contract with incentives
terms and conditions allow cost-savings sharing with supplier
typically utilized under conditions of high unit cost and relatively long lead times
Firm fixed price
most basic contractual machanism
price stated does not change
can be obtained using
simplest and easiest contract
supplier bears fanancial risk in rising market
supplier may add contingency fee if uncertainty is high
byer assumes financial risk in declining market
important for byer to understand underlying market conditions
cost-based contract
time and materials
requires "not to exceed" amount
little byer control over estimated maximum price
generally used in plant and equipment maintenance agreements
cost fixed-fee
little motivation to control costs
should include cost productivity
supplier receives reimbursement forr all allowable cossts up to predetermined level fixxed fee
cost plus incentive fee
may include cost-savings sharing at predetermined rate
appropriate when parties are confident of inital target cost estimates
similar to fixed-price plus incentive exept incentive is based on changes in allowable costs
lower risk of economic loss for supplier
can result in much lower cost to byer
used when thể is high risk of supplier contingency fee that would be included in fixed-price contract
parties must agree on allowable costs
generally applicable when goods or services are expensive, complex or important to byer
need to include terms and conditions that require supplier to carefully monitor and control costs
Long-term contract
benefits
access to cost/price imformation
volume leveraging
access to supplier technology
supplier receives better information forr planning
assurance of supply
risks
supplier volume uncertainty
supplier foregoes other búiness
selecting the wrong supplier
buyer is unreasonable
supplier opportunism
benefit of single and multiple sourcing
Benefits of single sourcing
optimum leverage and power oner supplier
development of value-adding programs such as supplier stocking, process improvement
the ability to develop a deep relationship, then develop programs for both parties
Benefits of multiple
improved assurance of supplier
check against price increase
Five Easy Steps to Risk Management
Risk Ranking: rank all the risks and identify which are the most
critical for your organization or project
Risk Mitigation: need to plan mitigation strategies or contingency plans for each
Risk Analysis: Once identified, each risk is analyzed against two
criteria – impact and likelihood
Risk Monitoring: A robust monitoring plan is key tomaking sure your register is up to date and everyone continues to know what to do
Risk Identification : Every risk needs to be identified, no matter the size. Create a risk register to keep track of them