sourcing strategysupply chain management.docx
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sourcing strategysupply chain management.docx
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sourcingstrategysupplychainmanagement
TableofContents
ExecutiveSummary
TheprimarygoalofthisreportisselectedappropriatesupplierforRavemaninreasonablefinancialsupport.RavemanEnterprisesisamedium-sizedhightechnologycompanylocatedsouthofSydneyinWollongong,Australia.Theactivityofsupplierselectionisanimportantfornewproductofr-Pod(ornewlineofwirelessmobilecomputer).Inthisreport,thepotentialsuppliersofCJBCo,Jaz-Proj,Shacom,andCharltekwasevaluatedforRavemanEnterprises.Thosefoursuppliersconsistoftwooverseassuppliers,andtwolocalsuppliers.Comparingeachpotentialsupplier’smarketshare,financesituation,corporationcapacity,andcosts,thesinglesupplierofShacomwassuggestedforRaveman.ThereasonforShacomselectedtoRavemanisthatittakescomparativecostadvantageandthehighestqualitywiththelowestdefectof4000.However,evensuggestedShacomforRaveman’snewproductionline,potentialrisksandcostanalysisalsomustbemeasuredbydeliveryspreadworksheet.Accordingtotheriskandcostproblembyfinancialanalysis,thereportrecommendssomeplansandsolutionsforsupplier,riskandfuturetorepairuncompletedpart.
1.Introduction
Enterpriseexploitsthenewmarketofwirelessmobilecomputertosatisfycustomerneeds.ThenewmarketexpendingforRavemantoimproveindustrycapacityandcapabilityisveryimportantforitsfuturedevelopment.And,supplierselectionisnotonlyimportantforsupplierchainmanagement,itisaWiththedevelopmentoftechnologyandincreasingmarketrequirement,Ravemanlsoamainfactortoimproveproductqualityinfinalmarketandcustomerexpectation.Then,thesupplierselectionisthekeysteptoprocessitslong-termobjectiveofRaveman.Consequently,processandtimeframes,sourcingstrategy,supplieranalysisandriskandcostanalysisarethetooltomeasurefoursuppliersvisitedbyRavemanTeam.
2.ProcessandTimeframes
Ravemanbelievethattheminidataprojectorsuppliers’selectiondecisionasacriticalpartorther-potdevelopment,procurementresearchedtenpotentialsuppliersintheminidataprojectormarket,andwithinthatRavemansendtherequestforinformation(RFI)inOctober2008.Finally,foursupplierswereintheshortlist,inDecember2008,thesefoursupplierssendtherequestforproposal(RFP),however,duetoChristmasandChineseNewYeartheclosingdate,actually,Ravemanreveriebackonthe1stFebruary2009.nextstepistorequestforsamplesfortesting,itisaimportantsteptotestingtheproductofsupplier’squality,then,Ravemansendtheteamdirectlyvisitthesuppliers,thisstepistocheckthecapacity,abilityofpotentialdevelopment,managementcapabilityandprocesscapability,thisprocesstakewholealmosttimeofMarch.Aftervisitingthesuppliers,theprocurementstarttoNegotiationsanddevelopthecontract,theteamspenttwoandhalfmonthonthis,andfinally,theteamchoosetheShacomwhichistheChinesecompanies,andspenttwoweeksonthecontractapproval.(SeeAppendixi)
Therearefewsuggestions,theteamspendstoomuchtimeonthesupplierselectionandevaluation,atthebeginning,RavemanshouldsendthemoreRFItothesuppliersthatcouldhavemorechoices.RavemanshouldaskthesefoursupplierssendbacktheRFPsoonthatcanbesavethetime.Inthesampletest,theteamshouldrandompickfromthesuppliers,sometimesthesupplierssendthebestonetobetested.
3.SourcingStrategy
3.1OverallStrategicDirection
RavemanEnterprisesisamedium-sizedhightechnologyfirmlocatedinWollongong,Australia,isjustasmallorganizationintheglobalmarket.Thecompanygraduallyexpandeditsproductmanufacturer.Andtheenterpriseaimstocontinuallyimproving,developingandinnovating.ThecompanydesiretoopenthewirelessmobilecomputermarkettosellthehighqualitywirelesspalmtotheAustralianandNewZealandmarket.InOctober2008,Ravmaninvestigated10suppliers’dataprojectorstocomparethepriceandcostofthemandthenselectthesuitablesuppliersofdataprojectors.Therearefourcompaniesprovideddetailinformationoftherelevantpriceandcost.Afterthecalculating,evaluatingandcomparingofthetotalholdingcost,RavemancangottheresultsthatutilizingtheChinesecompany-ShacomTechnologiesismoresuitable.
ShacomTechnologiesandCJB&CoTechnologiesbothareinternationalcompanies.Theybothsharealargeareainglobalmarketofmanufacturingthedigitaldataprojectors.Andtheyarecapableofacceptingthebigordertoproduce.Incontrast,AlthoughJaz-ProjCompanyandCharltekSystemsaretheAustraliancompaniescansavethemoneyofdeliveryandacceleratethedeliverytime,theyhaven’tpaymuchattentiontodataprojectormanufacturingthattheyhavenoadequateexperiencesinthisfield.Ravmandecidetodevelopthewirelessmobilecomputermanufacturingandselling,theyprefertoproducethehighqualityproducts.UsingJaz-ProjCompanyandCharltekSystemsmightincreasetherisk,whicharenotsuitablechoice.ComparedwithCJB&CoTechnologies,ShacomTechnologiesisbetteraton-timedeliveryrecordandQualitythatcanmeetthedemandofRavman,andthetoolingcost,SeatransportcostandlandtransportcostischaperthanCJB&CoTechnologies.Moreover,CJB&CoTechnologiesprefertoacceptthebigorderthattheyrequiretheMinimumbatchsizeof20000units(theMinimumbatchsizeofShacomis10000units),theymightdonotpaymoreattentiontothesmallcompany,suchasRavman.OverallchoosingSchacomtobeasupplierismoresensible.
3.2SourcingStrategy–singleversusmultiple
3.2.1Theadvantageofsinglesupplier
ThemainpointofJust-in-timeaimstoreducethewasteandfocusonvalueadded.ToinvolveJITphilosophyinpurchasing,theenterprisebegantomovetowardstosuppliersreduction.Thereareseveralbenefitsofsinglesupplier,whichisstatedtoqualityimprovement,rationalprice,morereliabledeliveryprocess,costreductionandthemostimportantelements(purchasercanbuildreliabledeliveryprocesswithsupplier).Thesinglesourcingcanprovideproductsatbetterqualityandlowercoststothebuyers(Goffin,Lemke,Lohmuller,PfeifferandSzwejcaewski,2001,p358).Anditcanhelpthesupplierandpurchaserestablishalong-termrelationship.Thus,thereisnoneedtoseekothersuppliersthatcansavetimeandcost.
3.2.2Thedisadvantageofsinglesupplier
Dependingonjustonesupplierassociateswithadrawbackthatmayresultinginthehigherswitchingcostsandthereisnoadequateandpropercompetitionbetweendifferentcoststructuresinvarioussuppliers.Thepurchasersjustrelyononesupplierthattheywillloosemarketfeelingsandwillnotfocusoninvestigatingandcomparingthemarketingcondition.Theenterprisecompetitivewillgraduallyreduceandthepurchasermightloosemarket(Faes&Matthyssens,2009,p246).Thereisjustonesupplierthatwillbearisktothebuyer.Ifthesuppliercannotprovidetherawmaterial,components,andfinalproductsatagoodqualityanddeliveryontime,thebuyercannotgetthealternatives.Itisasignificantrisktopurchaser.
3.2.3Thebenefitsofmultiplesuppliers
Thepurchaserhasanopportunitytofindasuitablesupplierthroughnegotiatingwithmultiple-sourcingtochoosetheoptimumsupplier.Multiplesourcingcanleadthebuyersinvolvedintothehigh-techmarketstoencourageinnovationandremaincompetitive.Thebuyercanselectthelowestpricesfromanumberofsuppliersandsimultaneouslyincreasethecompany’sleverage(Zeng,2000,p219).Moreover,thebuyerscangainproductsfromanumberofchannelsandsuppliersthatcanpreventtheproblemwhichthebuyersfromtheproductshortages.Themultiplesourcingandsuppliersaresuitablepurchasingalternatives.
3.2.4Thedrawbackofmultiplesuppliers
Thepurchasershouldestablishstableandlong-termrelationshipswithsuppliersthatshouldbewithoutanexcessivenumberofsuppliers.Theexcessivenumberofsupplierscannotgiveprioritytocontributingtoinnovationthenewproducts,improvingqualityandreducingcosts.Usingmultiplesupplierswilldecentralizethesuppliersthatwillbenotgoodforcontrollingandcentralmanagementforthebuyer.
3.3SourcingStrategy-domesticversusinternational
3.3.1Theadvantageofdomesticsuppliers
Usingthedomestic-sourcingcanprotectandhelpdevelopthedomesticfirms.Inaddition,itisgoodforthefullemploymentofdomesticlabors.Usingdomesticsupplierscansavethedirectandindirectprocurementcosts.Becauseoftheshortdistancedelivery,theon-timedeliveryrateishigherthaninternationalsuppliers.
3.3.2Thedisadvantageofdomesticsuppliers
Thedomesticsuppliersaredifficultinvolveinacompetitivemarkettograduallyimprovethemselves.Thesupplierscannotfocusonreducingcostsandimprovingthequality.
3.3.3Thebenefitsofinternationalsuppliers
Theinternationalsuppliersareforeignsourcing,whichthepurchasingprocessfromforeignsuppliers.Thebuyingenterprisecandiscoverthegoodopportunitiesoftheglobalmarkettofindhugeandmajorproducerforvariousrawmaterials.Andthepurchaserinvolvedintheglobalmarketcangetbetterrawmaterials,components,andfinalproductsatlowercosts.Theinternationalsourcingcanbeapplicablefortheenterprisestodiscovertheefficientpurchasingoutcomes.Theinternational-sourcingisbenefittothecustomers,whichcanprovidethediversityofassortments.Furthermore,itcananimatethedomesticmarketandincreasecompetitionofdomesticmarket.
3.3.4Thedrawbackofinternationalsuppliers
Thedomesticenterpriseswillbeconfrontedmorecompetitiveworldmarket.Theyw
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