Professional Documents
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Vendor MGT
Vendor MGT
EXECUTIVE SUMMARY
Also, recommendations based on study includes various ways for improving the
process and various observations are drawn. Key learning includes various new things
learned from project. The conclusions are Supplier development is one of the most
powerful approaches that a firm can engage in / on the path to World-Class Supply
Chain Management. The focus should be on developing suppliers to become self-
sufficient at Developing, Implementing and maintaining World-Class performance.
Also supply management becomes the key to supply chain management ONLY through
development efforts, that go beyond the first tier of suppliers.
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2. INTRODUCTION TO THE TOPIC
Selecting the right vendor is always a difficult task for buyers and purchasing
managers. Suppliers have varied strengths and weaknesses which require careful
assessment by the purchasers before orders could be given to them. The vendor
development system is for supporting the good quality of material, delivery on time,
good service and cooperation, reasonable price, strong and close relationship to
continuously improve, etc.
The vendor selection process would be simple if only one criterion were used
in the decision-making process. However, in many situations, purchasers have to take
account of a range of criteria in making their decisions. If several criteria are used then
it is necessary to determine how far each criterion influences the decision-making
process, whether all are to be equally weighted or whether the influence varies
accordingly to the type of criteria.
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As the growing popularity of just in time and supply chain management, the
supplier seems to be more significant role for manufacturing to achieve their customer
satisfaction in terms of quality, delivery and business point of view. The smooth
running of production line could be interrupted by the poor quality of material. The
schedule to delivery will be affected by both poor quality of material and poor delivery
performance. Also, the manufacturing will get less profit if they select the non-
reasonable price of material, as of the material is the cost of manufacturers. In order to
achieve the Quality Manufacturing Excellence (QME), the Vendor Management
System (VMS) is the one most important factor of success. The vendor/ supplier is the
partnership that concerned to manufacturer not only the quality but also other business
issues. As Vendor Partnership Relation (VPR), it is necessary to work closely between
manufacturer and supplier as a team working such as training a supplier’s staff about
quality techniques, including a design review meeting to gain ideas on how supplier
parts can best be used, providing sale projections/ forecasts with supplier to support
their production scheduling, sharing information of accept/ reject criteria for
manufacturer and supplier, etc. Such this Vendor Partnership Relation (VPR), it leads
to establish the Vendor Management Team (VMT) at Manufacturer to assess, work,
and coordinate with the vendor partnership at a first stage of production. The supplier
development is a vehicle that can be the important factor to increase the competitiveness
of the entire supply chains. The supplier development had been studied since the
supplier selection phase, the quality of materials; good delivery performance and cost
are some of major criteria in selection suppliers.
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Figure 1 – Evolution of Supplier
Development Strategies
A series of evolutionary strategies STRATEGIC
SUPPLIER
Higher DEVELOPMENT
❑ Longer-term
REACTIVE orientation
SUPPLIER ❑ Supply base/
DEVELOPMENT commodity
family focus
Relative ❑ Short-term problem
Supply Base resolution
SUPPLY BASE ❑ Supplier focus
Performance/ REDUCTION
Capability
Level
❑ Drop poor
SUPPLY BASE performers
ASSESSMENT ❑ Eliminate
unnecessary
redundancy
TOTAL ❑ Supplier performance ❑ Add best-in-class
QUALITY monitoring suppliers
MANAGEMENT ❑ Supplier assessment ❑ Fix higher potential
suppliers
Lower
Time
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expectations. Supplier databases often pinpointed those suppliers consistently unable
to perform, resulting in fewer suppliers getting more of the business. This “first cut”
of reducing the supply base is often fairly easy to implement, as non-performance is
easy to identify once an assessment system is in place. Almost all of the companies
who responded have already gone through several rounds of supply base reduction, and
are closing in on optimizing their supply base to an appropriate number of suppliers.
Many of these practices were implemented during the 1980s and early 1990s.
This is a portfolio analysis which states that not all organization required to go
for vendor development which are already using sourcing facilities from word-class
vendors or the outsourcing ratio is very small to total cost or total sales so that
investment in vendor is neither strategically nor financially justifiable. So, a corporate
level executive committee should develop an assessment of the relative importance of
all goods and services purchased by the company to identify where to focus any
development efforts. This is called critical analysis of commodities related to vendor-
development.
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Step # 4. Meeting with top-management of vendor:
After identify the suitable vendor for development and establishing a team, a
team should approach the top management of vendor and establish key area decision
related to strategic alignment, measurement and professionalism. Strategic alignment
not only means an internal business and technology alignment, but it should also focus
on customer requirement. Vendor measurement includes a total cost focus, credibility
and technical function. Professionalism involves setting a positive relationship, faster
communication, trust development, provide expertise whenever required.
At meetings with top management of vendor executive should identify area for
improvement. Such areas are formed on the basis of customer’s expectations needs.
Once a potential improvement project is selected, both buyer and vendor must
reach an agreement related to the specific measures that will indicate success. These
measures may include percentage of quality improvement, percentage of cost saving
shared, percentage of delivery or cycle time improvement, technology availability and
system implementation stage. Once an agreement is reached, the project is rolled out
hopefully according to schedule.
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Step # 9. Follow-up and modification:
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3. LITERATURE REVIEW
1. switch to another supplier, i.e., seek alternative sources of supply and purchase
from a supplier that is more capable and/or performs better
2. develop the supplier, i.e., invest human and/or financial resources to increase
the performance and/or capabilities of the supplier
Companies now know that suppliers of critical goods and services can provide
major competitive benefits, in the form of lower costs, improved quality, on-time
delivery, technological innovation, and customer service. As firms seek to globalize
their businesses, they must also bring with them a capable supply base that can likewise
support these global initiatives into new markets and businesses, as well as drive costs
out of the supply chain. In our studies, we employed the following definition:
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Supplier development can broadly be defined as “any effort of a buying firm
with its supplier(s) to increase the performance and/or capabilities of the supplier and
meet the buying firm’s short-term and/or long-term supply needs” (Krause and Ellram,
1997a). In practice, supplier development is gaining importance. A survey of 200 Chief
Procurement Officers shows that improving supplier development is a top priority for
the best-performing organisations [Carr et al. (2008), citing Checketts and Bartolini
(2006)]. In addition, the recent economic crisis has underlined the need for strong
supply chain partners and stable relationships as opposed to strategies that squeeze
suppliers, risk their bankruptcy and thus potentially harm the entire supply network.
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4. INDUSTRY OVERVIEW
One of the remarkable and influential moves for getting the solutions of above-
mentioned challenge is the industrial automation. Industrial automation facilitates to
increase the product quality, reliability and production rate while reducing production
and design cost by adopting new, innovative and integrated technologies and services.
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Fig. 2 Typical Automation System
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Fig. 3 Power plant automation by Siemens
The above figure shows the power plant automation provided by Siemens for
achieving sustainable, safe and economic operations. It provides the total integrated
automation (TIA) by automating every section of power plant with efficient control
devices, field sensors and actuating devices. In this automation, SIMATIC modules
(PLCs) are used as control devices while WinCC provides an effective graphical
interface.
1. To increase productivity
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2. To provide optimum cost of operation
Since the automation reduces the human involvement, the possibility of human
errors also gets eliminated. Uniformity and product quality with a greater conformity
can be maintained with automation by adaptively controlling and monitoring the
industrial processes in all stages right from inception of a product to an end product.
The initial investment associated with the making the switch from a human
production line to an automatic production line is very high. Also, substantial costs are
involved in training employees to handle this new sophisticated equipment.
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automation market is expected to grow at USD 149 Billion by 2022, at 6% of CAGR
between 2016 and 2022.
Geographically, Asia pacific, North America, Europe and Rest of the World
constitute the regions of study for the global factory automation market. Among all the
regions, Asia Pacific is anticipated to dominate the global market owing to the growing
application areas on a yearly basis. Advancement in technologies along with integration
with current manufacturing environment is predicted to stimulate the market growth.
Moreover, the presence of manufacturing companies and developing economy of the
Asian countries is likely to contribute to the growth of the market during the assessment
period. The Asian pacific market is expected to generate the fastest growth led by
Japan, China and India.
North America holds the second position owing to the high demand for
semiconductor products and manufacturing. Technological advancements in this region
is also another major factor stimulating the market growth during the assessment period.
The increase in the number of industrial robots into the U.S. is expected to drive the
U.S. market for factory automation.
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automotive industry and presence of world class large players such as Volkswagen,
Mercedes Benz, Audi, and others. The high cost of manpower in these regions coupled
with the research ecology is expected to drive the market. The Middle East and Africa
market is expected to be dominated by Saudi Arabia, UAE while Africa is expected to
result in moderate growth because of small industrial base.
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5. COMPANY OVERVIEW
Godrej and Boyce Mfg. Co. Ltd. (G&B) established in 1897 is one of the largest
privately held diversified industrial corporations in India with approx. 12000+
employees around the world. G&B have 15 diverse business divisions offering
consumer, office, and industrial products and services of the highest quality to every
corner of India and across the globe. The Godrej Group touches the lives of 750 million
Indians who use at least one Godrej product every single day. G&B’s commitment to
quality, attention to detail and customer centricity has helped earn the trust of
generations of Indians.
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and Consoveyo S.A. (System Integration), Langhammer GmbH and Riantics A/S
(Product Solutions), Aberle Software GmbH, Cirrus Logistics, DMLogic, HighJump,
Inconso AG and Voiteq (Software). They offer an extensive range of products and
services, from system integration to technologies for storage, palletizing, de-palletizing
and conveyor systems, through to software.
Godrej & Boyce Mfg. Co. Ltd.: Market leaders in India & No. 1 in storage and material
handling industry
The total staff strength of company is about 150 employees in which about 120
employees are permanent and remaining about 30 employees are on third party payroll.
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5.1 Products:
All products are built in accordance with safety standards and guidelines, and
to provide easy handling and access to parts for maintenance, as well as optimized
energy consumption and low noise level. As a product supplier, there vast experience
has enabled them to enhance our portfolio by successfully designing equipment using
cutting-edge technology: stacker cranes, mini-loads, shuttles, automated guided
vehicles, rail guided vehicles, conveyors, among others. All these products are entirely
designed and assembled within their company, giving them an unsurpassed
understanding of the core technologies. By constantly investing in specialized product
design, they can assure flexibility, modularity and customization. No matter the load to
be carried, container type, size or weight, they have the appropriate product to meet
every customer´s specific requirements.
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a. Stacker Cranes-
Stacker Cranes are automated machines that perform the storage and retrieval
of goods while working within the racking system. They design their Stacker Cranes to
allow full control of your warehouse activities ensuring error-free, smooth, fast and safe
storage and retrieval operations. Their own portfolio is developed to meet the market´s
latest requirements for flexibility, energy efficiency, reliability and performance.
There products cover a wide range of loads divided in three main categories:
Light Loads, Unit Loads and Heavy/ Oversized Loads.
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b. Conveyors-
Conveyors are the key to ensuring a fast, efficient and accurate transportation
of goods between all operational areas. Depending on what you are conveying, be it
light loads or unit loads, they have the appropriate technology to offer. Moreover, they
are not only delivering the standardized load handling products but also able to
customize their equipment according to your specific needs. There engineers evaluate
the characteristics of the goods; the material flow diagrams and the required
performance. After this analysis, they will determine which of solutions best suits your
requirements.
Fig. 5 Conveyors
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c. RGV (Rail Guided Vehicle)-
The Rail Guided Vehicle System is based on intelligent, high-speed and floored
rail guided vehicles fitted for a wide range of load handling applications. This
technology is an efficient, cost-effective and fast option for complex sorting
applications or connecting very distant points. It is also an interesting alternative to long
conveyor lines when the load handling units are not standardized. Their system is
formed by the Rail Guided Vehicles (RGVs) and their floor-fixed track rail (including
running rails, rail switching devices, lifts and maintenance areas, among others). In
addition, they may provide specific elements (i.e. fences, access controls or light
barriers) that are required to ensure a completely safe working environment for
operators.
No matter how complex the transport route, thanks to their modular and flexible
design, smooth and constant transportation is always guaranteed. Redundancy is also a
key factor of this handling solution, as all RGVs within the system are interchangeable.
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5.2 Company’s address:
Email: info@godrejconsoveyo.com
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6. PROJECT DETAILS
Limitations:
• Time constraints
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7. DATA ANALYSIS AND INTERPRETATION
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1. Collecting information about vendors
As a name suggest this stage consists of collecting the information of vendors
from various sources. These sources are Internet, vendors expos, previous experience,
information from customer about different vendors who has already worked with them.
This stage forms the base for the further process. Significant amount of time is spent in
this process. Basically, in this process we are collecting as much information we can
for further research. For example, if we have to find the vendors for palletizer then we
will look in all the sources like, we will look on internet, pamphlets received in various
vendors expos etc.
2. Analysis of vendors
After building the base i.e. collection of information the next stage is of analysis
of that information. In this stage the vendors are analysed on different parameter like
vendors experience, cost quoted by vendors, product specification, after sales service,
installation time, product flexibility, location of vendor, reputation of vendor in
industry, feedback from the existing customers of vendors, whether the vendor is a
dealer of a foreign company and many more. This is also an important stage where the
vendors bifurcation takes place. In this stage the vendors are ranked on the basis of all
the parameters mentioned above. It depends upon the company to give how much
weightage to which parameter. For some company vendors experience is very
important so that company might give 60% weightage to experience and so on. Vendors
with very poor weightage in every parameter are rejected. The top 10 vendors from the
list are considered first for further process. This data is maintained for further reference.
For example, continuing the above example of palletizer after collecting information
about different vendors of palletizer the information is analysed. Vendors experience
in the palletizer product, vendors existing customers, feedback from them, after sales
service are some of the parameters based on which company analysis the vendors. It
totally depends upon the company which parameters to evaluate.
After analysis of vendors next step is to establish the contact. In this stage top
10 vendors from the data base which are considered for contacting are contacted. The
communication takes place first through E-mails then through phone calls this process
depends upon how the vendor responds. In few cases vendors doesn’t responds then
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after some time period that vendor is removed from the list of top 10 after giving the
remarks and the immediate next vendor i.e. the vendor who is ranked 11th is considered.
This cycle repeats until company has at least minimum number of vendors who can be
subjected to further process.
4. Physical Visits
After establishing the contact, the next step is actually visiting the vendors
factory or manufacturing unit. For these visits technical team is send which checks the
product, verity, products specification, decision with the vendors technical team and
checking other parameters. For example, if a particular vendor has passed the previous
2 stages the technical team of a company visits the vendor company and checks for
actual products, process, product specification and so on.
After the physical visit to the vendors the technical team submits the report of
each vendor to the procurement department. On the basis of that report and other
parameters like experience, after sales service, location of vendor etc. the final decision
is taken for a particular vendor. For example, if a technical team has submitted the
report in favour of vendor than that vendor is almost finalized.
6. Vendor Registration
This is the ultimate stage in this process. After finalizing vendors each vendor
for a particular product is invited for registration separately. The terms and conditions,
policies are explained to vendors. After their approval the registration form is given to
each vendor and after submission of completely filled registration form and other
necessary documents the vendor is registered with the company.
After this process also if a company doesn’t find a capable vendor for a
particular product then company can think of making that product. Also, if a product is
closely related or which is to be used with/on company’s core product line than
company can decide to make that product rather than outsourcing. Also, if a particular
product has a high cost and if that same product can be made in company with little
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modification in some process than company decides to make that product in company
only.
Now the case arises of how the particular vendor is selected from a pool of a
vendors for a particular project or requirement. The choice of vendor is mostly
depending on customers preference i.e. whether customers wants a cost-effective
product or quality conscious product. Mostly customers demand a product with both
i.e. high quality and low cost than the vendor is assigned on the basis of cost and quality
i.e. which vendor which has a cheapest product but at a same time good quality. The
combination of both is mostly considered while assigning the vendor. Sometime
company chooses the vendor on the basis of flexibility of a product i.e. vendor with a
product having high flexibility is chosen. Also, delivery, location, after sales services
are some of the factors based on which vendors are assigned. Like which vendor can
provide the desired product quickly that vendor is chosen is products are required
quickly. Also, Project location is considered from both delivery and after sales services
point of view.
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8. RECOMMENDATIONS/FINDINGS
8.1 Findings:
3. Vendors are finalised on the basis of various factors like cost, quality of product,
experience, after sales services also technical report form a technical team is
most important while finalising the vendors.
5. Choice of vendor for a particular product depends mostly upon the customer
preference i.e. whether customers wants a cost-effective product or quality
conscious product. Also, other factors like cost, after sales service are
considered.
8.2 Recommendations:
1. Company have to not only focus on Vendor development but also on the
Managing Buyer-Supplier Relationship.
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3. Company should encourage vendor for continuous improvement by free flow
of information like timely feedback etc.
4. Company should focus on building the feeling of trust among the vendors by
not following the practices such as blame the vendor for any failure.
5. Also, there should proper communication between the vendors and company.
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9. KEY LEARNINGS
2. This helps the companies in offering best quality product in minimum possible
time.
5. Also, some suppliers feel the lack of trust due to the power imbalance i.e. mostly
the power is concentrated with company only.
6. Also, if a particular product fails at the customer end companies blame the
suppliers and do not take any responsibility. Due to this lack of trust builds in
vendors.
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10.CONCLUSION
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becomes the key to supply chain management ONLY through development efforts, that
go beyond the first tier of suppliers.
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11. BIBLIOGRAPHY
2. Wan H., Wan M., Nurulain Mat Tahar, Mohd Nizam Ab Rahman and Baba Md
Deros (2010) “Supply chain enhancement through product and vendor
development programme”
4. Jose Benedicto and B. Duhaylongsod (2013), “Vendor Financing and Its Impact
on Vendor’s Optimal Policies”
12. http://www.indianmba.com/Faculty_Column/FC136/fc136.html
13. http://www.engineeringenotes.com/supply-chain-management/process-of-
vendor-development-9-steps-management/15180
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14. https://www.electricaltechnology.org/2015/09/what-is-industrial-
automation.html
15. https://en.wikipedia.org/wiki/Automation
16. www.godrejconsoveyo.com
17. www.plantautomation-technology.com
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12. PROJECT PROGRESS REPORT
Name of the Student: Tushar Nikam Class & Roll No.: MMS-29
29-03- Introduction to
1 ---
2019 Project format
16-05-
2 Project Synopsis ---
2019
Methodology, Report
21-06-
4 to be submitted in ---
2017
industry
17-07-
5 Literature review ---
2019
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13. SUMMER INTERNSHIP PROJECT SYNOPSIS
Specialization: Operations
1. PROJECT TITLE:
Limitations:
• Time constraints
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4. SOURCE/S OF DATA:
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