LECTURE 4 Supplier Management

Supplier Lifecycle Management(SLM)

A harmonized supplier lifecycle process overview
Overview: Supplier Lifecycle Management
 Segment suppliers
 Qualify suppliers
 Integrate suppliers
 Collaborate with suppliers
 Development supplier capabilities
 Manage supplier performance
 Phase out suppliers
 Maintain supplier management governance
What is supplier relationship management (SRM)
 Positive buyer-supplier relationships
 Strategic supplier management based on spend category
 Enhanced risk mitigation mechanism
 Resilient supply chain
 Key Components
 Segmenting Suppliers
 Addressing Challenges
 Defining a Future Outlook
 Providing Methodology
Supplier relationship management framework
 Supplier qualification
 Supplier performance management
Supplier risk management
 Supplier development and diversity
 Supplier collaboration
 Supplier phase out
Benefit of SRM Stronger strategic partnerships
Value creation for the organization
Future outlook for SRM
 Enhanced supplier collaboration
 Technology innovation
 Forming stronger partnership
 Supplier Relationship
 Strategic Partnerships
 Strategic Alliance
Case study: Toyota
Supplier segmentation
Recap: Kraljic’s supply matrix
 Leverage items
 Strategic items
 Non critical items
  Bottleneck items
Supplier segmentation
 Important
 Strategic collaboration
 Tactical
 Selective collaboration
Portfolio analysis and typical contract durations
Supplier strategy-Basic supplier strategies
Supplier strategy-others outsourcing
Supply base optimization
Early supplier design involvement
Global sourcing
Long-term supplier relationships
Supply risk management
Supplier development
Total cost of ownership (TCO)
E-reverse auctions
Supplier’s voice and supplier preferencing
 Development
 Core
 Nuisance
 Exploitable

Supplier Qualification
When to measure launching of new model/project
Supplier development
Purchasing initiation
Risk mitigation
Professional sourcing
Agreement negotiation
How to measure
 Understand purchase requirement relative to business unit objectives
 Conduct thorough spend analysis
 Identify specific internal users
 Identify current suppliers
 Research supply marketplace
 Information Required
Conducting market research on suppliers
 Porter’s Five Forces Model
 Triangulation
 Supplier Analysis
 SWOT ANALYSIS
What to measure
 financial strengths
  Production or service capability
 Human resources
 Corporate performance
 Quality performance
 Information technology
Checklist for supplier visits Personnel-attitudes
Personnel-skills and know how of supervisors
Production equipment adequacy and maintenance
Means of quality control
Housekeeping
Competence of management and technical staffs
Purpose of assessment
 Identify and mitigate supply chain risk
 Supply chain establishment and integration
 Business partnering
 Manage new trading partner relationship
 Supplier acquisition or merging
 Joint product or market development
Supplier compliance supply chain rick
Guidelines and requirements
Outcomes
Supplier code of conduct
 Major Areas to be Covered
 Objective of the Document
 Features
Example (SCC of HKJC /HUAWEI)

Supplier performance management

Introduction of SPM
 Introduction
 Objective
 Process
 Define governance structure
 Define performance metrics and set-up scorecard
 Monitor and discuss performance with suppliers
 Address performance issues

Supplier Risk Management

Introduction of SRM
 Introduction
 Objective
 Process
 Identification and assessment
 Prioritization and monitoring
  Mitigation and improvement
 Periodic review
TPRM Government
 Three lines of defense
 Government-Common practice
Key takeaways for an integrated SRM
 Develop an integrated supplier database
 Translate risk data into predictive intelligence
 Segment suppliers into risk categories
 Keep supplier assessments up to data