Limiting Costs Through Strategic Procurement
Limiting Costs Through Strategic Procurement
In today's time of Lean Supply Chain, strategic procurement plays a very important role as major cost of running a business for any organisation is the purchasing expense. The process of selecting the Right Product' at Right Time' at Right Price' from a Right Source' forms the basis for Strategic Sourcing.
Strategic sourcing initiatives start with identifying a supplier after carrying out multiple audits for the same product being manufactured by a number of suppliers. This has multiple advantages. All these suppliers can be judged on similar scale of Productivity (meaning ability to scale up volumes or manage variability in the same product), Quality Parameters (like all similar things cannot be same, however, a minimum benchmark or standard for product performance can give a fair indicator of which supplier to partner in the long run.), Cost ( Multiple suppliers for similar products can have different cost structures which may be based on various methods of costing) and last but not the least Management Capability. Management Capability is turning out to be a true differentiator for companies which are efficiently run and companies which are not. To think of it, if the management capability is correct then all the above parameters will under check and will be an ideal case for selecting a right partner. Once this exercise of selecting a right supplier through strategic sourcing is complete, challenge for organisations become of managing these good suppliers.
The first step towards this initiative is to lay down service level agreements between supplier and buyer which will lay the framework for Supplier management and Strategic Sourcing.
The agreement ensures the respect of buyer and seller agreement and can be bound by law. The agreement will have key deliverables required from both the sides. The deliverables from Supplier side include transfer of title of materials supplied in good quality and deliverables from buyer include timely rewards of the supplied material in form of periodic lot wise payments.
The second step of supplier management will be to continuously monitor the trend of supplier for its delivery and quality targets. Today, many mechanisms are available to create an industry wise benchmark for a product category. If any delivery or quality targets fail, they act as symptoms for a quick review and again strategic sourcing comes into play with a decision to make, i.e whether to upgrade the supplier or to look out for new one and develop it? However the cost of finding should be offset by the business volumes and value.
Thus, strategic sourcing initiatives and supplier management act as a tool which benefits both the supplier and the buyer and establishes respect for each other. Making Use of a Day Trading Guide Find Out How Payday Loan Retailers Approve Borrowers For Cash Tips on how to develop a successful joint venture by generating strategic alliance? Frugal Mom's Guide Rapidshare Combat The Fat Program - Combat The Fat Rapidshare Find the Bed Style You Really Want at the Right Retailer Wholesale Dollar Merchandise Suppliers Just Waiting to Meet your Needs Do you Have the Right Dollar Store Merchandise Wholesale Suppliers? Fap Turbo Expert Guide Rapidshare - Fap Turbo Expert Guide Results How To Choose A Good Personal Injury Lawyer Free Truth About Abs System Rapidshare Wholesale hCG: we will beat any quantity price! The Hypothyroidism Solution Rapidshare - The Hypothyroidism Solution Pdf