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- 1Narchal et al. (1987) divide the business environment into three groups Case: StarbucksNarchal et al. (1987) divide the business environment into three groups:
1. Macro environment (politics, economics, society, technology)
2. Industry/sector environment (your specific sector –bio-engineering, fashion, local government)
3. Competitive environment (who are your competitors and what are they doing?)
Case: Starbucks
1. Macro environment: use PEST analysis.
- Economic crisis (2008): “the company announced a net loss of US$6.7 million, for the quarter ending June 2008
- Rapid internationalization
- Political: issues with Egyptian government, tax controversy in 2012
2. Industry/sector environment
- Food industry: experience is important and health concerns (e.g. calories)
3. Competitive environment
- Quality/price
- Brand
- They want to be expensive
- Ethics in supply in this strategy - 2Industry trends impact on purchasing and supply strategy Price deflation in consumer electronics Most (not all) markets are more price competitive today than they were in the last few decades Main reasonsIndustry trends impact on purchasing and supply strategy
Price deflation in consumer electronics
Understand the trend and change your purchasing and supply strategy.
The more knowledge we have, the lower the price.
Most (not all) markets are more price competitive today than they were in the last few decades
Main reasons:
- Learning and experience effects
- Level of competition
- The Internet
- Value conscious customers
In order to maintain profitability, companies must find a way to bring down the costs and / or increase the customer value - 3Competitive environment analysis: Porter’s five Forces
- 4Competitive strategy (Example) The competitive priorities for purchasing and supply are:Competitive strategy
An organization’s competitive strategy defines, relative to its competitors, the set of customers’ needs it seeks to satisfy with its product/ service portfolio
Based on how the customer prioritizes cost, quality, service, delivery time, variety, etc.
Example:
Eataly competes on quality. Walmart, that is an American mass supermarket is based on cost (s the purchasing and SC strategy must find low cost solutions)
The competitive priorities for purchasing and supply are:
- Cost
- Quality Delivery
- Flexibility
- Innovation
- Service - 5Achieving strategic fit Key steps to achieve strategic fitAchieving strategic fit
For any company to be successful, its purchasing and supply strategy and competitive strategy need to have aligned goals.
There is a need for consistency between the customer priorities that the competitive strategy hopes to satisfy and the SC capabilities that the supply chain strategy aims to build
Key steps to achieve strategic fit
Understanding the customer and supply chain uncertainty
Understanding the supply chain capability
Achieving strategic fit - 6What does a Purchasing and Supply Strategy look like? Understanding levels of strategyWhat does a Purchasing and Supply Strategy look like?
Determines the nature of procurement of raw materials, transportation of materials to and from the company, manufacture of the product or operation to provide the service, and distribution of the product to the customer, along with any follow-up service and a specification of whether these processes will be performed in-house or outsourced.
Defines not only processes but what the role played by each supply chain entity is.
Defines not only processes but what the role played by each supply chain entity is.
If your priority is to be quick, but some of your suppliers cannot be quick, you decouple
In a SC they need to have some priorities to work together as a team.
Understanding levels of strategy
The key is integrating at all three Levels - 7Supply operations, management, strategy and policy 2 types of policiesSupply operations, management, strategy and policy
From operational level to management (that is planning) to strategy (to manage risk; make/buy decision).
Strategy changes as the competitive environment changes. But not too often because it is also difficult to implement.
To policy: what you believe in. something you’re aiming for and something you want to be the best in. We going to keep improving towards it.
2 types of policies:
1) Aspiration
2) Causes - 8How the purchasing function can add value to overall businessm
- 9Strategic supply wheel (Cousins et al. 2008)m
- 10Purchasing:Centralization Synergies• Pooled negotiation power
• Shared resources
• Shared knowledge
• Coordinated strategies and policies
• Vertical integration
• Combined new business creation - 11Purchasing: DezentralizationDezentralisation pros
• Less bureaucratic purchasing procedures
• Direct responsibility for profit centres
• Fit with local requirements, local suppliers
• Local buyer motivation
• Increased responsiveness to local conditions
Dezentralisation cons
• Reduced bargaining power due to lack of economies of scale
• Inconsistent strategies, policies and codes of conduct across business units
• Limited synergy and knowledge sharing
• Duplication of efforts-waste - 12—
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- Supply chain Fichas sobre Sin título, creado por An Ngo el 07/01/2018.
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