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Flashcards

Sourcing

Bhavin Mistry Inglês 77 flashcards

Flashcards do conjunto (77)

  1. 1SourcingSourcing is part of the procurement process that is concerned with ‘how and where services or products are obtained’.
  2. 2Stages of the sourcing processIdentification of the requirement or need
    A sourcing plan
    Market analysis
    The identification and/or pre-qualification of suppliers
    Evaluating supply offers /options
    Creating contractual relationship
  3. 3Supplier appraisalEvaluating the capability of potential suppliers, in the pre-contract sourcing stage.
  4. 4Supplier pre-qualificationThe definition and assessment of criteria for supplier ‘suitability’ to ensure that only pre-screened suppliers with certain minimum standards of capability, capacity, and compatibility are invited or considered for participation in a given sourcing process.
  5. 5Supplier appraisal factorsCompetence (or capability); Capacity; Cash resources; Compatibility; Compliance; Communication; Commitment; Cost; Control; Consistency
  6. 6Competence (or capability)Of the supplier to fulfil the contract: where it can produce the kinds of items, or deliver the kinds of services required what management, innovation, design or other relevant capabilities it has.
  7. 7CapacityOf the supplier to meet the buying organisation’s current and future needs: eg how much volume the supplier will be able to handle (its production capacity); and how effectively managed its own supply chain is.
  8. 8Cash resourcesTo ensure that the financial status and stability of the supplier: its profitability, cashflow position, the assets it owns, the debt it owes, how its costs are structured and allocated, and so its overall financial health.
  9. 9CompatibilityOf the supplier with the buying organisation: both cultural (in terms of value, ethics, work approach, management style) and technological (in terms of process, organisation and IT systems).
  10. 10ComplianceEnvironmental, CSR and risk management systems to ensure consistent compliance. Willingness to comply with buyer policies and standards on ethics, CSR and sustainability.
  11. 11CommunicationEfficiency and supporting technology to support collaboration and co-ordination in the supply chain.
  12. 12CommitmentKey values like quality, service, cost management or continuous improvement.
  13. 13CostPrice, whole life costs and value for money offered.
  14. 14ControlSystems in place for monitoring and managing resources and risks
  15. 15ConsistencyIn delivering and improving levels of quality and service: eg a track record of reliability
  16. 16Tactical and operational sourcingLower-level decisions relating to low-profit, low-risk and routine items; make short-range decisions as to how specific requirements are to be met in response to changing supply market conditions; clearly defined requirements/specification, and transactional sourcing decisions based mainly on open bidding and purchase price
  17. 17Strategic sourcingTop-level, longer-term decisions relating to items with high profit/supply risk and low profit/high supply risk like procurement strategy; Decisions based on fact based analysis analysis and market; internal policies & procedures; improve value to price relationship
  18. 18Forming teams with stakeholders for the sourcing process - Early Buyer InvolvementRecognises the expertise/ knowledge of the purchasing function as a key foundational input in project work and in product/ service development.
  19. 19Forming teams with stakeholders for the sourcing process - Formal committee approachSpecifications may be developed by a committee represented by design, operations, finance, quality, procurement, etc. –to reconcile conflicting objectives of each.
  20. 20Forming teams with stakeholders for the sourcing process - Informal approachAll departments are urged to consider both commercial and operational factors in their decision making. Buyers are required to challenge user requests and to suggest alternatives.
  21. 21Forming teams with stakeholders for the sourcing process - Purchasing co-ordinator approachThis is a formalisation of the informal approach, with procurement staff designated as liaison officers to co-ordinate the interactions/consultations.
  22. 22Forming teams with stakeholders for the sourcing process - Early supplier involvementRecognises the expertise/ knowledge of the suppliers as a key input in project work and in product/ service development. Achieves short-term organisational gains via more accurate and achievable technical specification, improved product quality, reduction in development time, and reduction in development and product costs.
  23. 23Engaging stakeholders - Approaches to involving stakeholders in design, specification and sourcing processes - Multi-functional or multi-disciplinary teamsMulti-functional or multi-disciplinary teams: procurement may form project teams drawing members from different functions/departments to pool and share various competencies/interests.
  24. 24Engaging stakeholders - Approaches to involving stakeholders in design, specification and sourcing processes - Multi-skilled teamsTeams formed bringing together functionally versatile individuals who can engage in multiple tasks with other stakeholders- spec development, prequalifying, negotiating, contracting, appraising, etc.
  25. 25Engaging stakeholders - Approaches to involving stakeholders in design, specification and sourcing processes - Project teams/task forcesProcurement may form or be involved in short term cross-functional teams (members seconded from various departments) for a particular purpose and thereafter disbanded.
  26. 26Engaging stakeholders - Approaches to involving stakeholders in design, specification and sourcing processes - Virtual teamsA project team may be remotely interconnected interacting via ICT tools such as email, webinar, tele-conferencing, video conferencing, etc.
  27. 27Vendor or supplier performance managementSupplier performance management assesses a current supplier’s performance in fulfilling a contract.
  28. 28Benefits of proactive post-contract management of supplier relationships and performanceCompany incurs lower costs of identifying, appraising and training new vendors, and lower transaction and contracting costs of multiple sourcing and competitive bidding, by developing a small core group of trust suppliers.
    Quality and other problems can be ironed out progressively, and continuous improvement made over a period of feedback, problem-solving and co-operation.
    Good developed with positive relationships may earn preferential treatment.
    Less risk of supplier failure, if performance standards are regularly agreed, monitored and managed.
    Supplier more motivated to give best performance adding value through innovation, flexibility and commitment.
  29. 29Supplier performance appraisalHelp to identify highest-quality and best-performing suppliers: assisting decision making regarding
    (a) which suppliers should get specific orders; (b) when a supplier should be retained/removed; (c) which suppliers show potential more for strategic relationship; (d) distribute spend across several suppliers.
  30. 30Supplier performance measuresPrice; quality; delivery; service; financial stability; innovation capability; technology leverage/capability; overall performance
  31. 31Monitoring of performanceContinuous with exception reports; at key stages of project; periodic reviews; post-completion reviews to see lessons learnt.
  32. 32Information on performance can be gained throughFeedback from internal/external customers and other stakeholders;
    Gathering of performance information through observation, testing, transaction records and management reports;
    Budgetary control: monitoring actual costs against budgeted or forecast costs;
    Formal performance reviews (vendor rating exercises) reviewing performance against benchmark standard/kpi/service levels to feed into improvement planning.
  33. 33Vendor ratingVendor rating is the measurement of supplier performance using agreed criteria, usually including price; quality; and delivery. Using a supplier performance evaluation form, purchasers can assess the supplier’s performance as good, satisfactory or unsatisfactory. A weighting is applied to each factor in key performance areas. Another approach is factor rating method, which gives quantified, numerical score for each key assessment factor.
  34. 34Sole sourcingRefers to situation where there is only one supplier available in the supply market for a given procurement, dominated by a monopoly.
  35. 35Monopoly conditionsOnly one supplier of the goods or service exists in the supply market. Market has high barriers to entry preventing other firms from competing
    No close substitutes for the good or service available
    It is essentially a price maker. Buyer has no opportunity to dictate terms and conditions of trade which force international sourcing. Buyer will pay higher prices because of lack of competition and unable to specify requirements.
  36. 36Single sourcingA single supplier may be selected for the development of closer partnership relations or an ‘exclusive supply’ contract to get preferential treatment or hope for supplier commitment.
  37. 37Appropriateness of single sourcingTotal requirement to small to justify splitting among several suppliers.
    One supplier is ahead of competitors in terms of reputation, quality, price etc that it would not make sense using someone else.
    Expensive set up costs such as retooling
    Requirement is subject to supply risk or in short supply or buyer may be treated more favourably by an exclusive supply than any other competitor.
  38. 38Dual sourcingSharing supply between two suppliers. It maximises advantage of narrow supply while managing the risk of over-dependency on a single supplier.
  39. 39Drawbacks of dual sourcingDisadvantages of both are supplier complacency as they are not motivated to innovate, continuously improve or provide competitive value; over-dependence; supplier lock-in; not utilising newer suppliers who are innovate; supplier dependence and loss of preferred supplier goodwill.
  40. 40Multi sourcingBy having more potential suppliers of a given item or category or purchases, pre-qualified and approved as being able to meet the buyer’s requirement.
  41. 41Advantages of multi-sourcingAdvantages include established relationships in case of supply shortage or disruption; offer flexibility enabling buyer to become more opportunistic taking advantage of best available price, trading terms, quality and innovation which may also keep supply base competitive.
  42. 42Drawbacks of multi-sourcingDisadvantage are they can lead to unnecessarily high procurement costs with more transactions and less order value increasing administration costs; fail to exploit value-adding and competitive potential of concentrating on more collaborative relationships with fewer suppliers; also leads to more stock proliferation and increasing stock variety.
  43. 43Partnership sourcingStrong emphasis on mutual commitment, co-investment and relationship building.
  44. 44When partnership is beneficialHigh spend; high supply risk; product is technically complex; vital and complex or high hassle; supply market is fast-changing; few competent/reliable suppliers where closer relationship could improve supply.
  45. 45Characteristics of partnership sourcingCultural compatibility between partners; high level of trust, knowledge sharing and openness including cost transparency; win-win mutual acceptance; expertise, resources or competencies in complementary areas; clear joint objectives and meaningful performance measures to assess supply chain performance; and high degree of systems integration.
  46. 46Advantages of partneringGreater stability of prices and supply; more supplier motivation through mutual commitment; cost savings from collaborative cost reductions; access to supplier’s technology/expertise; joint planning and information sharing which supports planning and efficiency; ability to plan long term improvements; more attention to relationship management e.g. account manager access.
  47. 47The use of tendering: Open procedureOpen to any potential bidder on basis of a widely advertised invitation to tender. All bids evaluated against the requirement set out in the ITT and contract awarded on strictly competitive criteria.
  48. 48The use of tendering: Restricted procedureAdds a pre-tender qualification stage. Potential suppliers who respond to tender advertisement are prequalified. Short number are shortlisted for invitation to tender and participation in the tender process.
  49. 49The use of tendering: Restricted openInvolves prospective supplier to compete for contract on open basis, but tender pool pre-qualified by restricting advertising of the tender to selective media.
  50. 50The use of tendering: Negotiated procedureInvolves section of a small number of suppliers to enter into direct negotiates with buyer. At the end of the process, suppliers submit their best and final offer which is evaluated and compared to select the best-value offer. Process is useful when requirement cannot be specified in detail or priced in advance; when price is not most important variable; specifications may change; and solutions have to be developed in collaboration with suppliers.
  51. 51Direct negotiations with suppliers - Buyer objectivesObtain advantageous price; get supplier to perform contract on time; exert control on manner contract is performed; develop sound/continuing relationship with competent suppliers.
  52. 52Intra company trading and transfer pricing arrangementRefers to commercial relationships between entities which are part of the same organisation.
    General purpose behind this:
    To support capacity utilisation in the supplying entity or unit.
    To help supply entity to cover its fixed costs in time of recession and low external orders.
    To support profitability of the supply entity and the group as a whole.
  53. 53Other aspects of sourcing policy and strategy - Make/do or buyAt one extreme, a firm could make its products entirely in-house, buying in nothing but raw materials: value arises almost entirely from work done by the firm. Or alternately, firm could minimise its own activities, buying in almost everything from outside suppliers and therefore be adding value by adding all the value in the finished product.
  54. 54Make/do or buy decisionEffect of total cost of production of buying-in work and services from external suppliers
    Availability of in-house competencies and capacity; how readily they can be acquired or expanded; and availability in the future.
    Availability of suitable external suppliers.
    Need to retain resources, knowledge and skills in-house for future applications.
    Risks of giving control over key activities to external suppliers.
    Key issues in outsourcing and subcontracting –
    Need for decision to be made on clear objectives and measurable benefits, with rigorous cost benefit analysis and also supplier selection because of lock-in.
    Rigorous supplier contracting to that risk, costs and liabilities are equitably and clearly allocated, and expected service levels clearly defined.
    Clear and agreed services levels with appropriate incentives and penalties to motivate compliance and conformance.
    Ongoing contract management to ensure contract compliance and development of the relationship.
  55. 55Other aspects of sourcing policy and strategy - Outsourcing advantagesSupports reduction in costs; focus on core activities and competencies; gives access to specialist expertise; achieve economies of scale; adds competitive performance incentives, where internal service providers may be complacent.
  56. 56Other aspects of sourcing policy and strategy - Outsourcing drawbacksPotentially higher cost of service compared with in-house provision.
    Difficulty in ensuring service quality and consistency and CSR and difficulty in monitoring overseas.
    Potential loss of in-house expertise, knowledge, contacts and technologies which may be required in the future.
    Potential loss of control over areas of performance and risks.
    Risk of lock-in to an incompatible or under-performing relationship e.g. ethics or culture or relationship management difficulties.
    Risk of loss of control over confidential data and intellectual property.
  57. 57ther aspects of sourcing policy and strategy - When should outsourcing be usedWill benefits from expertise, cost effiecinecy and synergy of specialist supplier.
    Enable firm to leverage core competencies.
    Will not disadvantage the firm with the loss of-in-house capability or vulnerability to market risks.
    Will enable the firm to exploit technology or other operational capability which it lacks.
    Activities which external contractors have required competence and capability.
    Activities for which value for money is offered by outsourcing.
  58. 58Supplier switchingBuying organisation decides not to renew a supply contract, in favour of a new or alternative supplier. This may be because problems with reliability/performance; new supplier offering a more competitive bid; new supplier is able to capitalise on emerging opportunities which old supplier does not possess; or procuring low risk transactional items
  59. 59Risk of supplier switchingNew supplier may fail to perform; process compatibility; cultural/inter-personal compatibility; loss of knowledge; learning curve; exposure to new and unfamiliar supply risks; exposure of intellectual property and confidential data; problem of adversarial handover.
  60. 60Costs of supplier switchingIdentify and qualifying new suppliers; administering tendering exercises; early cancellation fees; change of internal systems and processes; contract development and contract management; risk mitigation and corrective measures.
  61. 61Consortium buyingA group of separate organisations that combine together for the purpose of procuring goods or services. Can greater larger contracts for economics of scale and take advantage of organisation’s requirements. More likely to be a transactional relationship because it is difficult for a supplier to develop long-term partnership relations with a group of different organisations.
  62. 62Consortium buying benefitsEnhance bargaining power; establish framework agreements which simplifying purchase administration for members; can pool knowledge and expertise.
  63. 63Consortium buying drawbacksCosts and efforts associated with communication and coordination, staff development and policy development.
    Exposure to commercial or intellectual property risk because buyers need full information about plans, processes, designs to make informed procurement decisions; disadvantage small suppliers because of very large contracts which suppress SME innovation; abuse of dominant market position; members are not obliged to purchase to the agreed specification.
  64. 64Selection CriteriaFocus on whether prospective suppliers are suitable and capable of fulfilling the requirement. Also primary evaluative and may focus beyond the immediate requirement.
  65. 65Selection criteria - depends onOwn strategic priorities e.g. innovation, CSR, quality leadership; particular process requirements like reverse customisation and last customisation or IT compatibility; any identified risk factors in sourcing e.g. int. delivery, low quality and engineering tolerances, and reputational risk; different types of procurement prioritising price or quality or delivery; different supply relationships for long term
  66. 66Typical selection criteriaQuality assurance, environmental and sustainability, technical capabilities, systems capabilities, labour standards, financial capabilities
  67. 67Typical selection criteria - Financial capabilityResources and management capability to ensure financial status and stability of the supplier. Measured by supplier's profitability, its cash flow position, the assets it owns, the debts it owes, how costs are structured and allocated, and so overall financial health.
  68. 68Typical selection criteria - Technical capability and production capacityRefers to factors in the supplier's operational capacity and facilities, which act as indicators of its ability to fulfil the buyer's current and future requirement.
    Productive capacity refers to volume supplier is able to handle, and how many units it can produce within a stated time period - Over-commitment or under-commitment; % utilisation by suppliers; the age of plant and machinery it has.
    Technical capability - Can supplier produce it; innovations to meet current or future requirements and willingness to develop; capability to respond flexibility; machinery and tolerances set by buyer's specification.
  69. 69Typical selection criteria - Environmental, sustainability and CSR performanceEnvironmental criteria - Use of less and greener materials and packaging; green design and innovation capability; robust EMS e.g. ISO 14001; compliance with environmental protection and emissions law/regulations.
    Social responsibility, ethical criteria and labour standards - development of robust CSR policies and ethical codes; evidence of responsible and ethical labour policies and practices like fair terms and conditions for work and equal opportunity; evidence of ethical trading practices and practices.
  70. 70Typical selection criteria - Supplier’s organisational cultureCompatibility of culture - 'the way we do things around here': values, attitude to quality, tolerance for risk, willingness to collaborate. Indicator of the supplier’s capability and commitment, and whether constructive working relationship will be possible with the buyer.
    How does the supplier feel about quality and customer service? Is it committed to innovation, creativity, responsibility, ethics and/or the environment? Are employees motivated and quality-conscious, or do they cut corners?
  71. 71Typical selection criteria - Quality and quality assuranceQuality - Includes fitness for purpose and conformance to requirement.
    QMS: The supplier's standards accreditation; Its quality management methods (ideally based on quality assurance, not just quality control); Its awareness of and willingness to adopt total quality management principles (e.g. zero defects, involvement of employees and supply chain partners in quality issues); willingness to commit to continuous improvement programmes
  72. 72Award criteriaFocus on which supplier or bid – out of pre-qualified short-list – is the best option for the specific requirement. They are primary comparative and focus on the immediate requirement.
  73. 73Typical award criteriaPrice, total life cycle costs, technical merit, added value solutions, systems, resources
  74. 74Award Criteria - Total lifecycle costBeyond the price paid for a product or service, there are additional costs involved (particularly in capital equipment procurement) in such areas as procurement (tendering costs), finance (interest), cost of quality management and quality failure (inspection, re-work, lost sales), installation, maintenance/repair and ‘end of life’ (disposal costs).
  75. 75Award Criteria - Technical meritThe supplier’s ability to meet the buyer's requirements in terms of specifications and the capacity/resources to supply the required quantities/volume.
  76. 76Award Criteria - Systems capabilityIn terms of whether the supplier's systems and procedures are compatible with those of the buyer. Also, the buyer will need to establish whether the supplier is willing to comply with the procedures, rules and systems they specify.
  77. 77Award Criteria – QualityIf the supplier has in place a system for ensuring that the products or services delivered to the buyer meet the requirements of the specification.

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FlashCards sobre Sourcing , criado por Bhavin Mistry em 30-10-2015.
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Bhavin Mistry
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