Professional Documents
Culture Documents
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In-House or Outsource
In-House is when the supply chain functions are performed by
the company. e.g. Madura Garments Outsourcing is when the supply chain functions are performed by a third party. e.g. Puma
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Third-Party Logistics (3PL) and Fourth-Party Logistics (4PL) A Third-Party (3PL) logistics firm is an external supplier that
manages one or more of a companys logistics functions. Generally 3PL manage functions like transportation, warehousing and information technology
e.g. DHL for Xerox, IBM
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Sourcing Processes Supplier Scoring and Assessment Supplier performance should be compared on the basis of
the suppliers impact on total cost There are several other factors besides purchase price that influence total cost:
Replenishment Lead Time Increase in lead time means more safety stock to be stored On time Performance Impacts safety stock and downstream processes Supply Flexibility Affects safety stock and downstream processes Delivery Frequency/Minimum Lot Size Impacts Inventory holding costs
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Design Collaboration
50-70 percent of spending at a manufacturer is through procurement 80 percent of the cost of a purchased part is fixed in the design phase Design collaboration with suppliers can result in reduced cost, improved quality and decreased time to market
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Procurement for both types should consolidate orders where possible to take advantage of economies of scale and quantity discounts
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Criticality
General Items
Bulk Purchase Items Take example of few product s/ raw materials/components and categorize them based on value and criticality
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Low
Low
Value/Cost
High
Supplier performance analysis should be used to build a portfolio of suppliers with complementary strengths
Cheaper but lower performing suppliers should be used to supply base demand Higher performing but more expensive suppliers should be used to buffer against variation in demand and supply from the other sources
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