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No matter what company it is, resources for supplier management are always limited. Which suppliers should we focus on managing? Not actively eliminating suppliers. Active elimination is a “bottomless strategy”, a bottomless pit of resources, with the greatest risk and the lowest return on investment. Once you fall into the quagmire of actively eliminating suppliers, you may not have enough resources to support new product development. As a result, new products often fall into the hands of suppliers that are to be eliminated in the future, falling into a vicious cycle of “suffering twice and being punished twice”. It is not about passive elimination of suppliers. There are usually a large number of such suppliers, some of which are “bottleneck” and cannot be cut or chopped; some are in a state of stagnation and require a lot of resources. So we just keep pushing forward and let time take care of them: maintain the status , as long as we ensure that no new business flows in, these suppliers will naturally be eliminated as old products are delisted. Some people say that it is the preferred supplier . The main business of the enterprise is done by the preferred suppliers. If the management is not good, once they quit, the impact will be great. But this kind of management does not mean that at 9:30 every morning, you call their boss to ask if the 150 employees on the production line have signed in. The preferred supplier is like those hardworking employees, who work hard and are reliable. What you need to do is to tell him the goal and follow up regularly. Management is an exception. For example, when I was managing package suppliers, I would check the on-time delivery rate of the previous week, the previous four weeks, and the previous thirteen weeks every week. Once it was lower than the target of 95%, I would call them to find out why it was low and what measures the supplier was taking to improve. The technical content of package is limited, and it is mainly made by preferred suppliers. They know that there are competitors, and if they don’t do a good job, the job will go to others – market competition manages these preferred suppliers. As a manager, you have to pay attention to what the preferred suppliers do, but don’t get involved too much in their daily operations and beware of over-management. Why do I say that? Because preferred suppliers are “manageable”, some people often give orders and give blind instructions, which results in a lot of extra costs for suppliers. Remember, although it seems that everyone knows how to do the things of preferred suppliers, as buyer , especially inexperienced purchasers #agent #analysis #budget #business #consulting #cost #customer #data #delivery #demand #future #inquiry #management #market #material #optimize #performance #plan #price #process #procurement #purchase #quality #quote #report #sales #service #sourcing #stock #supplier #time #tosapwise #trend #work

A reader asked what is the difference between a purchasing engineer and a buyer. The answer seems simple, the purchasing engineer is responsible for the technology, and the buyer is responsible for the daily management around the order. But at a deeper level, this issue involves the basic setup of the procurement and supply management department, which many companies have been exploring. Because positions and responsibilities (Roles and Responsibilities) are the cornerstone of the good operation of an organization. Supply management seems simple, but in fact it is very complicated, because it is necessary to manage all aspects related to suppliers: business, technology, production, inventory, ordering, delivery, quality, service, etc. It is actually operating or regulating a high-level A complete enterprise. How to clearly define the positions and responsibilities of each role is quite knowledgeable. There are three main roles to be introduced here: supplier business manager, supplier engineer, and buyer. These three roles form a basic supply management team. This setting is popular among some companies in the United States, especially in some large companies in the aerospace industry and semiconductor equipment manufacturing industry that the author knows. For example, in the author’s company, the supplier business manager is responsible for all business and overall supplier performance; the supplier engineer is responsible for technical aspects such as quality control, production process, supplier development, etc.; and the buyer is responsible for daily order management around orders. Such as placing orders, tracking orders, delivery, expediting, verifying prices, payment, etc. One of the purposes of this setup is to allow business managers to get rid of the day-to-day management of order management and focus on strategic levels, such as overall price (Cost), quality (Quality), delivery (Delivery), service (Service), technology (Technology), Asset (Asset), Process and People (Process and People), collectively referred to as the seven major contents of QCDSTAP. The logic is that day-to-day supplier performance, such as on-time delivery, quality and technical support, can only be ensured by addressing some of the most fundamental issues at an overall strategic level.

#procurement #purchase #business I have been training supply chain management for the sales of some companies in Korea, and I have become more and more aware that if procurement is done like sales, 80% of the procurement performance will be better. Let’s start with the customer-centric mentality. One sales director said that he stayed with customers all day and would not go back to his office unless the company had a meeting. The reason is simple: the customer’s needs are his greatest needs.

In the past few years, I have been training supply chain management for the sales of some companies in Korea, and I have become more and more aware that if procurement is done like sales, 80% of the procurement performance will be better. Let’s start with the customer-centric mentality. One sales director said that he stayed with customers all day and would not go back to his office unless the company had a meeting. The reason is simple: the customer’s needs are his greatest needs. Procurement also has internal customers. How many procurement companies can treat internal customers with this mentality? The reason why we purchase is for the existence of internal customers. It’s easy to say this, but ask yourself, when was the last time we proactively met with an internal customer? Eighty percent of us can’t do “it” with our internal customers; but I’m afraid it’s not an exaggeration to go over often and take the initiative to say hello and ask if there is anything we can do for you. Some people may say, can we greet so many internal customers? This is actually a bit amateurish, or it sounds like an excuse. Counting on fingers, it is difficult for us to have more than 5 key customers at any time, no matter which functional department we are in; and our biggest troubles are often caused by those two or three people. Maybe some people say that if you don’t look for it, internal customers will come to you; if you look for it, won’t you find more things? Not necessarily. It’s a blessing, not a curse. You can’t avoid the curse. What’s yours will always be yours. Take the initiative to say hello and contact more, and communicate smoothly. Many problems will be solved before they become problems, and there will be fewer problems in the future. By the time he finds you, 80% of the time the matter will either be on fire or smoking. You have to Spend more energy to solve it.

#tosapwise #supply #procurement #management The strategic position of the procurement department is reflected in its relationship with internal customers. This is a very important point. Bullying suppliers will not determine the status of procurement if internal customers see procurement as nothing more than a chore. If the relationship with internal customers is not equal, it will be difficult for the procurement department to demonstrate its strategic importance. To improve status, you must demonstrate your value. If you can’t come up with ideas or do big things, and you have to follow the engineers’ lead in everything, procurement is destined to be a errand boy, and the relationship with internal customers is not on the same level. To be respected, you must first be worthy of respect. To be worthy of respect, you must first do your job well and thoroughly. Senior engineers are respected because they are technical experts, their drawings are well-organized, and their specifications are practical; finance is respected because their finances are well-organized, their cash and inventory are balanced, and their accounts are clearly managed. The object of procurement work is suppliers. To be respected in procurement, there must be a system to manage suppliers in an orderly manner. Companies that are good at procurement solve problems at the supplier level, such as supplier selection, development, and elimination. Companies that are just errand boys often focus on parts and material numbers, and are busy all day long treating symptoms. If you spend all day dealing with poor quality and material shortages, you are probably far away from the strategic level. To put it bluntly, you are just doing odd jobs. Who doesn’t know how to do odd jobs? And who respects those who do odd jobs?

Procurement cannot avoid cost reduction. A chief procurement officer said it well, 70% of procurement performance is reflected in procurement cost reduction. Supplier quality, delivery time, service, etc. are certainly important, but if the cost target is out of control, the value of other targets will be greatly reduced. Therefore, whether it is my book or training, the core is cost reduction, but it is not a simple negotiation price reduction – you know, I rarely mention negotiation, but to seek better solutions within the supply chain. In summary, there are three steps to reduce supply chain costs: 1)The first step is to lower the price through negotiation . 2)to reduce production costs through lean production and to reduce transaction costs through e-commerce . 3)Value Engineering / Value Analysis (VA/VE) is the third step in reducing supply chain costs and also the biggest potential for cost reduction

tosapwise Material Management is to manage the purchase objects with certain classification to obtain better scale advantages and bargaining power. For example, coordinate the purchasing strategies of each division, select the best suppliers and alternative suppliers at the company level, and negotiate and cooperate with suppliers based on the volume of the entire company. The benefits of Material management are self-evident, but we must be aware of its cross-departmental, cross-product line and cross-business characteristics. With complex organizations and products, the Material strategies formulated by purchasing department are always useless and impractical For example, the purchasing manager selects large companies as preferred suppliers for mass production capacity considerations. The design department prefers to find small companies ,owing the time limit for new product development is too tight, small companies are “small and easy to turn around”, with flexible delivery and fast speed. Of course, purchasing can transfer the business to prestigious suppliers during massive production, but this will fall into a vicious circle of eliminating suppliers (purchasing-led) and looking for new suppliers (design-led) again and again. Not to mention the high cost, some products have to continue to use the suppliers selected by the design due to restrictions such as process flow, so the number of suppliers begins to expand, and the management cost and complexity of the purchasing department increase Therefore, the design department is a key department in the product strategy. So are production, R&D, and marketing. Product strategy must take into account their actual needs and gain their unanimous approval. In North America, many companies that do a good job in procurement use a multifunctional group approach to manage products. For example, a procurement manager, a design engineer, and a production manager form a team responsible for formulating and implementing the product strategy for motors. This group is the Material team (some companies call it the “Supplier Action Team ( SAT ). Such a team is often led by procurement, but it does not necessarily have to be led by procurement. As long as the responsibilities and roles are clearly defined, people from any department can lead.

A reader wrote to me, saying that he had worked for Four large manufacturing companies in UK, and the purchasing bosses of each company were not originally from the purchasing department. Why ? Is there no real promotion path for purchasing managers in UK? This is a good question. I have contacted with many local companies in recent years and have noticed this. I think the reasons are as follows: First, the profession of procurement is still relatively young in some countries. Secondly, senior positions such as purchasing director and vice president, especially the position of vice president, are leadership positions. Leadership is more important than professional ability. In terms of professional ability, different functions have different requirements; Third, in terms of career development, don't stick to one path. With the rapid development of society, lifelong careers almost no longer exist.

Tosapwise Demand analysis is best work for procurement we must carefully analyze the needs of customers, whether they are internal or external customers, and distinguish between needs and solutions, rather than simply executing. Always remember that customers are rich and stupid, and we should be careful when they ask for something. This is not to offend customers; it is just to respect the fact that sometimes customers are like children, and what they want is not what they really need. Let’s talk about positively influencing demand. This is to provide the market and supplier information that procurement is familiar with to design, to help them better define demand. In the field of indirect procurement, there are even more examples. For example, if you want to go on a business trip, the logistics department will often ask whether you can use a conference call instead, whether it is a direct flight (more expensive) or a connecting flight (cheaper), and whether you must go and return during peak hours (peak hours are more expensive). For example, if you want to buy 100-pound A4 paper, the experienced girl in the administration department will often ask you what you are going to use it for, and whether you can use 80-pound paper, which has a similar effect but is more cost-effective. These are all actively and positively influencing demand, that is, on the basis of meeting the needs of internal customers, they can also reduce costs. In the big framework of balancing demand and supply, there is no clear boundary between demand and supply management, but there is a lot of overlap. The earlier supply management intervenes in demand management, the easier the subsequent supply chain execution will be; the later it intervenes, the more difficult the subsequent execution will be. At this time, demand management has to deeply intervene in supply management, such as urging for delivery. Over the years, I have discovered an interesting phenomenon: the more first-rate management a company has, the more and earlier procurement intervenes in demand management, and the less internal customers intervene in supply management. In this way, internal customers can concentrate on solving front-end problems, that is, better managing customers. The more extensive management a company has, the more prevalent “purchase” is, and the less and later procurement intervenes in demand management, while internal customers (sales and design) intervene more in back-end supply. As a result, internal customers do not have enough energy to manage front-end customers, demand definitions are unclear, and urgent demands increase, which creates more problems for the supply side, and internal customers have to spend more energy managing supply, which becomes a vicious circle.

purchase is supply-oriented , with insufficient demand management; procurement is demand-oriented , managing demand, influencing demand, and streamlining supply by streamlining demand. https://lnkd.in/ebST5bRT