2. Soucing Introduction Lecture 3 & 4.pptx

2. Soucing Introduction Lecture 3 & 4.pptx

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  1 Procurement & Sourcing Introductionand Course Plan
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  2 Introduction 1. Introduction ofthe Instructor 2. Introduction of the participants 3. Discussion on Course outline a) Elective Course dynamics b) Books c) Quizzes d) Assignments e) Cases f) Report and its presentation 4. Class Participation 5. Attendance and Class Discipline (Mobile and Laptop etiquettes) 6. Asking/responding questions 7. Mid Term Exam 8. Final Exam
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  3 Introduction….. Contd. 9. CR/FBPage/WhatsApp Group 10. Tips for Exams. (How to attempt Questions) 11. Counseling Hours (before and after every class by appointment) Comments/Questions of Students:
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  4 Course Learning Objectivesand Outcomes Course Learning Objectives 1. To develop an understanding of the Procurement process in general and its strategic importance in overall supply chain. 2. To understand tools, techniques and best practices in strategic sourcing 3. To understand the role and importance of various players, internal and external, and how to handle those players. 4. To understand the master the process of Order issuance and execution and post receipt activities. 5. To understand the concept of Globalization and its comparison with local sourcing 6. To understand the dynamics of Negotiations Course Learning Outcomes 7. To be able to explain the difference in purchasing, procurement and strategic sourcing. 8. To understand the principles, process and best practices in strategic sourcing management 9. To explain how various parties/players affect the sourcing process 10. To understand various environmental, ethical and social issues in sourcing 11. To develop team work, communication and interpersonal skills 12. To become a self-learner in the field of sourcing and negotiations skills 13. To develop decision making and analytical skills 14. To be a good negotiator in various purchasing scenarios
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  5 Supply Chain Managementand Sourcing • SCM: A supply Chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. • In simplest terms, supply chain management is the management of flow of goods and services • Sourcing: Where does it fall in the overall SCM Picture?
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  6 Purchasing - Definitions ClassicalDefinition :To buy materials of the right quality, in the right quantity, from the right source, delivered to the right place at the right time at the right price. Criticism : “Right is a very relative term and some “rights” may only be obtained by trading off some other “rights”. It also indicates that Purchasing is a transactional and tactical activity rather than relational and strategic activity. Improvements on Classic Definition: Purchasing as Procurement: Procurement is a wider term than purchasing Purchasing as Organizational buying: Four Organizational buying groups: Industrial Producer/Organizations Intermediate Organizations Government/Public Sector organizations Institutions Purchasing as Supplier Management:
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  8 Strategic Sourcing Definition “TheProcess in an Organizational Unit, either as a function or as part of an integrated Supply Chain, responsible for procuring or assisting Users to Procure in the most efficient manner, required supplies at the right time, quality, quantity and price and the management of Suppliers, thereby contributing to the competitive advantage of the Enterprise and the achievement of its Corporate Strategy”
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  12 Strategic Thinking Strategic Thinking System Perspective Intent Focus Intelligent Opportunism Timely Thinking Hypothesis Driven
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  13 Purchasing/Procurement/Strategic Sourcing • Purchasing Asimple Transactional function implying acquisition of Goods or Services in return of something of value. • Procurement A relatively broader range of processes to obtain necessary goods and services to run the organization. Includes activities like sourcing, supplier selection, price and terms negotiations, Order and Contract Management, Relationship Management, etc. • Strategic Sourcing Goes higher than Procurement in Management Level. It covers topics like value addition, Risk Management, whole supply network and its linkages.
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  14 Strategic Sourcing 1. Concernedwith top level, long term decisions 2. Involves high profit, high risk strategic items 3. Also involves low profit, high risk bottleneck items. 4. Examples are long term purchasing policies, partnership sourcing, reciprocal and intra company trading, Globalization, purchase of capital items, ethical issues etc.
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  16 Integrated Purchasing Like SupplyChain Management, Purchasing is also an well-knit process which integrates with other functions of an organization. 1. Purchasing and Logistics/Distribution 2. Purchasing and Finance 3. Purchasing and Marketing 4. Purchasing and HR 5. Purchasing and Design/Operations/Customer Service Its always “possible” to get a lower Price, but its not always “good” to get a lower price (Total cost Concept of Working with Suppliers)
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  17 Integrated Purchasing Total Costassociated with Working with suppliers 1. Quality 2. Delivery Performance 3. Maintenance Cost 4. Training needed to use suppliers’ Products 5. Payment Terms 6. Tooling 7. Freight/Freight Forwarding 8. Packaging 9. Duties/Customs 10. Insurance 11. Warehousing 12. Ordering
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  18 Adding Value byPurchasing Personnel Eight Ways by which purchasing personnel can add value to their Organization 1. Leveraging Purchases 2. Managing Total Cost of Supply Chain 3. Conducting Value Analysis 4. Reducing Administrative Process • Processing of PO • Checking Acknowledgement • Matching Order, Receipt, Invoices • Inspections Suppliers’ Products • Dealing with Poor Supply Quality • Expediting Suppliers’ Deliveries 5. Selecting the best suppliers 6. Certifying Suppliers 7. Taking Corrective Actions 8. Receiving inputs from Suppliers
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  19 11 stage SourcingProcess 1. Identify or re-evaluate needs 2. Define/evaluate user’s requirement 3. Make or buy decision 4. Type of purchase (rebuy/routine, modified rebuy or new buy) 5. Market Analysis 6. Identify possible suppliers 7. Pre-screen possible suppliers 8. Evaluate remaining suppliers base 9. Choose Supplier/Place PO 10. Deliver product/perform service 11. Post purchase/performance evaluation