Chapter 3-Part 1 Lecture 3Chapter 3-Part 2 Lecture 7SCM 3301 1st EditionOutline of Previous LectureChapter 3-Part 1 Lecture 3Reasons for Global Sourcing -QualityCostDelivery PerformancePotential Challenges –LogisticsCommunicationPolitical StabilityNote: >50% supply needs sourced globally!When you go from a domestic source to an international source, you save 20% on the price.Benefits of Establishing Supplier Relationships- Flexibility in delivery- Improved quality- Transparency in communication of information- Expedited material flow- Strategic advantage- Best practices sharingNote: Stronger supplier partnerships are the key to competitive advantage.Keys to Successful Partnerships- Building Trust- Shared Vision and Objectives- Personal Relationships- Mutual Benefits and Needs (“Win-Win”)- Commitment and Top Management Support- Change Management- Information Sharing (formal and informal)- Commitment to Continuous Improvement- Performance Metrics“You can not manage, what you can not measure.”Supplier Development Programs Designed to Improve a Supplier1SCM 3301 1st Edition- Local supplier development Moga, India; Nestle Creating Shared ValueSupplier Evaluation Measures- Safety: Internal, External- Sustainability: Green, Ethics- Quality: Consistency, Conformance, Service- Delivery: Reliability, Speed, Capacity- Cost: Total Cost of Ownership- Business MetricsMeasures weighted depending on importance to the organization.Weighted Criteria Evaluation System- Supplier Overall Rating (0-100)- Category Score (0-100), Weights (.05-.25)o Unacceptable (less than 50) Supplier not usedo Conditional (Between 50 and 70) Supplier performance needed- timeframeo Certified (Between 70 and 90) Routine supplier audits performedo Preferred (Greater than 90) Less frequent supplier audits requiredCurrent LectureChapter 3-Part 2 Lecture 7Supplier Certification Process- The process for evaluating key suppliers with a goal of eliminating incoming inspectionso Percent incoming lot rejectionso Percent incoming product defectiveo Percent on-timeo Quality performance measureso Supplier process visibilityo Documentation of processesStandardized Supplier Certification2SCM 3301 1st EditionISO 9000- Management & quality standards in design, development, production, installation & service.- Companies wanting to sell in the global market seek ISO 9000 certification.ISO 14000- A family of standards for environmental management.- The benefits include reduced energy consumption, environmental liability, waste & pollution, and improved community goodwill.Supplier Recognition Programs- Reinforces the performance of suppliers- Encourages improvement with all suppliers- Builds trust and collaboration between companies- Establishes best practices and benchmarking for supplier baseSupplier Relationship Management (SRM)- Refers to the extension of procurement processes to include:o Automation of routine transactionso Integration with finance and productiono Visibility of information and process flowso Consolidation of informationo Management reporting supporto Supplier measurement supporto AnalyticsAnalytics- Data Driven Decision Making- Spend Analysis- Maverick Spend (Internal) +- Non-Contract Compliance (External)=- Spend