1 / 19

How many suppliers does your business need?

How many suppliers does your business need?. Charles Yung, Stephen Nolan, Kacie Satsuma, Lars Johansen, Mark Klein. Overall chain options. Strategic Supplier – Have one or few inputs Can reduce costs Transaction costs Long term contracts Building relationships. Overall chain options cont.

ilyssa
Télécharger la présentation

How many suppliers does your business need?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. How many suppliers does your business need? Charles Yung, Stephen Nolan, Kacie Satsuma, Lars Johansen, Mark Klein

  2. Overall chain options • Strategic Supplier – Have one or few inputs • Can reduce costs • Transaction costs • Long term contracts • Building relationships

  3. Overall chain options cont. • Several key Suppliers • The component is somewhat important to the company’s core competencies. • It is value adding to customer.

  4. Overall chain options cont. • Many suppliers / Auction • Lots of options • Decisions made on cost/s

  5. Criteria for choosing suppliers cont. • Core competency / strategic • Criticality • Aligns with mission • Standard or customized • Impact on revenue • Transaction costs

  6. Criteria for choosing suppliers cont. • Volume / Value • Number of Suppliers

  7. So How Many Suppliers Do You Choose? • Single Sourcing an input. • Advantages: • Cost • Quality • Information  Building relationships • Cooperative, and coordinated • Loyalty  Rolling Contracts • Improved efficiency – greater product consistency

  8. Single Sourcing cont. • Disadvantages: • Resilience • Ex. Honda heating and air conditioners • Globalization of Supply Chain • Greater risk from remote suppliers *Note: Both Fraser and Tarantino claim that “a general rule of thumb to follow is to avoid single-sourcing for any critical path part.”

  9. SC Understanding • Mapping Tools • Pinch points -Bottlenecks -Limited Capacity -No Alternatives SRM Software -Analytics & Replenishment

  10. Suggestions: • Lead Supplier w/ alternatives • Examples • Experience from Steven and Lars • Multiple Sites • Single Source each location

  11. Supplier Comparison

  12. Most Powerful = Agility • Velocity • Shorter Pipelines • Visibility • Decreased and Demand Driven Supply Chain • Decreases Risk through shared info. • Enabled by: Culture of risk mitigation • supply chain executive

  13. The Alternative: Multiple Sourcing • Advantage: • Plays one supplier against another • Increased Competition • Disadvantage: • Likely requires longer negotiation times • May delay / disturb production schedules • Decrease Communication Flow

  14. The Decision Tree ApproachThe Goal is to determine the optimal value of “n” nS  n suppliers, n=1, 2 P(D)  probability of down Pn(D)  probability that all suppliers are down L  financial loss caused by disasters of all suppliers down C(n)  operating cost of n suppliers

  15. If you want this explained come see me, for the rest of you… lets make good use of our time. Linear operating cost: The Brain Teaser: Making the decision Mathematically Non-Linear operating cost:

  16. Conclusions: • Should I single source or multi-source? • Single source (Strategic Supplier): • Commodity • Not critical • Standard – cheap and easy • High volume • Many suppliers to choose from

  17. Conclusions: • Multi source (But few) • Critical components • Multi source (Many) • Products where availability cannot be assured by supplier

  18. References • Anderson, Alex. "The balanced supply base.." MSI 21(2003): 41. • Berger, Paul. "How many suppliers are best? A decision-analysis approach." Omega 32(2004): 9-15. • ---. "Single versus multiple sourcing in the presence of risks." Journal of the Operationsl Research Society 57(2006): 250-261. • Christopher, Martin. "Creating Resilient Supply Chains." (2004). 14 May 2006 <http://www.som.cranfield.ac.uk/som/scr/downloads/ExelAdvantage.pdf.>. • Cooke, James. "A case for sole sourcing." Logistics Management 43(2004): 32-35. • Morgan, Mick. "Single-Sourcing Keeps It Simple." Caterer & Hotelkeeper 193(2004): 73.

  19. ¿Questions?

More Related