This program should include ongoing, systematic supplier development and integration, including joint projects, training, inventory coordination, incentives, and penalties. Following the final selection, a joint program should be initiated to solve supplier problems, eliminate deficiencies, and establish an open relationship that includes timely feedback and information sharing.
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Willingness to share benefits achieved through supply chain integrationĪfter the pool of potential suppliers has been reduced by a preliminary assessment, the remaining candidates should be subjected to in depth, on-site risk assessments conducted by a cross-functional team to identify strengths, weaknesses, and deficiencies. Senior management interest in achieving a sustainable competitive advantage for the supply chain
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Willingness to develop jointly seamless processes and eliminate non-value-added activities at the interfaces between customer and supplierĭemonstrated financial strength and profitabilityĬompetitive technology and process capabilitiesĭemonstrated compliance with government regulations Although some suppliers are selected over other qualified suppliers based on the need to fill government-mandated quotas, most are selected based on combinations of the following factors:Ī track record of demonstrated cost competitiveness and on-time deliveryĬustomer support and logistics capabilities Suppliers should be carefully selected because the company's commitment, in many cases, will be to a long-term, intimate business relationship. Performance metrics should be established at this stage as a means of assessing candidates and tracking future supplier performance. Company needs should be mapped against the capabilities of potential suppliers. If the decision is made to use outside suppliers, the next step involves a worldwide search for competitive suppliers based on the identified capability needs. To achieve these objectives a company must first determine its current and future capability, technology, and capacity needs, map them against its current capabilities, and then assess whether the resulting gaps can best be filled through internal development, acquisitions, or outside suppliers. The factors critical to success are then identified, and metrics for evaluating progress and performance are suggested.Ĭompetitiveness. This chapter begins with the topic of supplier selection, introduces approaches to integration, discusses management of the integration process, and identifies management tools that are becoming available to support this effort. From there, the integration effort expands outward. An analysis of in-bound logistics can often reveal opportunities for savings.
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The first step is to make in-house improvements, such as inventory reductions that can reduce working capital, warehousing, and transportation costs. Many companies adopt an approach that begins at home and gradually works outward through the supply chain. The integration process can be expensive and is, in many respects, an exercise in resource allocation. Based on strategies, needs, and potential returns, different priorities and approaches may be assigned to the supply chains of different segments of a business. Integrating a supply chain is an incremental process, with priority typically given to the highest potential returns on investment.