Source Management on Supply Chain Management 3
By : Wibisono Adhi
The best sourcing strategy is to identify the best suppliers
from many varied points of view. Some points are needed to be considered.
Sourcing team has to discover how good the suppliers
are, knowing their capabilities and how they usually behave. It must be
suitable with company’s need and culture. The contracting method is also
important. Sourcing team need to choose and negotiate to use the best method, whether it is based on “spot price” or “open book”
approach. In order to minimize the risk, they have to make sure that there are risk/revenue sharing for high risk deal and joint
development to decline cost. The consideration of business risk and rewards
must be based on technology, supply, and sharing of technology (skill and
experiences, equipment, and Joint partnership). The most common criteria for
supplier selection are TQRDC (Technology, Quality, Reliability, Dependency, and
Cost). To compare one to other suppliers Q/C ratio is the most common technique
used.
The sourcing team brings
together diverse groups and views with a common goal to reach. They must have
“the everyone” points of view. The sourcing team mobilizes the organization based on structural order. Begin
with the development of opportunity & data, than continued by the development
of sourcing strategy, the evaluation of proposals, contract negotiation, plan
implementation, and finished with the validate & execute stage. They have
to make a life network and communicate it with business and functions
stakeholder.
The Execution of purchasing contract is generally undertaken
by operational roles. The contract must be accompanied by
a supply chain logistics agreement. It has to be
exhaustive, detail and understood by the local staff. The delivery performance
needs to be measured and get feedback from the supplier. The supply logistic
agreement needs to clearly explain how purchasing is
involved in supply performance evaluation. It is used to enforce
claims, re-negotiate contract renewal, and to drive improvement project on
suppliers. The other important question is definitely how purchasing and operations coordinate actions towards supplier (role of
quality of grey area and the sense of urgency).
Procurement has direct connection with company profit. Every
rupiah saved in purchasing improves company profit. Different with every Rupiah
of Sales which only affect the cost of sales. There are two approaches on
conducting the procurement. There are strategic and
operational approaches. The goals on strategic procurement is to define the
right place, right quality, the right quantity, right
time, right price, and right supply. On the other hand, the goals of
operational procurement are to manage the
uninterrupted flow of materials and services, manage the
cost of operational activities, and minimize inventory investment and
lost. The strategic procurement activities contain several strategic based
activities such as developing procurement strategy and aligning it with the
overall organizational strategy, assessing the supply market, gathering
information, identifying suitable supplier, selecting supplier, negotiate
company’s supply contract, evaluating supplier, manage critical commodities, manage
relationships with critical suppliers and the rest of company, monitoring
procurement performance, improving the procurement processes, developing an
electronic procurement system, and implement company’s best practices. Whereas,
the operational focused procurement activities are such as preparing forecast
with quantities and delivery times required, collecting demands, controlling
authorization issues, placing purchase orders, follow up purchase orders,
communicate with supplier, taking care of administration (delivery, tax and
regulatory issues and invoice), monitor the shipments, manage transaction with
supplier, source the item that are unique to the operating unit, generate and
forward material releases and provide suppliers performance feedback.
In order to maintain warehouse efficiency and meet the production
needs, different delivery practices can be used :
a.
Fixed
standard quantity with variable frequency (transport / packaging optimization
(pallet, full truck).
b.
Fixed
delivery frequency with variable quantity (for ex. Weekly delivery to replenish
past consumption).
c.
Just-In-Time
/ Just-In-Sequence (Deliveries triggered by “kanban”, production sequence).
d.
Consignment
stock (stock belongs to supplier until consumed).
e.
Vendor-Managed
Inventory (Delivery managed by supplier to keep stock between agreed min and
max).
f.
Consignment
& VMI (combination of the two practices above, more frequent than individually)
g.
External
(usually outsource) storage for inbound materials, delivered on demand.
h.
Milk-Run
– Managed internally or externally.
In the selection of delivery practices, an ABC/XYZ matrix can
be used to determine classes of delivery methods. The ABC is to value the usage
of the item and XYZ is to state the frequency of usage. For example for a high
value item with frequent usage, it will be placed on AX box and daily JIT can
be suitable for this criteria. For BX box (medium value with frequent usage), a
weekly JIT will be compatible. In C* Boxes the operation has
to keep enough inventory, so a fixed quantity or fixed
frequency can be used. A similar approach using usage,
variables can be used to determine stocking policy.
