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Importance of supplier management
Importance of supplier management

A supplier is an enterprise or an individual who provides various needed resources to an enterprise and its competitors, including raw materials, equipment, energy and services. The following is the importance of supplier management that I have compiled for you. Welcome to share.

Importance of supplier management

The main reason for the sharp increase in the proportion of procurement and procurement costs is that modern manufacturing enterprises increasingly rely on suppliers to provide value-added parts for their finished products. Most of the value of enterprise end products comes from suppliers. Therefore, manufacturing enterprises need a better supplier relationship management (SRM) system when seeking cost control and competitive advantage. An effective supplier management system helps enterprises to strengthen communication with suppliers, establish more effective cooperative relations, and also help enterprises to improve production process control, conduct more perfect supplier analysis, select and optimize supplier selection decisions.

Demand analysis

Accurate and timely demand analysis is the premise of enterprise decision-making, as well as in procurement. With the professional development of supplier team, accurate and timely procurement can save money and gain purchasing advantage in the market. Procurement should not only face production, but also meet the requirements of the market and customers. SRM can integrate internal and external resources, establish efficient organization and procurement, strategically deploy the requirements of its own business key materials or services, and reduce unexpected problems in daily production and operation.

Classification and selection of suppliers

We should determine the characteristics of suppliers that conform to the company's strategy, evaluate all suppliers, and classify suppliers into transactional, strategic and large-value types. Generally speaking, transaction type refers to suppliers with small transaction amount and large quantity; Strategic suppliers refers to a few suppliers necessary for the company's strategic development; Large-value suppliers refer to suppliers with huge transaction amount and general strategic significance. The purpose of supplier classification is to formulate different management methods for different types of suppliers and realize effective management. This change in management style should be supported by full communication with all stakeholders.

The evaluation and selection of suppliers should consider many factors, including: strength (technology, ability, competitiveness, etc. ); Response speed (sales service, quality response speed, response to prevention problems and interest in improvement work, etc.). ); Quality management (efficiency, product design and quality assurance procedures, etc.). ); Time control (delivery time, whether delivery is on time, etc.). ); Cost control (design cost, manufacturing cost, maintenance cost, transportation cost, storage cost, etc.). ). SRM can comprehensively inspect all aspects of suppliers and help enterprises to make accurate classification and selection.

Establish a cooperative relationship with suppliers

To determine what kind of relationship and development strategy to adopt for various suppliers can be carried out through several steps: first, reach an understanding with strategic suppliers and large-scale growth suppliers in terms of overall objectives, procurement category objectives, phased evaluation, information sharing and important measures, and record them. Secondly, conduct * * * the same process improvement training meeting with relevant departments to find out the potential improvement areas. Third, define the responsibility of each supplier and clarify its status and role. Finally, the two sides reached a framework agreement to establish a supplier relationship and defined the relationship objectives. The work that can be done in this part includes: establishing a supplier management system; Supplier performance management; Contract relationship management of suppliers; Design and implementation of purchasing process. SRM can make the procurement process transparent, improve efficiency and responsiveness, reduce turnaround time and improve the satisfaction of buyers and sellers.

Negotiate and purchase with suppliers

According to the previous steps, we can reach an agreement with the supplier through negotiation. SRM can help enterprises to track important supplier performance data, such as changes in supplier funds, so as to negotiate. SRM can also realize some internal and external functions of the company in the procurement process. The internal functions of the company include: purchasing information management; Training management and performance management of procurement personnel; Real-time query of supplier information; Internal application and online approval. The functions outside the company include (with suppliers): online ordering; Electronic payment; Online bidding and so on.

Supplier performance evaluation

Supplier performance evaluation is an important link in the whole supplier relationship management. It is not only a measure of the implementation effect of cooperation between the two parties at a certain stage, but also the basis for the adjustment of supplier relations in the next step. SRM can help enterprises make supplier evaluation process and provide feedback to suppliers regularly. The performance evaluation process of suppliers can be evaluated from key aspects such as technology, quality, response, delivery, cost and performance of contract terms, and can also include the specific performance evaluation of relevant expert groups. The purpose of the evaluation process is to provide an open communication channel for both parties to enhance their relationship. At the same time, suppliers can also give feedback to enterprises and give their views on enterprises from the perspective of customers. These evaluation information will help to improve their business relationship, thus improving the business operation of the enterprise itself.

classify

Supplier classification is an important part of supplier system management. It determines which suppliers you want to cooperate with strategically, which businesses you want to increase, which you want to maintain the status quo, which you want to actively eliminate and which you want to determine. Accordingly, suppliers can be divided into strategic suppliers, preferred suppliers, temporary suppliers, passive, active and undetermined suppliers. Of course, the division and definition of different companies may be slightly different.

Generally speaking, transaction type refers to suppliers with small transaction amount and large quantity;

Strategic suppliers refers to a few suppliers necessary for the company's strategic development;

Large-value suppliers refer to suppliers with huge transaction amount and general strategic significance. ,

Strategic suppliers refers to the suppliers with strategic significance to the company. For example, they provide products with complex technology and long production cycle, and they may be the only suppliers. Their existence is vital to the survival of the company. The cost of changing suppliers is very high, and some of them are even impossible. We should take a long-term view and establish a long-term relationship with such suppliers.

Products or services provided by preferred suppliers can be obtained from other suppliers, but enterprises tend to use preferred suppliers. This is the fundamental difference with strategic suppliers. The preferred supplier is based on the overall performance of the supplier, such as price, quality, delivery, technology, service, asset management, process management and personnel management. Obtained preferential supplier treatment. For example, many suppliers can make mechanical parts, but the company gives priority to supplier A and gives this supplier new business, which is based on the overall performance of A.

Generally speaking, it is the first time for suppliers to provide products or services to the company, and they don't know much about their performance, so they are given a year to inspect. After the inspection, either upgrade to the preferred supplier or demote to the eliminated supplier. Of course, for priority suppliers, if their performance declines within a certain period of time, they can also be adjusted to inspect suppliers, "stay in school for observation", give them a chance to improve, and then either upgrade or downgrade.

Passive elimination of suppliers should not get new products. However, the company has not actively transferred its existing business. As the main product completes its life cycle, such suppliers will naturally be eliminated. Treat such suppliers rationally. If the performance is ok, don't upset the balance. From the supplier's point of view, the product is already in production, and the additional investment is not much. I am happy to continue to support you; From the buyer's point of view, the cost of re-selecting suppliers may be too high. In this way, both sides realize that it is best to maintain the status quo. Of course, in some cases, products may become "chicken ribs", suppliers are not very profitable (or unwilling to continue to supply), and buyers are not willing to re-identify new suppliers. Then, suppliers have more power, pay less attention to your products, and their performance may not be ideal. This is definitely a challenge for buyers. It is more important to maintain a relatively good relationship.

Taking the initiative to eliminate suppliers will not only fail to get new business, but also have to move existing business. This is the most extreme example of supplier management. For such suppliers, we must prevent the situation of "larger foe". Because once the supplier knows that his existing business will be removed, he may take extreme measures, either raising the price, stopping the supply, or the performance will get worse. So, before pulling the trigger, make sure that your other supply channel has been opened.

Unconfirmed supplier's identity has not been determined. After analysis and evaluation, it is either upgraded to inspect suppliers or defined as passive elimination or active elimination of suppliers.

Another purpose of supplier classification is internal communication. For example, give new business to strategic or priority suppliers, and then consider investigating suppliers, and never eliminate suppliers. These should be written policies and communicated to all departments of the company. Of course, other departments should be consulted when classifying suppliers. But once a decision is made, the whole company must carry it out. Another example is that a company should adopt an approved supplier list (approved supplier list; Supplier of AVL). The supplier list shall be based on the supplier classification system. Of course, as a supplier management department, we must ensure that all kinds of suppliers can meet the company's expectations. Otherwise, the reasonable expectations of internal customers cannot be met, and the existing supplier policy may not be implemented. Remember that "to solve problems, you can't just make policies."

choose

Suppliers and buyers choose suppliers to establish strategic partnership, control the risk of their relationship, and establish a dynamic supplier evaluation system, which are common concerns of buyers in China. With the increasing proportion of purchase amount in sales revenue, purchase has gradually become the key factor to determine the success or failure of electronic manufacturers. As the basis and premise of the normal operation of supply chain, supplier evaluation and selection is becoming the hottest topic among enterprises.

There are many criteria for selecting suppliers, which can be divided into short-term criteria and long-term criteria according to the length of time. When determining the criteria for selecting suppliers, we must consider short-term criteria and long-term criteria, and combine them to make the selection criteria more comprehensive, and then use this criteria to evaluate suppliers and finally find the ideal supplier.

Short-term standard

The short-term criteria for suppliers to choose suppliers mainly include: appropriate product quality, low price level, timely delivery and good overall service level.

Appropriate commodity quality

The quality of purchased goods meets the requirements of purchasing units, which is the first condition that purchasing units should consider when purchasing goods. For goods with poor quality and low price, although the procurement cost is low, it will lead to the increase of the total cost of the enterprise. Because unqualified products often affect the continuity of production and the quality of finished products in the process of putting them into use, which will eventually be reflected in the total cost.

On the contrary, high quality does not mean that the purchased goods are suitable for enterprise production. If the quality is too high, far exceeding the quality required for production, it is also a waste for enterprises. Therefore, the quality requirements in procurement are in line with the production needs of enterprises, and it is wrong to ask too much or too little.

cut the cost

Supplier cost includes not only the purchase price, but also all the expenses incurred in using raw materials or parts. Low purchase price is an important condition for selecting suppliers. But the supplier with the lowest price is not necessarily the most suitable, because if the product quality and delivery time can't meet the requirements, or the transportation cost increases due to geographical distance, the total cost will increase, so the lowest total cost is an important factor to consider when selecting suppliers.

Timely delivery

Whether the supplier can organize the supply according to the agreed delivery deadline and delivery conditions directly affects the continuity of enterprise production, so the delivery time is also one of the factors to be considered when selecting suppliers.

Enterprises should pay attention to two aspects when considering the delivery time: first, reduce the inventory quantity of raw materials or spare parts used in production, thus reducing the funds occupied by inventory and other inventory-related expenses;

The second is to reduce the risk of material breakage and shutdown and ensure the continuity of production. Combining these two aspects, the requirements for timely delivery should be like this: users should deliver it when they need it, not late or early, and very punctual.

The overall service level is good.

The overall service level of the supplier refers to the ability and attitude of each operation link within the supplier to cooperate with the buyer. The main indicators for evaluating the overall service level of suppliers are as follows. If the buyer does not know much about how to use the purchased goods, the supplier is responsible for training the buyer on the use of the products sold.

The training of suppliers before and after selling products will also greatly affect the buyer's choice of suppliers.

Installation service: through installation service, the buyer can shorten the production time or the time required for the equipment to be put into operation. Maintenance service. Free maintenance is to protect the interests of the buyer, but also put forward higher quality requirements for the products provided by suppliers. In this way, suppliers will try their best to improve product quality and avoid or reduce the occurrence of free maintenance;

Technical support service: If suppliers provide corresponding technical support to buyers, they can solve problems for buyers and sell their own products at the same time. For example, in the information age, products are updated very quickly, and technical support such as free or paid upgrade services provided by suppliers is very attractive to buyers, which also reflects the competitiveness of suppliers.

Long-term standard

The long-term criteria for selecting suppliers are mainly to evaluate whether suppliers can ensure long-term stable supply, whether their production capacity can be relatively expanded with the growth of the company, whether the future development direction of their products can meet the needs of the company, and whether they have the willingness to cooperate for a long time. The long-term criteria for selecting suppliers mainly consider the following four aspects: whether the internal organization of suppliers is perfect or not

The internal organization and management of suppliers is related to the supply efficiency and service quality of future suppliers. If the supplier organization is set up in disorder, the efficiency and quality of procurement will decline, and even the supply activities cannot be completed in time and with high quality because of wrangling between supplier departments.

Whether the supplier quality management system is sound.

When evaluating whether the supplier meets the requirements, one of the important links is to see whether the supplier adopts the corresponding quality system, such as whether the quality and management have passed the IS09000 quality system certification, whether the internal personnel have completed all the work according to the quality system to the letter, and whether the quality level has reached the internationally recognized IS09000 requirements.

Whether the supplier's internal machinery and equipment is advanced and how to maintain it can be seen from the old and new degree and maintenance of the supplier's machinery and equipment that managers attach importance to the quality of production machines and products and the quality of internal management. If the machinery and equipment in the workshop are old and there is a lot of dust and oil on the machine, it is hard to imagine that the enterprise can produce qualified products. Whether the financial situation of the supplier is stable.

The financial situation of suppliers directly affects their delivery and performance. If the supplier has financial problems and the turnover is not working well, it will affect the supply and then affect the production of the enterprise, and even lead to a serious crisis of production stoppage.

Different enterprises will take different steps when choosing suppliers, but the basic steps should include the following aspects.

Establish an evaluation team

Enterprises must establish a team to control and implement supplier evaluation. Team members come from purchasing, production, finance, technology, marketing and other departments. Team members must have team spirit and certain professional skills. The evaluation team must be supported by the senior leaders of manufacturers and suppliers.

Determine the list of all suppliers.

Through the supplier information database, as well as the media channels such as purchasing personnel, sales personnel or industry magazines and websites, we can understand the suppliers who can provide the required items in the market.

List the evaluation indicators and determine the weight.

The above criteria for selecting suppliers have been discussed in detail. In short-term standards and long-term standards, the importance of each evaluation index is different for different enterprises. Therefore, for different enterprises, the design of evaluation index weight should be different. One of the main tasks of evaluating suppliers is to investigate and collect information about suppliers' production and operation. On the basis of collecting supplier information, certain tools and technical methods can be used.

Selective evaluation

The evaluation of suppliers includes two procedures: first, preliminary screening of suppliers; The second is the on-the-spot investigation of suppliers.

In the preliminary screening of suppliers, the first task is to use a unified standard supplier registration form to manage the information provided by suppliers.

This information should include the registered place, registered capital, major shareholder structure, production site, equipment, personnel, main products, major customers and production capacity of the supplier. By analyzing this information, we can evaluate its technical ability, supply stability, resource reliability and comprehensive competitiveness.

Among these suppliers, the list of suppliers can be obtained after eliminating the suppliers that are obviously not suitable for further cooperation. Next, it is very important to arrange field visits to suppliers. If necessary, the quality department and process engineers can be invited to participate in the audit team, which not only brings professional knowledge and experience, but also contributes to internal communication and coordination.

After comprehensively considering various important factors, we can give each supplier a comprehensive score and select qualified suppliers.

80/20 Rule/Pareto Principle

As a universal law, this phenomenon also exists in commercial procurement. 20% of the purchased items account for 80% of the total purchase value, and the remaining 80% of the purchased items account for 20% of the total purchase value. On this basis, suppliers can be divided into key suppliers and ordinary suppliers. The former accounts for 20% in quantity and 80% in supply value, and the latter is the same.

Items provided by key suppliers are generally strategic items of enterprises or items that need to be purchased centrally, such as engines, transmissions needed by automobile factories and color picture tubes needed by TV manufacturers. Purchasing enterprises should cooperate with them with 80% energy to ensure the production of their own products. The items provided by general suppliers have little influence on the production and operation of enterprises, such as office supplies and maintenance spare parts. Enterprises only need to follow up the delivery with 20% energy.

Of course, the actual situation is not so detailed, and the relationship between February 28 and 28 is not static. For laymen, this is also a revelation: if you want to gain respect, you have to use 80% of your energy to squeeze into the 20% of the people on weekdays.

Attention problem

In the case of the same quotation and the same delivery commitment, we should first choose those suppliers with good corporate image and strong strength. If this supplier has provided products to some brand enterprises and has been recognized by these brand enterprises, then it should undoubtedly be the best reference when choosing. Otherwise, the supplier should not be selected. For example, in 1992, a large number of cheap Yugoslav cars flooded into the United States. Many people bought Yugo cars the first time they heard about it, but those who bought Yugo cars did not get any service. For these car buyers, if they can choose a supplier who already has a certain reputation and strength, they can avoid such losses.

Select a supplier.

Exclusive suppliers should be avoided. Many enterprises rely too much on the same supplier for some important materials, which often leads to suppliers controlling the purchase price and putting great pressure on buyers. At this point, the purchaser has fallen into the monopoly control of suppliers, and the enterprise has only one supplier. At this time, the purchaser is in a dilemma because the switching cost of changing suppliers is too high. For property buyers, we should try to avoid this situation. This requires buyers to choose as many suppliers as possible when purchasing similar goods, preferably 2~3 suppliers.

Avoid the lack of scientific selection methods

It is arbitrary, the management system of many domestic enterprises is not perfect, and there is a lack of scientific methods for selecting suppliers. In this way, when selecting suppliers for most projects, more reference is made to all kinds of written materials and self-introduction provided by suppliers themselves, as well as word-of-mouth in the market, or personal subjective imagination is used to select suppliers to participate in bidding, so human factors are relatively large when selecting suppliers. In addition, in terms of supplier selection criteria, the selection criteria of enterprises mostly focus on supplier's product quality, price, flexibility, punctual delivery, lead time and batch number. , there is no comprehensive supplier comprehensive evaluation index system, and it is impossible to make a comprehensive, specific and objective evaluation of suppliers.

Cooperation process

1, establish contact

Potential suppliers can contact us through various media. Send us the necessary information.

A) You can send us the necessary information through the message board recruited by popular commodity suppliers on the e-commerce website. Note: company name, city, main products, name, contact number, etc. , so that our staff can contact your company to discuss the details of cooperation in detail;

B) You can complete the necessary information by registering on the website;

C) You can establish direct contact with us by telephone and provide necessary information, such as company name, city, main products, name and contact number;

D) We can interview our purchasing department directly to get to know each other.

Step 2 check the sample

3. Cooperation and negotiation

The supplier sends basic information such as product name, price and sample to E-commerce A, and E-commerce A will communicate with the supplier in detail to decide the price and quantity of the purchased goods. And make a standard purchase contract.

Step 4 conclude a contract

The contracted supplier can become an associated supplier, and we will purchase according to the demand.

Step 5 place an order to buy

According to the contract, the supplier delivers the goods to E-commerce A Logistics Center on time, with good quality and quantity.

Step 6 sell

After the E-commerce A Logistics Center confirms the quantity and quality of the goods, the related goods can be sold overseas on the E-commerce A sales platform.

Step 7 solve

8. Improper handling

Index system

Quality (quality), Cost (cost), Service (service), technology (Asset), people and processes are collectively called QCDSTAP, which is the first letter of each English word. The first three indicators are common in all walks of life, relatively easy to count, hard indicators, and direct performance of supplier management performance; The latter three indicators are relatively difficult to quantify, and they are soft indicators, but they are fundamental to ensure the first three indicators. The service index is in the middle, which is an important performance of supplier value-added. The first three indicators are widely accepted and applied; The knowledge and understanding of other indicators is unbalanced, and their implementation can reflect the level of supplier management.

Quality index (quality)

Commonly used is the million defective rate. The advantage is simple and easy to operate, but the disadvantage is that the proportion of a screw is the same as that of an engine with a value of 10000 yuan, and any quality problem is considered as a defective product. Suppliers can improve the overall qualification rate by manipulating the qualification rate of simple low-value products. Standards vary greatly in different industries. For example, in the "multi-variety and small batch" industry with many types of procurement, the rate of defective products per million can reach 3000, which is the world level; Under the zero defect standard of mass processing industry, 80% of suppliers of this quality level have been eliminated.

Cost index (cost)

Commonly used is the annual price reduction. It should be noted that the difference in purchasing unit price is combined with the total price reduction. For example, if the price is reduced by 5% every year, the total cost will be saved by 2 million. In practice, the statistics of purchasing price difference is far more complicated than it seems, and I believe people who have experienced it feel the same way. For example, when the new price will take effect: the buyer will decide according to the delivery date, and the supplier will decide according to the order date-these must be agreed with the supplier in advance.

On-time delivery rate (on-time delivery)

On-time delivery rate pays equal attention to quality and cost. The concept is simple, but there are many calculation methods. For example, by piece, by order and by order line, the on-time delivery rate may be different. Generally use percentage. Disadvantages are the same as millions of defective products: the ratio of one screw to one engine is the same. People on the production line will say that products can't be assembled without one. That makes sense. However, from the perspective of supply management, a screw with a production cycle of only a few days is still different from an engine with a lead time of several months.

Service index (service)

The service cannot be intuitively counted. However, service is an important part of supplier value. Gene Richter, the late chief purchasing officer of IBM, was the winner of three "Gold Purchasing Awards" of American Purchasing magazine. Summing up his life experience, one thing is to affirm the service value of suppliers. This service is invisible in price, but obvious in value. For example, the same supplier, one with design ability, can make reasonable suggestions on the buyer's design, while the other can only process according to the drawings, and its value is self-evident.

Technical index (technology)

For industries with high technical requirements, the key for suppliers to add value is because they have unique technology. One of the tasks of the Supply Management Department is to assist the Development Department in drawing up a blueprint for technical development and finding suitable suppliers. This task is crucial to the success of the company in a few years, and should be an indicator of the supply management department and evaluated regularly. Unfortunately, the supply management department is often busy with daily expediting, quality and price negotiations, and has no energy and interest in the company's technology development, and chooses suppliers at will, laying a curse for various problems in a few years.

Asset management (assets)

Supply management directly affects the company's asset management, such as inventory turnover and cash flow. The supply management department can transfer the inventory to suppliers through VMI, but it is more important to reduce the inventory of the whole supply chain by improving the forecasting mechanism and procurement process. For example, in the semiconductor equipment manufacturing industry in the United States, due to the strong periodicity of the industry, the phenomenon of over-forecasting and over-production is very common, and large companies often write off tens of millions of dollars in inventory. In the end, the whole industry seems to have made a lot of money, but after deducting expired inventory, there is not much left. However, some companies have successfully reduced their inventories by improving their forecasting and purchasing mechanisms, thus becoming industry leaders. Therefore, the performance indicators of the supply management department should include the inventory turnover rate. This can also avoid over-purchasing for price concessions.

People and processes (people and processes)

For the supply management department, the quality of employees directly affects the performance of the whole department and is also the key to gain respect from other departments. School education, professional training, work experience and job rotation are all ways to improve the quality of employees. Based on this, indicators can be established, such as 100% employees receive professional training for one week every year, 50% employees are certified as professional purchasing managers, and the job-hopping rate is less than 2%.

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