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ISQA 439

ISQA 439. 2 for 1. Strategic Planning. Strategic Planning. Mission Statement Vision Statement Strategies Long-Term Action Plan Commits Organizational Resources Creates Competitive Advantage Performance Measures. Strategic Planning Steps. Developing the Vision

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ISQA 439

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  1. ISQA 439 2 for 1

  2. Strategic Planning

  3. Strategic Planning • Mission Statement • Vision Statement • Strategies • Long-Term Action Plan • Commits Organizational Resources • Creates Competitive Advantage • Performance Measures

  4. Strategic Planning Steps • Developing the Vision • Translating the Vision into Goals • Developing the Strategies to Achieve the Goals • Selling the Strategies • Executing the Strategies • Tracking Progress

  5. Development of Commodity and Supplier Strategies • Identify Critical Elements • Cost Drivers • Critical Materials • Key Technologies • Determine How to Manage • The Commodity • Each Supplier Within the Commodity

  6. Commodity Strategy • Industry Standard or Custom • Criticality • Market Study / Commodity Study • Global • Domestic

  7. Commodity Strategy • Sourcing Strategy • Single or Multiple Sources • Price/Cost Analysis • Contract Type • Automation • Logistics • Inventory • Transportation • Supplier Evaluations

  8. Supplier Strategy • Formal Analysis • Capability, Capacity, etc. • Present Status, Desired Status, Methodology • Performance Improvements • Additional Services • Administrative Improvements • Consignments, etc. • What Must WE Do?

  9. Strategy Development Example: Nuts and Bolts • Critical Elements • Quality (Counterfeit) • Availability • Minimize Administrative Cost • Strategy • Single Source • Local Supplier • Or Consigned Inventory • Known Manufacturer • VMI

  10. Strategy Development Example • Decide How to Manage Specific Supplier • Goals / Objectives for That Supplier • Develop Specific Performance Measures to Track Supplier Improvement • Invoice Accuracy • Prompt Backorder Clearance • On Time Delivery • Supplier Forecasting

  11. Forecasting as a Strategy Foundation • Volume Requirements • Timing • Locations • Future Requirements • Technology Impacts

  12. Technology

  13. Alphabet Soup • ERP • MRP • MIS • CRM • SRM • WMS • TMS • RFID • GPS • EDI • CAD • CPFR • ASRS

  14. RFID http://www.youtube.com/watch?v=4Zj7txoDxbE

  15. Ladar Forklift • http://www.jervisbwebb.com/Products/automatic_trailer_loading.aspx?pid=190&qs=1_6_

  16. ISQA 4/539 Specifications Sourcing Strategy Supplier Selection

  17. Specifications • Responsibility • Purchasing’s Role • How Described • Descriptive • Design • Performance • Statements of Work

  18. Specification Provides • Performance Requirements • Parameters Which Describe Including Units of Measure • Materials to be Used • Production Processes • Inspection, Test Requirements • Reference to Other Documents or Specifications • Mil Specs, Drawings, SAE Specs, etc.

  19. Elements of Specifications • Intended Use, Quality Requirements • Standardization • Value Analysis • Internal Negotiation Opportunities

  20. Quality • How would you define ‘Quality’?

  21. Quality • Definitions • Quality - Quality Control • PROCESS Controls • Rule of 10 • Quality and Multiple Sourcing • Supplier Certification

  22. Quality • Is Quality Free? • Can We Achieve 100% Quality?

  23. Total Quality Management • TQM Principles • Know/Understand Customers and Requirements • Satisfy/Delight Customers • Continuous Improvement Elements of TQM • Process Identification • Process Mapping • Process Simplification • Process Controls • Track - Monitor • Continuous Improvement • TQM and Six Sigma

  24. Value Analysis • Begun by Larry Miles at GE • Basic Objectives • Reduce Cost While Maintaining Function • or • Increase Function While Maintaining Cost • NEVER Cheapen Product While Reducing Cost • Focus is Always on Function and Value

  25. Value Analysis, cont. • Exploded View Parts Diagram • Question Each Part • Really Necessary? • An Industry Standard? • If Custom, • of Most Suitable Material? • Do Specs Reflect Need • Manufactured in Most Efficient Way? • Assembled in Most Efficient Way? • Does Each Component “Match” Overall Design? • An Example

  26. Standardization • Internal • Processes • Materials • Equipment • External • Industry Standards (Materials) • Industrial Standardization (SAE) • Multi-Industry (ANSI, ASTM) • International (ISO, Metrics)

  27. Standardization • Industry Standards • Company Standardization • Impacts on Inventory • Impacts on Purchasing • Impacts on Maintenance and Repair • Impacts on Quality • Implementation

  28. Why Involve Purchasing in the Design Process? • Define Requirements • Generic or Proprietary • Determine Availability and Lead Times • Examine Alternative Goods • Make/Buy Analysis • Minimize Total Cost • Early Supplier Involvement

  29. Suppliers and New Product Development • Create Competitive Advantage • Early Supplier Involvement • Supplier Expertise and Cost • Latest Technology • Faster to Market • Improved Quality • Fewer Changes, Change Orders

  30. Sourcing Strategies

  31. General Supply Chain Strategies Supply Base Reduction Supply Base Addition Supplier Development Inventory Strategies VMI Consignments Lean Operations Simplification Standardization Automation Risk Management Identification Mitigation Cost Reduction Administrative Commodities Services Leveraging Technology Lead Time Management Sustainability

  32. Sourcing Strategies • Industry Standard or Custom? • Criticality • Term of Agreement • Automation • Risk Mitigation • Sustainability

  33. Supplier Selection

  34. Dave Hoover’s Purchasing Axioms • A Firm Has The Suppliers It Deserves • A Supplier Will Only Be As Good As It Has To Be • The Best Way To Get More From Suppliers Is To Ask For It

  35. Supplier Selection • Goal: Long Term, Close Relationship with World Class Suppliers • Create Competitive Advantage from Supply Base • Capabilities • Performance • Future Considerations

  36. Capabilities • Financial Capabilities • Today • To Grow With Us • Technical Capabilities • Engineering • Buyer Support • Quality Process Controls • Manufacturing Capabilities • Production Capabilities • Capacity

  37. Supplier Characteristics • Proximity • Access to Infrastructure • Union Shop • Forecasting • Others • Terms (2/10, Net 30) • Risk Profile • Sustainability

  38. Risk and Sustainability Supply Chain Risk Sustainability Environmental Non-Renewable Resource Energy Consumption Emissions Hazardous Materials Social Responsibility Ethics Gender Equity Living Wage Labor and Relationships Organizational Profitability, LT Viability Customer Perceptions Customer Relationships • External • Governmental • Infrastructure • Supplier • Logistical • Terrorism • Natural Disasters • Accidents • Internal • Policies • Administrative • Operational • Organizational • Ethics

  39. Risk Prevention/Remediation • Ts and Cs • Safety Stock • Safety Lead Time • Additional Suppliers • Geographic Dispersion • Business Continuity • Ours • Suppliers • Training • ISO 31000 2009 • Supply Chain Mapping • Forecasting • Project Management • Review Supplier Selection Process • Supplier Visits • Daily Diligence

  40. Supplier Selection Process • Clear Specification • Marketplace Surveys • Identification of Available Suppliers • Determining Supplier Qualifications • Make/Buy Analysis • Selecting from Qualified Suppliers • Reverse Auctions

  41. Supply Base Analysis • Industry Average Numbers of Suppliers • How Many Suppliers Do You Have? • How Many Suppliers Do You NEED? • Risk • View Suppliers as Investments • Is the Supplier Making Money For You? • Is the Supplier a Good Return on Your Investment • Sustainability

  42. Supply Base Reduction • Maximize Leverage • Increase Quality and Reduce Variability • Utilization of Resources • Minimization of Administrative Cost • Create Stable Supply Base • Develop Synergy • Create Competitive Advantage Through Supply Base • Manage Risk

  43. Supplier Performance • Quality • On Time Delivery • Flexibility • Problem Resolution • Productivity Improvement • Their Supplier Management Program • Progress Toward Certification • Other Important Criteria

  44. Buyer Performance • Forecast Accurately • Share Information • Minimize Rush Orders and Schedule Changes • Focus on Total Cost - Not Price • Pay Bills On Time • Manage Supplier Relationships

  45. Supplier Visits • Housekeeping • Inventories • Order Processing Procedure • Quality Processes • Their Purchasing Process • Financial Statements • Other Capabilities • Engineering, Logistics, Technology • Logistics, Process Improvement • Credit Policies and Terms

  46. Other Supplier Selection Criteria • Social Goals • Minority/Women Owned • Small Business • Buying Local (Governmental Set-Asides) • Manufacturer vs Distributor • Environmental Considerations • Supply Chain Risk

  47. Intangibles • Intuition • Personality Types • Corporate Philosophy • Reputation • References

  48. Global Sourcing

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