Question

Explain the Purchasing Orientation and Involvement of Suppliers by outlining the Six (6) Wynstra Topological possible configurations of Purchasing participation in product development, the Nine (9) steps of Supplier Development and theTen (10) Aims and Objectives of Kyoryokyu Kai(Supplier Associations).                                                                                                                                        

Answer 1

The purchasers focus is short term and tactical. Buyers are rewarded in their ability to obtain the lowest price from suppliers for the given level of quality and availability.

Buyers use two tactics namely commoditization, where they imply that the product is a commodity and care only about price; and multi-sourcing where they use several sources and make them compete for share of the companies purchases.

Here buyers simultaneously seek quality improvements and cost reduction.

Buyers develop collaborative relationships with major suppliers and seek savings through better management of acquisition, conversion, and disposal costs. They encourage early supplier involvement in materials handling, inventory levels, just-in-time management, and even product design. They negotiate long-term contracts with major suppliers to ensure the timely flow of material.

They work closely with their manufacturing group on materials requirement planning (MRP) to make supplies arrive on time.

The kinetic and the topological aspects of the formation and structure of highly crosslinked polymers are considered.

A statistical model has been developed to describe the correlations between the chemical composition of the original substances and the production and topology of the network.

It is based on imagining the network to be a collection of rings connected to each other at random and having some size distribution.

The model has been analysed by the Monte Carlo method.

The structural topology is described by introducing a size distribution function for the rings.

The topology has been studied as a function of the vitrification conditions.

A topologically critical yield and a drop in the rate constant for the reaction has been found to exist in the network at near stoichiometric reagent ratios.

Purchasing involvement in product development is an area that has received increasing attention during the last few years. One reason for this is the growing awareness that the purchasing function can contribute to the firm's strategic position. A second reason is the increased focus on the need for product development to survive in a competitive environment. It is generally regarded that involving suppliers in the product development process can lead to shorter product development lead times, lower costs, and higher product quality. However, these advantages can only be achieved if supplier collaboration in product development projects is managed carefully. This includes, for example, motivating suppliers to collaborate and monitoring, interpreting, and distributing information on individual suppliers and supplier markets.

To achieve successful supplier involvement, the purchasing department often takes the role of a relationship manager. In this way, the purchasing department works as an intermediary, based on its knowledge about the supplier market regarding cost, quality, and availability of purchased materials and components. Therefore, purchasing must have the ability to communicate effectively in coordinating part of the work of suppliers. At the same time, it must be able to communicate the potential design contributions to design and technology experts internally.

One of the ways the purchasing department can be involved is by participation in the new product development project. Such participation can, for example, range from ad hoc, limited involvement to formal and extensive participation in the development team.

It is important to note that the purchasing department does not necessarily have to coordinate all of the contacts with the suppliers. Other internal functions, such as research and development (R&D) and manufacturing, may have considerable knowledge about supplier markets and can play an important role in coordinating the work of the involved suppliers. In practice, supplier involvement is never managed solely by the purchasing department, but is an integrated task that is carried out by several business functions, in varying constellations.

This article focuses exclusively on the role and participation of purchasers in product development teams. There are two reasons for this. First, many organizations are increasing the role of purchasing in product development, and second, relatively little research has been done on this specific topic. Both from a managerial and a scientific point of view, therefore, there seems to be a need for developing the body of knowledge on this issue.

This article examines how organizations involve the purchasing department in product development projects, i.e., how purchasing professionals are connected to a single product development project. The research identifies different possible configurations for this involvement and the factors that favour one configuration over another. Furthermore, there is a need for investigating the aspects that enable the purchasing professional to fulfil his or her role in a particular configuration. This will help in understanding which configuration is appropriate and feasible in a given situation. The research consists of a limited number of exploratory case studies; therefore, the findings and conclusions should be seen as tentative.

The aim of this article is to develop a conceptual framework for the different ways purchasing professionals can be involved in a development project. Based on an empirical investigation, a configuration typology is developed for purchasing involvement in the project. In addition, some factors that drive the need for and enable a differentiated approach toward involving the purchasing department in the product development project are identified based on a literature review. These factors are later applied to the case studies.

A CONFIGURATION TYPOLOGY TO INVOLVE PURCHASING IN PRODUCT DEVELOPMENT

In the literature, various organizational mechanisms have been proposed to coordinate the functional interfaces between different departments in an organization. These organizational mechanisms include direct contact between the people involved, full-time integrators, and special task forces or teams. Direct contact between people from different departments can be promoted by creating a special liaison role, i.e., a person, belonging to one of the involved departments, with the responsibility for communicating and achieving coordination between the departments. Full-time integrators are persons who have the responsibility to coordinate the activities of the involved departments. A project manager is an example of a full-time integrator. A task force is a temporary committee in which a representative of each of the involved departments discusses a certain issue. Teams are more permanent task forces, often used in conjunction with a full-time integrate or. As teams provide the highest degree of horizontal coordination in the organization0, product development activities are often carried out in project teams. These project teams do not necessarily have to be dedicated teams. When product development resources are limited, engineers tend to be involved in more than one project team at the same time.

These basic organizational mechanisms can provide a starting point for identifying possible configurations for involving purchasing in product development projects. Purchasing can, for example, become involved in the product development project based on direct contact between purchasers and developers or engineers. This situation signals that purchasing is not integrated into the project team but is involved on an ad hoc basis when engineers need support from the purchasing department.

Purchasers may be integrated in the product development project in several ways. One possibility is integration on a dedicated basis; that is, purchasers work full-time in the development project. Another possibility is integration of purchasers on a part-time basis, where purchasers also may perform operational purchasing activities or may be involved in other product development projects. When additional coordination of purchasing activities is needed, a liaison role can be created so that a purchaser takes a coordinating role in the project team. The purchasing coordinator role may be supported by other purchasers in the purchasing department. This situation resembles a combination of purchaser involvement on an ad hoc basis and a purchasing coordinator. The purchasing coordinator may also occur in combination with either the dedicated purchaser involvement or the more part-time involvement. The various purchasing involvement configurations provide different degrees of coordination.

Based on the above discussion, several configurations to involve purchasers in product development projects can be distinguished. Six possible configurations are presented in Figure 1 and discussed below.

A. Engineers contact purchasing specialists external to the project team on an ad hoc basis.

B. Purchasing specialists are integrated into the project team on a part-time basis and work closely with an engineer regarding specific parts/materials/technologies.

C. Purchasing specialists are integrated into the project team on a full-time basis (dedicated) and work closely with engineers regarding specific parts/materials/technologies.

D. A purchasing coordinator is added to the project team and takes care of coordinating purchasers external to the project team.

E. A purchasing coordinator is added to the project team in combination with purchasing specialists integrated in the project team on a part-time basis.

F. A purchasing coordinator is added to the project team in combination with purchasing specialists integrated in the project team on a full-time basis.

Configurations A, B, and C provide different opportunities for more in-depth and dedicated project involvement of purchasing specialists. For example, C will probably be chosen over A in situations where the individual project provides sufficient work for a single specialist to be involved full-time, e.g., in a project with many different parts using one technology. Full-time involvement is also more likely in projects where a high degree of collaborative product development takes place. In other words, increasing degrees of (project) innovation are expected to lead to increasing purchaser involvement.

On the other hand, configurations D, E, and F allow for a higher degree of coordination. For example, D is likely to be chosen over A in projects where many different components, technologies, or suppliers are being used. Project complexity, therefore, is expected to drive the need for purchasing coordinators. Also, when a project has a long duration (other things being equal), a purchasing project coordinator seems more appropriate.

Based on the above discussion, it appears that some configurations are more appropriate for certain projects than others. For example, when a project is lengthy and large, has a high degree of innovation, and has different technologies/products involved, part-time or dedicated integrated purchaser involvement with a coordinator (E and F) seems more appropriate than a configuration with an indirect purchaser involvement on an ad hoc basis.

Process of Supplier Development: 9 Steps | Management

Step # 1. Identify critical commodities for development:

This is a portfolio analysis which states that not all organisation required to go for vendor development which are already using sourcing facilities from word-class vendors or the outsourcing ratio is very small to total cost or total sales so that investment in vendor is neither strategically nor financially justifiable.

So, a corporate level executive committee should develop an assessment of the relative importance of all goods and services purchased by the company to identify where to focus any development efforts. This is called critical analysis of commodities related to vendor-development.

Step # 2. Identify vendors for critical commodity development:

After identifying commodities for development next step is to identify group of vendors of that particular critical commodity needed to be developed. A very well-known approach is parcto-analysis of existing Vendor performance.

Vendors who are failing to meet minimum performance objectives related to the quality-areas, delivery, cycle time, late-delivery time, total cost, service, safety or the climate and environment are targeted for analysis and appropriate development.

Step # 3. Formation of internal team:

Before approaching vendors and asking for improvements, it is important to develop internal cross-functional team for the initiative. Team members come from different departments like design, engineering, quality control.

Step # 4. Meeting with top-management of vendor:

After identify the suitable vendor for development and establishing a team, a team should approach the top management of vendor and establish key area decision related to strategic alignment, measurement and professionalism.

Strategic alignment not only means an internal business and technology alignment, but it should also focus on customer requirement. Vendor measurement includes a total cost focus, credibility and technical function. Professionalism involves setting a positive relationship, faster communication, trust development, provide expertise whenever required.

Step # 5. Identify opportunities for development:

At meetings with top management of vendor executive should identify area for improvement. Such areas are formed on the basis of customer’s expectations needs.

Step # 6. Define feasibility and viability:

After identifying the key areas for development opportunities should be evaluated in terms of feasibility and viability and it should include resources and time-requirements for carrying out the project and potential outcomes of this investment.

Step # 7. Joint agreement of project:

Once a potential improvement project is selected, both buyer and vendor must reach an agreement related to the specific measures that will indicate success. These measures may include percentage of quality improvement, percentage of cost saving shared, percentage of delivery or cycle time improvement, technology availability and system implementation stage. Once an agreement is reached, the project is rolled out hopefully according to schedule.

Step # 8. Monitoring progress of project:

Once a vendor development project has been initiated, progress must be monitored and tracked over time. This can be achieved by creating different monitoring means, process and standards for objectives, updating progress and in turn creating new or revised objectives based on progress till date.

Step # 9. Follow-up and modification:

By continuing the step (viii) we have required continuous follow-up and accordingly it may require modification in the original plan, additional resources, information or priorities depending upon the current situation at that time.

Kyoryoku Kai is, as the name suggests, a Japanese phrase that is used to describe any supplier association or groups of suppliers’ associations. A supplier association is used within the Lean business philosophy. In effect it is a group of the most important or vital suppliers to any particular company, who work jointly and together to develop more efficient supply methods with a base line aim of reducing production costs.

The concept originated within Japan and was and indeed still is used within the Toyota Production System. It has taken some time to develop and then refine these associations, some 50 years in the case of Toyota, but it is a strategy that offers tangible reward.

Structure of Kyoryoku Kai

Within any Kyoryoku Kai membership can be either direct or indirect suppliers. Although this may seem odd, can be important to include indirect suppliers sometimes, simply because they may be able to give input about parts they supply to other direct suppliers and how they interact or interface with each other.

Usually there are various levels of Kyoryoku Kai, with a very senior management team overseeing the whole framework. Then there may be an executive level, with a regional or more local section below that. Each level has more members, so the local or regional sections are the biggest.

Joint Working in Practice

In practice, the process of working together is much less daunting than it may seem to potential members. The Kyoryoku Kai facilitates for members to work on the basis of co-operation and trust, so members do not have to worry about other members being able to gain a competitive edge over them.

Detailed Objectives of Kyoryoku Kai

Although the overall aim of Kyoryoku Kai is to drive down the costs of production, there are several other objectives, all of which are important.

• Use the Kyoryoku Kai to make sure that waste is eliminated from all aspects of the supply chain, simply through increased communication between suppliers and the customer.

• Create a stable supply chain. The Kyoryoku Kai can ensure that the supply chain is made secure and less volatile than if the suppliers are simply left to work independently.

• Share best practices – facilitate sharing best practice and efficiency throughout the supply chain.

• Speed up the production process. Through a more stable and secure supply chain, combined with suppliers working together there can be less operational hold ups in the production process, because the ‘flow’ of supplies is not interrupted at any stage.

• Supply feedback to the customer. This is important because the supplier can actually help the customer do things slightly differently, in a manner that is more cost effective or more productive. It also highlights the way that the Kyoryoku Kai is a two-way process and this is fundamental to its success. If the Kyoryoku Kai is to succeed the customer has to listen to what the suppliers say. It is not a means whereby the customer can dictate to suppliers; this is a dialogue, not a monologue….