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  • Associated Technologies: An Analysis of Supplier Evaluation - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    offered to the end consumer But a problem with B2B networks is that no one best standard has emerged in the economy top Electronic Data Interchange EDI One common type of B2B network is an Electronic Data Interchange EDI Private or semi private types of EDI networks that are popular include Value Added Networks VAN s and Electronic Trading Networks ETN s It is important to note that companies who have invested in VAN s and ETN s and had some success with them may be somewhat reluctant to switch to relatively newer technologies 1 top Extensible Markup Language XML Extensible Markup Language XML is another technology that is being promoted as the next standard in Internet communications among trading partners It is believed to be a very important technology in supply chain management where numerous technologies are often at war with each other Promoters promise better technology to enable easier and faster messaging of critical supply chain information between disparate systems and organizations that participate and collaborate in supply chain processes 20 top Web Exchanges Web exchanges have also emerged as a viable option Because the Internet has become a common and efficient communication tool many firms have attempted to take advantage of the new medium They have adopted software and hardware and have linked up with their suppliers on web exchanges to share the information used in supplier evaluation Many web exchange companies arose during the dot com era in hopes of becoming providers for both simple and complex product industries Some examples of web exchanges that survived the dot com crumble in the complex product automotive industry are as follows Covisint Covisint world headquarters is located in Southfield Michigan The company was founded in 2000 by automotive OEM s General Motors Ford DaimlerChrysler Nissan Renault and technology companies Commerce One and Oracle Since the company began PSA Peugeot Citroën has also become a stakeholder SupplyOn SupplyOn world headquarters is located in Hallbergmoos Germany The company was founded in 2000 by automotive supply companies Bosch Continental INA and ZF and technology company SAP Siemens automotive joined the company at the end of 2001 The company advertises its solution as a platform run by suppliers for suppliers FreeMarket FreeMarkets world headquarters is located in Pittsburgh Pennsylvania The company was founded in 1995 by Glen Meakam who is now chairman of the publicly traded company They are recognized for having pioneered the reverse auction process 8 top Trust and Information Sharing It makes sense that companies in complex product industries have more to gain by means of a technology assisted supplier evaluation function because there is a greater variety of demand placed on their procurement function 6 However exact ramifications of the technologies are unclear Professors Handfield and Nichols state Until such fundamental issues as trust and information sharing are resolved with key suppliers and customers no B2B technology is likely to ever have any significant impact on business processes 10 Furthermore academics have published empirical evidence that supports this

    Original URL path: https://scm.ncsu.edu/scm-articles/article/associated-technologies-an-analysis-of-supplier-evaluation (2016-04-30)
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  • Performance Measurements and Metrics: An Analysis of Supplier Evaluation - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    individual s perception about performance and not on quantitative data top Weighted Point Method In the weighted point method the relevant attributes are chosen and each are assigned a weight depending on the importance to the overall performance 24 The firm reaches a consensus on weight assignments to prevent or minimize subjectivity The weight for each performance category is then multiplied by the performance score that is assigned to it Finally these products are totaled to determine a final rating for each supplier Firms often use the weighted point system because it is highly reliable and its implementation costs are moderate In addition it combines qualitative and quantitative performance factors into a common system Because users can change the weights assigned to each performance category or change the performance categories themselves depending on the strategic priorities of the firm the system is flexible The weighted point method overcomes the subjectivity of the categorical system but it has some drawbacks It requires the buyer to specify the value of one performance measure relative to another which is often difficult in practice top Cost Based System Using the cost based system a buyer is able to quantify the additional costs incurred if a supplier fails to perform as expected The total cost of doing business with the supplier can be calculated by the supplier performance index SPI This index is calculated for each item or commodity provided by the supplier and has a base value of 1 It is represented by the following formula SPI Purchase Price Nonperformance Cost Purchase Price As derived from the equation the closer SPI is to 1 the better the supplier Non costs should include qualitative factors 14 Benefits a buyer can achieve by using this approach include 26 the ability to source requirements based on total cost consideration a methodology to increase supplier accountability and control an equitable and consistent evaluation tool definition of supplier performance expectation communication of the firm s buying priorities to suppliers the ability to perform sourcing risk assessment enhancement of internal communication for reporting critical supplier sourcing information the ability to provide positive supplier reinforcement a basis for a supplier award program This system is the least subjective of the three because it quantifies the total cost of doing business by considering non performance costs The main difficulty in the use of the system is its complexity and its requirement that users have a developed cost accounting system Although this sounds like an ideal way of dealing with costs it is difficult to identify the costs of supplier non performance Against their subjectivity and drawbacks the categorical method the weighted point method and the cost ratio method are the most widely used techniques in supplier evaluation due to their ease of use and implementation Several other models and techniques have been proposed for supplier measurement and evaluation These include total cost of ownership approach analytical hierarchy process Barbarosoglu and Yazgac 1997 weighted linear model approaches Lamberson et al 1976 Timmerman 1986

    Original URL path: https://scm.ncsu.edu/scm-articles/article/performance-measurements-and-metrics-an-analysis-of-supplier-evaluation (2016-04-30)
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  • Definitions: An Analysis of Supplier Evaluation - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    Economic Order Quantity Just in Time Total Quality Management Life Cycle Electronic Data Interchange EDI Extensible Markup Language XML Supplier Evaluation is a sourcing strategy used to assess suppliers in terms of product or service quality delivery speed and accuracy price competitiveness and the ability to develop implement technologies in order to increase the value of products and services and to assure continuous improvement Key terms include Economic Order Quantity A philosophy of ordering supplies in batches rather than continuously replenishing inventory Ordering is done this way in order to achieve price breaks offered for purchasing specific quantities 12 top Just in Time A production approach that seeks to eliminate all types of waste by processing and moving materials and goods just as they are needed 12 top Total Quality Management A philosophy that places the responsibility of quality on workers producing products or providing services rather than on quality control This philosophy is based on the idea that it is more efficient to produce quality inputs than to fix outputs 12 top Life Cycle The period of time that starts at the time of the purchase of a good and continues as long as the good is used or in process top Electronic Data Interchange EDI The computer to computer exchange of business data in a standardized format 9 top Extensible Markup Language XML A way to create maintain share and use common information formats that are self defining self contained and allow for the transfer of information over all electronic means intranets internets and extranets and all forms of media not just paper but even braille and voice applications 5 top Categories SCM Topics Supplier Evaluation Read the Supply Chain Management Professional Newsletter Read the latest supply chain research articles and news as soon as we post them

    Original URL path: https://scm.ncsu.edu/scm-articles/article/definitions-an-analysis-of-supplier-evaluation (2016-04-30)
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  • Background: An Analysis of Supplier Evaluation - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    relationship was characterized by the following 18 Arm s length formal communication Adversarial attitudes Lack of trust Aggressive win lose approach in negotiations with a price focus Emphasis on individual transactions and short term contracts Little direct contact and involvement in design activities Reluctance to share information Reliance on goods inward inspection and defect rectification top Economic Order Quantity Concept As quality improvement programs began to take hold buyers began to understand the need for supplier selection based on factors other than price Traditionally buyers purchased based on the Economic Order Quantity concept This model encouraged buyers to place large orders to achieve price breaks Orders were then delivered to a receiving area inspected and moved to a warehouse Later orders would be moved to a manufacturing floor where they would be reconditioned With this system orders were very standard and late deliveries were not a problem because a backlog of inventory was available top Partnership Model However companies discovered that this method s total cost was unnecessarily high and improvement programs such as Just in Time JIT and Total Quality Management TQM began to take hold This created a need to evaluate suppliers based on new characteristics Issues such as on time deliveries smaller order quantities frequent delivery schedules packaging specifications flexibility quality and reliability became key supplier qualities Buyers began to understand that price was not the sole indicator of best value The alternate approach to the adversarial model used in the past is the partnership model This model is used commonly today and is characterized by the following 18 A high frequency of both formal and informal communications Cooperative attitudes A trusting relationship Problem solving win win negotiating styles with an emphasis on managing total costs Long term business agreements Open sharing of information by multi functional teams Vendor certification and defect prevention approaches top Supplier Evaluation Supplier evaluation has developed into its current form particularly because of advances in quality improvement programs and JIT production efforts As these advances took place the need to evaluate suppliers based on characteristics other than price became apparent The idea of buyers sharing information with vendors became a key to improving quality quantity delivery price and service performance and the buyer supplier relationship began to take the appearance of a partnership relationship rather than an adversary relationship 11 Exceptional supplier performance relies heavily on communication and cooperation between buyers and suppliers over an extended period of time The adversarial or transactional approach that was used in vendor selection in the past focused on short term relationships involving many vendors Thus it did not provide the time or focus needed to improve supplier performance In addition constantly adding new vendors required learning costing companies both time and money 11 Moreover basing supplier selection solely on price proved problematic as quality improvement programs began to take hold Ignoring other issues such as delivery times and quality were risky to a buyer They could run out of materials if a delivery was late

    Original URL path: https://scm.ncsu.edu/scm-articles/article/background-an-analysis-of-supplier-evaluation (2016-04-30)
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  • References: Developing Collaborative Supplier Partnerships - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    Handfield R Nichols E 2002 Supply Chain Redesign Transforming Supply Chains into Integrated Value Systems Upper Saddle River NJ Prentice Hall PTR 7 McCutcheon D Stuart I 2000 Issues in the Choice of Supplier Alliance Partnerships Journal of Operations Management April 2000 Volume 18 8 Matrix adapted from Gessieaux F 2001 Re inventing Supply Chains From Automation to Integration to Collaboration Achieving Supply Chain Excellence Through Technology Volume 3 4 15 01 9 Avery Susan 1996 Toyota Industrial Equipment Develops Suppliers Raises U S Content Purchasing August 15 1996 27 29 10 Anonymous Half Work With Suppliers Half Don t Purchasing Magazine June 15 2000 11 Nelson D Mayo R Moody P 1998 Powered by Honda Developing Excellence in the Global Enterprise New York John Wiley Sons 12 Factories of the Future Integrated Product Development Industry Week June 1 2002 13 Portals Finally Get Down to Business CIO Magazine December 1 2002 14 Is XML the next big thing Logistics Management and Distribution Report May 2002 15 EDI The pros and cons Purchasing Supply Management December 1994 16 The Once and Future EDI CIO Magazine January 1 1997 17 EDI vs XML Frontline Solutions September 2001 18 Tag you re it Standards XML CIO Magazine March 15 2000 19 XML and EDI An Inevitable Integration Business Credit October 2001 20 Suspicious Minds CIO Magazine January 15 2003 21 Security Issues in the EDI Environment International Journal of Operations Production Management 1994 22 From Traditional EDI to Internet based EDI Managerial Implications Journal of Information Technology December 1999 23 Handfield Robert Executive Report of Key results of Recent Research on Supplier Development Strategies and Outcome 24 Mieghem Timothy 1995 Implementing Supplier Partnerships Prentice Hall Trade 25 Batson Robert 2002 Getting started in a supplier improvement initiative Annual Quality Congress Proceedings 26

    Original URL path: https://scm.ncsu.edu/scm-articles/article/references-developing-collaborative-supplier-partnerships (2016-04-30)
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  • Future Developments: Developing Collaborative Supplier Partnerships - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    03 Future Developments The shift in business today is clearly towards more collaboration between all members of the supply chain One such development to be seen is more companies undertaking supplier development initiatives In a poll conducted by Purchasing Magazine 53 of respondents claimed they were utilizing supplier development techniques but only a small fraction are involved to the extent of Honda of America 10 This signifies a great opportunity for companies to focus on in the future Information sharing has become a key component in building sustainable competitive advantages in the marketplace As the marketplace continues to change so will the methods with which businesses communicate with one another While many systems are currently in place there is still a strong desire to make information more visible to members throughout the supply chain By making information more easily visible collaborative partners can improve the responsiveness of their entire supply chains 6 Supply chains of the future will be networks of vigorous trades linking many independent units into groups with the ability to quickly react to market demand Information visibility will be made possible through a wide range of computer software programs classified as Collaborative Planning Forecasting and Replenishment CPFR systems which enable instantaneous information regarding demand forecasts and inventory status These systems even have the potential to provide information regarding weather forecasts and road conditions which could be transmitted to delivery trucks to potentially avoid transportation issues 6 CPFR systems have the ability expand their influence even farther as wireless Internet access becomes an integrated part of our society This will allow connectivity to all personnel on the factory floor as well as individuals in various other locations top Categories SCM Topics Supplier Partnerships Read the Supply Chain Management Professional Newsletter Read the latest supply chain research articles and

    Original URL path: https://scm.ncsu.edu/scm-articles/article/future-developments-developing-collaborative-supplier-partnerships (2016-04-30)
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  • Case Studies: Developing Collaborative Supplier Partnerships - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    for inventory Without these relationships Dell would not have been able to support a 50 growth rate for 3 consecutive years that lead to 12 billion in annual sales by 1997 top Eric Scott Limited 28 As a small leather goods manufacturer Eric Scott Limited believes in improving supply chain operations through collaboration with suppliers and customers By switching from a home grown IT system to Made2Manage Systems VIP enterprise portal solution in 1999 Eric Scott Limited has been able to enhance communications with its partners both up and down stream Implementation of the system required overcoming suppliers issues before the advantages could be reaped One major concern of Eric Scott Limited was the protection of their customers data and information To ensure customer privacy the two companies worked out a sort of hybrid hosting where the collaboration servers are hosted by Made2Manage and the customer data is kept behind Scott s firewall This managed gateway approach allows for a relatively high degree of collaboration between the two businesses An advantage of the Made2Manage system was the ability it offered Scott to communicate through electric data interchange EDI with customers and suppliers Orders come in by EDI where the Made2Manage system schedules them for manufacture and shipment and then sends notification to the customer Also this real time data is available on the portal where customers can access the site at any time to check on the status of their orders and pay their invoices on line Another benefit of the VIP software is that the system portal provides a collaborative forum for the suppliers This allows suppliers to check on inventory status with the company and have pre set reorder points for shipments The portal also permits customers to exchange virtual design documents and store them thereby reducing prototypes and the entire timeline from the product s conception to its delivery Collaborative relationships managed through Made2Manage Systems software and technology allowed a small company like Eric Scott Limited to add big value in dealings with both suppliers and customers As Scott expanded into new markets VIP enterprise portal solutions offered them opportunities to provide additional services around product distribution From managed gateways and forums for reordering and design development to EDI capabilities that schedule manufacture and shipment of orders send customer notifications provide 24 hour online order checking and invoice payment options Eric Scott Limited s adoption of partnership collaboration techniques and use of technology have ensured benefits for all involved top Volkswagen Brazil 29 In 1997 Volkswagen VW implemented the modular consortium concept of supply chain management at its new assembly complex in their Brazilian plant In order to for this concept to be successful VW first had to drastically reduce its number of suppliers from 400 to only 8 Then these 8 suppliers were invited to locate their bases of operations at the VW Brazil plant where they were provided with their own offices and staffs In addition VW asked them to each invest an additional 50

    Original URL path: https://scm.ncsu.edu/scm-articles/article/case-studies-developing-collaborative-supplier-partnerships (2016-04-30)
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  • Expected Costs and Benefits: Developing Collaborative Supplier Partnerships - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    initiative there are costs related to supplier development that must be absorbed Most of these costs are on the front end and decrease as problems in the collaboration are identified and solutions are developed Quantifiable costs Organizations have identified the following quantifiable costs directly related to developing supplier relations 60 increase in labor 23 increase in travel increased 17 increase in training and consulting 25 top Quantifiable benefits As these costs are substantial they pale in comparison to the benefits that have been realized from companies that have implemented successful supplier relations As stated earlier most of this direct reduction in costs surrounds the areas of delivery and quality The following is a list of quantifiable benefits that has been positively correlated with supplier development initiatives 90 reduction in defects in three years 4 improvement in meeting specifications 30 scrap reduction 7 stock availability improvement 26 improvement in on time delivery 94 of line items filled within lead time 10 reduction in freight costs 16 reduction in previous purchase price 35 improvement in price per unit 8 improvement in total costs 23 top Non quantifiable benefits It is also important that non quantifiable or soft results be considered when deciding whether a supplier collaboration initiative has been successful Although these benefits are not as easy to measure they are equally important to the firm and its overall success The following list highlights results that are not quantifiable but have been reported through research Suppliers will better understand the expectations of the firm and their customers Leaner supplier production systems Better performance of the firm s internal processes Increased cross functional communication within the firm 25 Faster quicker decision making Loyalty between partners Improved safety on site Improved new product launch Increased number of supplier ideas and suggestions 23 top Categories

    Original URL path: https://scm.ncsu.edu/scm-articles/article/expected-costs-and-benefits-developing-collaborative-supplier-partnerships (2016-04-30)
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