Supplier Competition And Cost Improvement
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Supplier Competition And Cost Improvement
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Author : Cuihong Li
language : en
Publisher:
Release Date : 2016
Supplier Competition And Cost Improvement written by Cuihong Li and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Buyers have two levers to enhance their supply base performance: fostering supplier competition and inducing suppliers to improve. The competition-improvement relation between the two levers has important implications for supply base design. We study a buyer facing two potential suppliers that can exert cost-reduction efforts, examining the interplay of supplier competition and supplier cost improvement under various information structures (i.e., the supplier effort is observable or unobservable) and commitment capabilities (i.e., the buyer may not commit, or may commit to a full or partial procurement mechanism, before suppliers exert efforts). We find that the two identical suppliers may choose unequal efforts, resulting in an asymmetric equilibrium outcome that enhances the performance of dual sourcing. Moreover, the competition-improvement relation depends on the effort observability. Whereas supplier competition always leads to lower improvement effort when the effort is unobservable, it may induce higher effort when the effort is observable. Thus, a tradeoff between supplier competition and supplier effort is not always necessary in supply base design. Comparing the observable- and unobservable-effort cases, we demonstrate a detrimental effect of supplier effort observability on the buyer profits. Finally, we show that more commitment expands the presence of asymmetric equilibria, enhancing dual sourcing, and the partial commitment strengthens the positive effect of competition on observable efforts while maintaining the detrimental effect of effort observability.
Supplier Competition And Cost Reduction With Endogenous Information Asymmetry
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Author : Cuihong Li
language : en
Publisher:
Release Date : 2019
Supplier Competition And Cost Reduction With Endogenous Information Asymmetry written by Cuihong Li and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
We consider a buyer sourcing from multiple competing suppliers who exert cost reduction efforts before procurement contracts are awarded. The supply chain is subject to the classic hold-up problem--as the lack of a contract commitment hinders suppliers' incentives to make investment upfront--complicated with supplier competition. With deterministic cost-reduction outcomes, suppliers will not exert any effort if this effort is observable, and a pure strategy equilibrium does not exist if the effort is unobservable. We analyze the mixed strategy equilibrium with unobservable supplier effort, in which suppliers randomize their efforts and the buyer designs an optimal procurement mechanism. We show that the optimal procurement mechanism can be implemented by a conventional single-price reverse auction with a random reserve price. The mixed strategy of supplier effort generates endogenous information asymmetry on supplier costs that provides suppliers with information rent, which sustains their efforts. The endogenous information asymmetry improves effort efficiency (by inducing positive supplier effort) yet introduces trade inefficiency (by causing the possible failure of trade between the parties). While increasing supplier competition (measured by the number of suppliers) hurts the effort efficiency, it improves the trade efficiency. As a result, the buyer is always better off introducing supplier competition by including more than one supplier in the supply base. However, the desired supply base size (number of suppliers) depends on the product revenue: for high-margin goods, the optimal size is achieved with two suppliers, whereas for low-margin goods, a larger supply base is better for the buyer. We show that the result based on deterministic cost reduction can be established as a limit of the case when uncertainty in cost reduction exists and shrinks to null. Our study helps to understand the impact of supplier competition when supply chain parties deliberately make their actions unpredictable to avoid being held up. The findings provide managerial guidance on procurement auction and supply base designs.
Strategic Procurement
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Author : Caroline Booth
language : en
Publisher: Kogan Page Publishers
Release Date : 2010-09-03
Strategic Procurement written by Caroline Booth and has been published by Kogan Page Publishers this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-09-03 with Business & Economics categories.
Most organizations, regardless of industry, spend more money on suppliers than they do on employing their staff. Written for the non-procurement expert, Strategic Procurement explores the 'why' and 'what' of good procurement rather than the 'how.' It explains why you should focus your efforts on this previously neglected area of business and rich rewards, where P&L impact is relatively painless and immediate, where benefit to cost ratios of 10 to 1 are realistic ambitions and in-year payback is possible. It covers all the aspects of strategic procurement, including The role of the executive and the organization in procurement; Primary and secondary supply chains; Cost reduction techniques Making yourself important to suppliers; Sustaining procurement improvement; Keeping procurement on the business agenda Showing you how to cut costs without harming your business and the importance of recognizing supplier relationship management, Strategic Procurement offers real understanding of the true worth of procurement in the boardroom.
Supplier Relationship Management
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Author : Stephen Easton
language : en
Publisher: Apress
Release Date : 2014-06-14
Supplier Relationship Management written by Stephen Easton and has been published by Apress this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-06-14 with Business & Economics categories.
There’s a new buzz phrase in the air: Supplier Relationship Management (SRM). Corporate executives know it’s necessary, but there’s only one problem. Nobody yet knows how to do it. Or they think it’s all about bashing your vendors over the head until they reduce the price another 4%. Supplier Relationship Management: How to Maximize Vendor Value and Opportunity changes all that. Containing the best and most innovative advice from the operations and procurement experts at consultant AT Kearney, this book shows that SRM is at root a strategic discussion requiring cross-functional interaction and internal alignment at the highest levels. It requires an honest appraisal of the value that suppliers now bring to your firm, as well as their potential value. It then requires a frank and constructive business-to-business dialogue about how to improve the relationship. When this happens, a company reaps myriad benefits, ranging from new opportunity to added value to competitive advantage—and, quite likely, to overall (and sometimes substantial) cost reductions. This book shows the most concrete methods you can use today to: Identify value-adding opportunities in the supply chain Work closely with suppliers to maximize the benefits Work the "Critical Cluster" of suppliers, where the greatest opportunity for advantage lies Review suppliers to encourage constant gains in quality and cost Turn your SRM strategy into a major competitive advantage Supplier Relationship Management introduces and explains the Supplier Interaction Model, a key tool that will help you get the most from your supplier relationships. It segments the supplier universe into nine categories, from those you want to run away from fast to those so good and so useful to your organization that it can make sense to invest in them directly. Numerous case studies show how to apply the principles to your situation. Supplier Relationship Management burns off the fog that has surrounded the procurement process for far too long. It is the definitive guide for business executives who want to get the maximum benefits from suppliers and gain very real advantages over competitors.
Supply Chain Development For The Lean Enterprise
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Author : Robin Cooper
language : en
Publisher: Routledge
Release Date : 2017-12-06
Supply Chain Development For The Lean Enterprise written by Robin Cooper and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-12-06 with Business & Economics categories.
Four questions determine whether a company is using interorganizational cost management. Does your firm set specific cost-reduction objectives for its suppliers? Does your firm help its customers and/or suppliers find ways to achieve their cost-education objectives? Does your firm take into account the profitability of its suppliers when negotiating component pricing with them? Is your firm continuously making its buyer-supplier interfaces more efficient? If the answer to any of these questions is ""no"", your firm risks introducing products that cost too much or are not competitive. The full potential of the supply network can be realized only when the entire supply chain adopts interorganizational cost management practices. Competitive pressure has led many firms to try to increase the efficiency of supplier firms through interorganizational cost management systems, a structured approach to coordinating the activities of firms in a supplier network to reduce the total costs in the network. It is particularly important to lean enterprises for two reasons: Lean enterprises typically outsource more of the added value of their products than their mass producer counterparts. Lean enterprises usually compete more aggressively and must manage costs more effectively. Interorganizational cost management can reduce costs in three ways: through product design, through product manufacture and through cooperative approaches between buyers and suppliers to build smoother interfaces. However, more than just cost management must cross interorganizational boundaries. Suppliers are also a major source of innovation for lean enterprises. Successful supplier networks encourage every firm in the network to innovate and compete more aggressively. Read this book to learn to manage the supply chain to forge competitive advantage while reducing costs.
Strategic Procurement
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Author : Caroline Booth
language : en
Publisher: Kogan Page Publishers
Release Date : 2014-11-03
Strategic Procurement written by Caroline Booth and has been published by Kogan Page Publishers this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-11-03 with Business & Economics categories.
A company's success is determined by its ability to utilize all its assets. Yet two assets often neglected by the boardroom are the amount it spends on goods and services and the expertise of the organisation's key suppliers. This highly accessible book will help you understand how to tap into these assets to secure competitive advantage. With application to organisations in all industries internationally, Strategic Procurement details why procurement is critical to successful business performance. It explores the strategic value of procurement to business and the potential for significant cost savings through maximising value from suppliers and third-party spend. A lot has changed in the world of strategic procurement. While many developments have served to reinforce the business value of good procurement practices, there are many risks associated with poor procurement. On the upside, procurement's role has increased in many recent mega-mergers. On the downside, there are glaring examples of supply continuity issues triggered by natural disasters; reputational issues related to supply chains of companies like BP and Apple; and the inadvertent role played by suppliers as the weakest link in cyber-crime. This second edition of Strategic Procurement has been thoroughly updated to reflect these developments. Besides real-life case studies, there is a new chapter on procurement's role in delivering successful mergers and acquisitions as well as three new chapters exploring the mitigants to a variety of supplier-related risks. Additionally, there are expanded sections on corporate responsibility, procurement proficiency, good procurement across the organisation, and new ways of supplier collaboration.
The Power Of Two
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Author : C. Cordón
language : en
Publisher: Springer
Release Date : 2008-07-02
The Power Of Two written by C. Cordón and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008-07-02 with Business & Economics categories.
The Power of Two presents the best way for your company to increase competitive advantage. By forming close collaborative relationships with a small set of customers and suppliers you can achieve a significant cost advantage over your competitors, increase your market share and achieve significant top line growth.
Supplier Collaboration In Collaborative Product Development With Internal Competition
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Author : Timofey Shalpegin
language : en
Publisher:
Release Date : 2020
Supplier Collaboration In Collaborative Product Development With Internal Competition written by Timofey Shalpegin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
This paper examines a development process in which a firm explores alternative approaches for the development of a single product. To do this, the firm employs competing internal teams, but it also needs to involve key suppliers who are responsible for the development of a key component (or subsystem) via a collaboration with one or several internal teams. We explore how internal competition affects the suppliers' collaborative efforts and the firm's profits, and also how the firm should allocate the internal teams to potential suppliers. Our analysis suggests that this setting is significantly different from standard tournament settings, implying that existing research results should not be simply extrapolated to supply chain settings. For example, unlike in traditional tournaments, we find that increasing supplier competition by increasing the number of teams per supplier can actually increase supplier efforts. We develop a tournament model with two suppliers who differ both in their expertise for the specific type of development project and in their development costs (i.e., their cost-effectiveness). We also identify a critical influential factor: the cost savings resulting from the similarity between different development efforts by the same supplier (with different internally competing teams). If the cost savings are not very high, i.e., if the different development efforts are not very similar, the firm should optimally allocate more teams to the supplier with less relevant expertise or lower cost-effectiveness. Similarly, involving a third supplier is beneficial only if the cost savings are low. While companies make significant efforts to identify the supplier with the best expertise, our results show that allocating more teams to the stronger supplier generally undermines the suppliers' incentives to exert high levels of effort. Hence, allocating the most teams to that supplier might not always improve firm profits.
Supplier Matters
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Author : Dr. Aditya Verma
language : en
Publisher: Notion Press
Release Date : 2019-01-17
Supplier Matters written by Dr. Aditya Verma and has been published by Notion Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-01-17 with Technology & Engineering categories.
“Purchase commonly respond that they are so busy in daily paper works and firefighting that they have no time to do things, what they really want to do. Aditya’s book will surely help in organizing their work. S K Goenka, Managing Director, Emami Ltd. INDIA "Aditya distills hands-on experience built over decades in MNCs and Indian companies into a practical handbook that will prove immensely valuable to supply chain and sourcing professionals and general managers wishing to improve their procurement function's effectiveness and strategy". Kenneth Gayer, Chief Executive Officer, Gelest Inc., USA “Too often in the past, suppliers were selected primarily on the basis of cost and that proved costly”. This is excellent manuscript from Aditya to improve supplier managing process. Ricky Jack, Vice President Global Operations (Retd), DuPont Solae LLC., USA “Procurement function of any organization is run by the most responsible person. If anything goes wrong, he or she who heads Purchase is generally the one held responsible. There’s always a sense of fire-fighting - raw materials must reach the plant on time, but there shouldn’t be excess inventory. Inputs must be at the lowest cost, but vendors must be loyal - even if payments are delayed, just in time even if forecast accuracy is 50%. Into this apparent chaos flutters the pages of this book, an enjoyable and educative narration on how to massage a modicum of method into the madness. Fantastic tale and a treatise from Aditya.” Dr. Anjan Ray, Director – CSIR, Indian Institute of Petroleum, INDIA. Using real world examples, the author demonstrates the importance and structure of a robust supplier qualification process, as well as ways to monitor the ongoing performance of the supply base. He goes on further to show how critical it is to have all major business functions aligned throughout the process. James W. Bova, Vice President, Global Sales, PMC Group Inc., USA. “Aditya created and oversaw Sourcing operations for India & High Growth regions in a large MNC, and applied the strategies described herein which delivered results, this book will surely help businesses in improving profitability and sustainability through procurement”. Jens-Wolfgang Rieck, Sr. Director – Procurement Portfolio Transformation – Honeywell, Switzerland. “Risk analysis, lean processes, criticality grid, supplier development and global business culture understanding are key to procurement performance. Aditya with long experience in the Procurement reflected very well on these.” Yofre Rodriguez Carlos, Global Procurement & Supply Chain Director, Kirsch Pharma Group, Germany.
Global Sourcing Performance And Competition
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Author : Paul Scheffler
language : en
Publisher: Logos Verlag Berlin GmbH
Release Date : 2015-09-01
Global Sourcing Performance And Competition written by Paul Scheffler and has been published by Logos Verlag Berlin GmbH this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-09-01 with Business & Economics categories.
In today's times, more and more companies pursue global sourcing strategies in some form and to some extent. The most prominent reason for the increased interest in global sourcing is the idea to benefit from factor cost differences between sourcing regions. However, recent research indicates that cross-border sourcing is no panacea to generate cost savings. There are situations in which international sourcing does not lead to the intended price reductions or even causes expensive backsourcing activities. Accordingly, the ambiguous image of global sourcing is the point of departure for the dissertation at hand. Thus, the main purpose of this thesis is to explore how global sourcing can contribute to a firm’s purchasing performance. The results indicate that the accumulation of social capital between the buying organisation and its international suppliers can increase the sourcing success. However, given the limited amount of resources for those intimate buyer-supplier relationships, close partnerships cannot be maintained with all suppliers. Consequently, the research at hand points in the direction that global sourcing can be a means to increase the intensity of competition in supply markets, facilitating the pursuit of more adversarial relationships.