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Vendor Selection and Development

This document discusses vendor selection and development. It defines key terms like vendors, purchasing, procurement, supply management and strategic sourcing. It explains that companies focus on core competencies and outsource non-core functions to vendors. Selecting vendors allows companies to access expertise they lack, free up resources, and gain cost advantages. The total cost of ownership must be considered, not just the direct cost, when evaluating vendors.

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Asher Ramish
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102 views11 pages

Vendor Selection and Development

This document discusses vendor selection and development. It defines key terms like vendors, purchasing, procurement, supply management and strategic sourcing. It explains that companies focus on core competencies and outsource non-core functions to vendors. Selecting vendors allows companies to access expertise they lack, free up resources, and gain cost advantages. The total cost of ownership must be considered, not just the direct cost, when evaluating vendors.

Uploaded by

Asher Ramish
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Vendor Selection and

Development
Prepared by ASHER RAMISH

Lecture 1-2
Synopsis

• The decision to make or buy


• What is a vendor or supplier?
• Purchasing,
• procurement,
• supply management or
• strategic sourcing

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The Decision to Make or Buy

• Extremely difficult for companies to survive by


performing all processes In-house due to lack of
expertise in 100% areas.
• Firms flexibility increases
• Focus on core competence
• Freeing up space doing some innovative tasks
• Strong chance to gain cost advantage

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What is A Vendor?

“A vendor is any person or an organization,


physical or virtual, that is providing
services or products, directly or indirectly
to the business customer or end user”.

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Why Enter a Vendor Relationship?

• The vendor must


– Do something I can’t do
– Do something I can’t afford to do
– Do something I don’t want to do
– Be better, faster, cheaper

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Purchasing

A major function of an organization that is responsible


for acquisition of required materials, services and
information

Purchasing has traditionally been a low-profile function

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Procurement

An organizational function that includes


specifications development, value analysis regarding
sourcing, supplier market research, negotiations, buying
activities, contract administration, traffic, receiving and
stores.

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Supply Management

• Supply management is the identification,


acquisition, positioning and management of
resources that an organization needs in the
attainment of its strategic objectives.

• It‘s about managing risk and maximizing


opportunities.

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Strategic Sourcing

• A process of developing a supply base capable of


becoming a complementary, value added business
partner.
• Integrates the capabilities of the supply base
• With a comprehensive view of a customers
requirements at all stages
• Into a unified supply network
• With customer responsiveness as the ultimate driver
of value.

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Total Cost of ownership

• Direct cost • Once the total cost


• Indirect cost of poor quality is
– Cost of waste factored in
– Opportunity lost cost
– Cost of storage • The cheapest may
– Administrative cost well be the most
– Transportation cost costly
– Maintenance cost
– Insurance etc.

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Boeing's 787 Dreamliner Is Made Of
Parts From All Over The World

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