Business skills: Analyzing supplier performance and pricing 2- 11 In this exerci
ID: 666955 • Letter: B
Question
Business skills: Analyzing supplier performance and pricing 2- 11
In this exercise, you will learn how to use spreadsheet software to improve management decisions about selecting suppliers. You will filter transactional data on suppliers based on several different criteria to select the best suppliers for your company. You run a company that manufactures aircraft components. You have many competitors who are trying to offer lower prices and better service to customers, and you are trying to determine whether you can benefit from better supply chain management. In the BlackBoard “Learning Module” folder you will find a spreadsheet file that contains a list of all of the items that your firm has ordered from its suppliers during the past three months. The fields in the spreadsheet file include vendor name, vendor identification number, purchaser’s order number, item identification number and item description ( for each item ordered from the vendor), cost per item, number of units of the item ordered ( quantity), total cost of each order, vendor’s accounts payable terms, order date, and actual arrival date for each order. Prepare a recommendation of how you can use the data in this spreadsheet database to improve your decisions about selecting suppliers. Some criteria to consider for identifying preferred suppliers include the supplier’s track record for on- time deliveries, suppliers offering the best accounts payable terms, and suppliers offering lower pricing when the same item can be provided by multiple suppliers. Use your spreadsheet software to prepare reports to support your recommendations.
Hint on Excel Skills and Usage (See Excel Tutorial Links Below)
This exercise requires some student knowledge of spreadsheet database functions. At a minimum, students should know how to sort the database by various criteria such as item description, item cost, vendor number, vendor, name, or A/P terms. Students may need to be told that A/P Terms is expressed as the number of days that the customer has to pay the vendor for a purchase. In other words, 30 designates net 30 days. The vendor that allows customers the longest amount of time to pay for an order would, of course, offer the most favorable payment terms.
Students will need to add additional columns for calculating the delivery time for each order. The delivery time can be calculated by subtracting the Order Date from the Arrival Date. Vendors with the shortest delivery times are obviously desirable.
These numbers are useful when trying to determine who is the vendor with the best on-time delivery track record. Students can use the DAVERAGE or the SUMIF and COUNTIF functions to determine the average delivery time for each vendor. Students can also use one of the database functions to determine the vendor with the best accounts payable terms. To determine the vendor with the lowest prices for the same item when it is supplied by multiple vendors, students can filter the database using the item description. This filtered list can then be sorted by item cost and vendor number.
Explanation / Answer
Ans:
Supply chain management experts share their tips on how to make your supply chain operate more efficiently. Throw away your spreadsheets. Too many enterprises still "plan their purchasing using slow and unreliable spreadsheets," said Jason Averill, executive vice president at Avercast. To make sure you are using the most up-to-date, accurate information, "move up to an affordable supply chain platform." Select a supply chain solution that is tailored for your industry. "There are hundreds of off-the-shelf supply chain software packages or component modules on the market today, and most implementations end up requiring some level of customization and integration with other systems," said John Freund, CEO of JumpTech. "Do your homework and start your research with systems that were designed for companies in your industry, or that are similar to yours in some key aspect. Odds are your project will end up in the 'better, cheaper, faster' category that way, and you'll likely get a number of handy system features you won't get if you venture too far afield from your space." Establish metrics. "Despite decades of encouragement and hundreds of millions of dollars dumped into information technology, most companies still don't have their supply chain metrics under control," said Joe Francis, executive director of Supply Chain Council. "Enterprise-wide balanced scorecards, cascading supply chain metrics and management dashboards can provide timely insights that help supply chain managers react to disruptions and opportunities in today's volatile markets." Francis recommends starting with metrics that can be benchmarked internally and externally, such as cash-to-cash cycle time, return on working capital, perfect order fulfillment and agility indicators. Manage information rather than information management. "Enterprise solutions should facilitate proper collection, identification and easy access to allow for rapid decisions," said Shawn Casemore, founder of Casemore & Co. and an expert on supply chain and operational excellence. "Collecting information that is not relevant, and serves only to meet the criteria of an enterprise solution, is not the way to efficiently manage a business. Collect the information that is more relevant and aligns with business objectives. Then ensure information is easily accessible." Involve your employees. "Give [employees] visibility into how they impact the customer," suggested Mike Ledyard, partner at Supply Chain Visions. "Create a metrics program that links shop floor level metrics to customer needs and corporate objectives." Integrate sales, operations and finance. "Integrate what Sales plans to sell, what Operations plans to make and what Finance has forecast into a single consensus driven plan," advised Ledyard. "Sales and Operations Planning (S&OP) provides the optimal balance between customer demand, production capacities and corporate financial performance." Consider working with fewer vendors or a national supplier. "Instead of looking for the least expensive option and having different solutions for different locations, I recommend [having] one enterprise solution that can support you everywhere you do business, even if it means that you have to pay more," said Lenny Kharitonov, president of Unlimited Furniture Group, Inc. Monitor the performance of each partner in the supply chain. "The failure of a key supplier can be disruptive and ultimately impact revenue," said Alex Cote, vice president of marketing at Cortera. "You want to be constantly monitoring your suppliers so you don't get caught off guard." To keep on top of your supplier network, "have a system in place to measure, improve and, if necessary, replace partners," said Kharitonov. Implement tracking and mobile technologies. "To improve efficiencies and minimize costs and inaccuracies, take advantage of technology such as RFID, voice picking, mobility, warehouse automation systems and warehouse management systems," said Kevin Beasley, CIO of VAI. Remember that the supply chain doesn't begin at the warehouse or end on the store shelf. "Many believe that the supply chain starts at the warehouse and ends when products have been delivered to stores," said Brendan Lowe, president of USA business at Aldata. "This simply isn't true and is symptomatic of the 'delivery' mindset that unenlightened retailers have. More important than ensuring products are stocked on the shelves is that those products are [considered] desirable by your customers." So be sure to track which products your customers actually want and which ones they don't as part of your supply chain management strategy. Integrate marketing expenditures into supply chain planning. "Include marketing expenditures, which include costs, resource limits and anticipated demand impact of proposed marketing initiatives, into your supply chain plan to maximize corporate profitability," said Jeff Karrenbauer, president of INSIGHT, Inc. "By doing this, companies [can] identify which marketing campaigns should be implemented and which should be avoided, the optimal target customers, channels and products for each campaign and the corresponding optimal procurement, manufacturing and distribution requirements, all in light of supply chain costs, capacities, service requirements and the max profit objective." You can also refer this for further http://www.slideshare.net/jpaulson1/supply-chain-process-improvement-methodology-v1
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