Summary
Summary SUPPLIER RELATIONSHIP MANAGEMENT LEARNING OUTCOMES
- Institution
- University Of South Africa (Unisa)
MNP3703 Supplier Relationship Management Learning Outcomes and more
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1 WHAT IS SUPPLIER RELATIONSHIPMANAGEMENT?
GIVE AN OVERVIEW OF THE CONCEPTS PURCHASING AND STRATEGIC SOURCING AS
THE PREAMBLE FOR SUPPLIER RELATIONSHIP MANAGEMENT
Purchasing management
Purchasing management refers to the systematic process of deciding what, when and how much to purchase, the act
of purchasing it and the process ensuring that what is required is received on time in the quality specified.
Purchasing management deals with the process used to obtain goods and services to satisfy the needs of an
enterprise by utilizing the following steps:
Identify the need
Finding and choosing the right supplier to fulfill the need
Negotiating matters such as price, quality and quantity with the supplier
Ensuring that the goods or services fulfilling the need are delivered according to the agreed conditions
Maintaining files and records to document the transaction
Strategic purchasing is the process of planning, implementing, evaluating and controlling strategic operating decisions
for directing all activities of the purchasing function towards opportunities consistent to the firm’s capabilities to
achieve its long-term goals
Strategic sourcing
Broad – all issues of strategic importance is the supply of material and services to a modern organisation are regarded
as strategic sourcing
Narrow – strategic sourcing can be regarded as a strategic management process whereby commodities and suppliers
are analyzed, and relationships are formed and managed according to best practices and appropriate strategies in
support of long-term organisational goals
Strategic sourcing in the narrow sense can be seen as a process
Strategic sourcing can be regarded as a process whereby spending is analyzed and categorized according to the
importance and cost of the purchases, and the complexity of the supplier base.
ILLUSTRATE AND INTERPRET THE SUPPLIER PERCEPTION MODEL
The supplier perception model identifies how suppliers see a buying organization by focusing on 2 aspects
1. The value of the business offered by the buying organisation in terms of the supplier turnover levels, and
2. The level of attractiveness that the buying organization’s business has for the supplier
A buying organisation’s comparison of the supplier perception model and the supply positioning model:
Hig Develop relationship Core relationship
h (especially with the suppliers of bottleneck (especially the suppliers of critical
products or services) products or services)
Level of
Marginal relationship Exploit relationship
attractiveness
(especially the suppliers of routine products (especially the suppliers of leverage
Low or services) products or services)
Low Value of business High
,ILLUSTRATE AND INTERPRET THE SUPPLY POSITIONING MODEL
But the buying organisation evaluates the amount they spent and purchases of products and services. The supply
positioning model is also known as the strategic sourcing. Products or service are classified as routine, leverage,
bottleneck and critical.
The Supply positioning model
Hig
h Bottleneck products or services Critical products or services
Low expenditure High expenditure
Few alternate products/services Strategic to profitability and
available operations of buying organisation
Few qualified sources of Alternate products/services not
products/services available available
Unique specification Few qualified sources of
products/services available
Level of risk & Complex specifications
complexity
Routine products or services Leverage products or services
Low expenditure High expenditure
Many existing alternate Existing alternate products/services
products/services available available
Products/services readily available Products/services readily available
from various qualified sources
Small individual transactions
Low Clear specifications
Low Value spent on an item High
The core quadrant of the supplier perception model is the ideal situation for a buying organisation to be in from the
supplier’s point of view.
COMPILE YOUR OWN CONCISE DEFINITION OF THE CONCEPTS SUPPLIER,
BUYER/SUPPLIER relationship and supplier relationship management
Supplier – a person or organisation that provides something needed such as a product or service.
A buyer/supplier relationship comprises any interaction between a buying organisation and a supplier.
Supplier relationship management is the discipline of strategically planning for and managing, all interactions with
3rd party organizations that supply good or services to an organization in order to maximize the value of those
interactions
What does supplier relationship management entail? The following SKILLS ARE REQUIRED FOR
EFFECTIVELY MANAGING BUYER/SUPPLIER RELATIONSHIPS:
The ability to adopt a shared understanding between partners
The ability to recognize the level of cultural match between partners
The skills to foster high quality relations
The ability to manage relationships through changes in contractual obligations
The sills to manage consortium-based relationships
,2 UNDERSTANDING RELATIONSHIPS
EXPLAIN THE DETERMINANTS OF INDIVIDUAL BEHAVIOUR WITH THE AID OF A
DIAGRAM
Beliefs are true for an individual and represents the substance of a person. Belief create values that influence the
attitudes that direct how we think, feel about things and make choices. In the end, this is visible as our unique style of
our behaviour.
Habits are the noticeable repeated and learned behaviour patterns, and to change habit, there is a need to change the
attitude that created it.
ILLUSTRATE BY MEANS OF EXAMPLES IN A TABLE THE DIFFERENT INDIVIDUAL
RESPONSES TO THE SAME SITUATION
Quitters Camper Climber
Abandons early Goes half way Gets there
“Too hard” “Comfortable here” “Not there yet, Let’s go
Survives Vegetates Grows
Do just enough Analyses Takes risks
Defends Some progress is made “Energizer bunny”
Blames other Gets too tired Achievers
Rejects change Waits and sees what will Accepts change
happen
Can be disruptive Can be subversive Embraces change
Says in the rut What’s in it for me Looks for the next
peak
Maybe 20% of Maybe 60% of people? Maybe 20% of people?
people?
,
, LIST CHARACTERISTICS OF THE DIFFERENT MANAGEMENT STYLES
CONTINUUM OF BUYER/SUPPLIER RELATIONSHIPS
TRANSACTUAL ALLIANCE
RELATIONSHIPS RELATIONSHIPS
COLLABORATIVE RELATIONSHIPS
Communication High potential for problems Systematic approach to enhance
communication
Competitive advantage Low High
Connectedness Independence Independence
Continuous improvement Little A focus on
Contributions to new product Few Many/early supplier involvement
development
Difficulty to exit Low Difficult/high impact
Duration Short Long
Expediting Relative Proactive
Focus Price Total cost
Level of integration Little or none High or total
Level of trust Low High
Number of suppliers Many One or few
Open books No Yes
Quality Incoming inspection Design quality into system
Relations Inward-looking Concern with each other’s wellbeing
Resources Few/low-skill level Professional
Service Minimal Greatly improved
Shared forecasts No Yes
Supply disruption Possible Unlikely
Technology inflow No Yes
Type of interaction tactical Strategic synergy
INDICATE THE DIFFERENCES BETWEEN MANAGERS AND LEADERS BY MEANS OF A
TABLE
Managers Leaders
Handles tactics, drives forward using authority Handles strategy, drives forward by using inspiration and
goodwill
Makes the provisions and the “how” Makes the vision and the “why”
Work is managed to a satisfactory performance People are led and influenced beyond simply legitimate
authority
Plans the pace and reacts Directs and is proactive
“Fire-fights” “Fire-lights”
Works with boundaries / limits and demands Works with hopes and dreams and commands respect
respect
Mainly focused on short term Mainly focused on medium / longer term
Inspires stability within the statues quo Inspires innovation and change
Often are extroverts and emotionally warm Often are introverts and emotionally distant
COMPARE THE CHARACTERISTICS OF TRANSACTIONAL AND TRANSFORMATIONAL
LEADERSHIP IN THE FORM OF A MODEL FOR LEADERSHIP
Feature Transactional Transformational
Vision Goals and objectives for immediate Long-term vision
results
Control Structures and processes created, Creates a climate of trust and empowers people to control
solves problems themselves; manages problem solving
Outloo Maintain and improve the current Changes the current situation
k situation
Style Plans, organizes, directs and Coaches and develops people
controls people
Culture Guards and defends Challenges and change
Power From positions and authority within From influencing a network of relationships
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