LED Lighting Procurement: over press supplier is in the self mutilation"

Soon, a LED lighting company will be a buyer to enhance supply chain operations manager. It wasn't long before the manager went around to tell him how much of the price he had cut from one supplier to another, and how much of the cost savings could be saved each year. He is also ready to adjust the entire supplier group, will save procurement costs. The new government took office three fire, there is nothing to be criticized, but its way and method is questionable.

First look at the price method of the manager: he often parts that the largest amount of re inquiry, this method will certainly get a good price. But he forgot the original, there are many other parts suppliers in the company, but the price is very low dosage is maintained at high dosage level, there is no doubt that the supplier at a loss, only to make up for large amount of those parts by.

A direct result is the adjustment of the overall profitability of the supplier's sharp decline, the company became their not profit or less profitable customers, its business focus to other more profitable customers to suppliers for on-time delivery rate, the company's quality and reduce the level of service. For example, before the new manager took office, all suppliers quarterly delivery rate of more than 96%; and a few months after taking office, there are several suppliers on time delivery rate has fallen below 90%.

Second, the supplier lost faith in the company. Previously responsible for chassis manufacturers supply chain manager found in over this piece of business, is a major supplier of several basic situation: on the one hand, because the overall economic downturn, on the other hand over the years because of naked price. As a result the supplier neither the capacity nor the economic power burden of engineering technology, because the new parts are likely to develop into the competition in the next round of inquiry, which directly affects the company to develop new products.

In order to improve the enthusiasm of the supplier service, the former manager adopted the policy: the new parts in the development stage after a round of bidding, into the mass production stage is no longer the second round of bidding. In this way, the supplier will not have to worry about hard to help develop achievements into competitors, therefore are very willing to invest in the development stage of engineering and technical support, on-time delivery of new products is greatly improved. Some suppliers also set up technical personnel for the company, at any time to provide technical support. The new supply chain business manager for the second round of bidding, breaking the continuity of this policy, the direct destruction of the buyer and the buyer's trust foundation.

An example of a more typical is that there is a supplier of components can not transfer to other suppliers to do, because of the great influence on the performance of this group of parts of the final product, the replacement of the supplier risk, the need for new supplier qualification and product design department, do not want to spend the time and take risks. What about the new supply chain manager who has a strong attitude towards the existing suppliers: in any case, the price of 15%, as to how to drop, it is the supplier's own thing.

Suppliers can not save labor costs, it can only work on the material. However, the price of nickel, the main raw material, is two times higher in a year, and the supplier has repeatedly raised the price requirement. Material utilization also has no potential to dig, because the supplier has been a number of parts together processing, scrap waste has been reduced to a minimum. So, looking for cheap materials has become the only way to survive suppliers.

That's the problem. The original nickel alloy used in Germany, the price is high, but the quality is good. The same kind of nickel alloy produced in France is low in price, but the technical performance is different from that of germany. Suppliers to achieve 15% of the price reduction target, the procurement of nickel alloy made in france. And other parts assembled to the final product, shipped to the customer, the customer reflects the performance is not up to standard. This is a big problem, affecting the customer's own production line, delay time. This huge loss, even if the supplier is not enough to sell the loss.

Product department of punitive expedition, hundreds of products have been sent to all over the world, if the replacement of parts, optical parts cost is hundreds of thousands, there is a huge logistics cost, and customer trust crisis and future business losses are incalculable. The interesting thing is that the supply chain business manager believes that by reducing the purchase price to help companies save so much money, should be promoted to. As for the quality of the accident, he felt that this is a matter of the quality department, with nothing to do with their own.

This problem is the quality of the accident on the surface, in fact, a procurement problem. Procurement dereliction of duty lies in three aspects: first, the development of 15% of the price index under consideration. People who do not do not know the approximate profit margins of suppliers, especially in the case of major raw material prices doubled. Although the supplier is exclusive, but the price is the lowest. When issuing, many suppliers bidding, can not find a lower price than the supplier.

Second, such a substantial price cuts, which means there is a big risk. Procurement needs to analyze the risks, so that the company's understanding of these potential risks, supervise the quality control. Procurement in order to achieve their own goals of the promotion of this risk, and assume that other departments are aware of the wrong is wrong. With a professional words, not to others as God, that they have the ability of foresight, but to make ourselves as close to god.

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