Supply chain management seminars 2015,business analysis exam,it certification exams,online it solutions pvt limited - Reviews

07.06.2014
By JIMMY ANKLESARIACompanies need to stop beating down suppliers on costs and collaborate with them to control costs for both parties, says Jimmy Anklesaria in his book, Supply Chain Cost Management: The AIM & DRIVE Process for Achieving Extraordinary Results.
On October 21, 1993, the Wall Street Journal published an article by the don of business management, the late Dr. As global competition becomes a hot priority for top management in many companies, there is going to be a scramble to lower prices at any cost. Once a cost management strategy team has been assembled, it is important that all members view the process before, during, and after their respective activities are performed. At this stage, depending on the level of cost knowledge or cost cooperation by a supplier, the team may take a stab at estimating the cost of each of the major activity boxes. Once the team has identified the topic, established its goals from different perspectives, completed the Goal Specification Worksheet, mapped the process, and understood the general cost elements associated with each cost activity, it is time to begin the process of identifying critical costs in the supply chain. The purpose of developing a cost breakdown for use in the AIM & DRIVE process is to understand the cost structure underlying a supplier's price and be able to identify critical costs in the supply chain. As noted earlier, the purpose of a cost breakdown is to identify critical costs in the supply chain, not to audit the price structure of a supplier. A well-known expert on cost management and founder of the Anklesaria Group, Jimmy Anklesaria conducts seminars and workshops on that topic for Fortune 500 companies as well as in college classrooms. Copyright © 2016 CSCMP's Supply Chain Quarterly, a publication of Supply Chain Media, LLC.
CSCMP's Supply Chain Quarterly is published by Supply Chain Media LLC, a joint venture of CSCMP and AGiLE Business Media LLC. It is the entire supply chain that ends with the ultimate consumer of the goods and services provided by the chain. It's the sum of the acquisition price paid by the company to all its suppliers (we'll call that "A"), plus the conversion costs incurred by that company (call it "B"), and the administrative, marketing, and distribution costs needed to bring the product to its customer, plus or minus a profit or loss ("C").
On the other hand, the supplier would prefer to increase its revenue (A) by increasing the price charged to the customer.


Process mapping for the purpose of writing a cost management strategy doesn't have to be very sophisticated. While it may be possible to estimate some of the costs, there are times when the customer has no clue whatsoever about the supplier's cost structure. Notice the words "supply chain." I have often observed that when teams consisting of two or more levels of the supply chain engage in an AIM & DRIVE exercise, the first thing the customer wants to do is tear down the supplier's price. The team needs to prepare a list of costs in each category, estimate the values of those costs, and identify which of those costs are critical in the supply chain. The views and opinions expressed in articles appearing in CSCMP's Supply Chain Quarterly are the authors' and do not necessarily reflect those of the Council of Supply Chain Management Professionals or of Supply Chain Media LLC. The most important steps include understanding how suppliers price their products and identifying suppliers' critical supply chain costs. How unfortunate it is that the traditional role of customer and supplier pits one against the other on the issue of price. As a company budgets for advertising, research and development, training, and management, so should it budget for a return on investment in the form of profit. In order to obtain cost information from a supplier, you should take the time to prepare a well-thought-out request for quotation (RFQ) that includes, among other information, a detailed breakdown of the supplier's quoted price. Despite all the persistence in the world, there are times when suppliers are still not willing to share cost data. That may be fine, provided the team has determined that the acquisition price is one of the critical costs in the supply chain. This is a symbolic gesture, but it is worth making in order to show a supplier that, as a customer, you do not expect it to run a charity. A good guide is the Cost Activity Worksheet (Figure 3), which was developed by Steve Frels and his Strategic Supply Management Services team at Deere and Company.
Ten years later, the Japanese automaker was indeed one of the largest manufacturers in the United States, and Bob's company was one of its largest suppliers of electronic parts.


In such cases, it helps to dig out the cost data from your internal records and use that as a base for estimating the cost breakdown of the supplier's quote. And it will continue to build as the benefits of true cost management are shared through the supply chain. Not surprisingly, it is the total revenue (total cost) of the next-level supplier in a particular supply chain. 1 is labor charges for the customer-service center operator, a cost that is fairly administrative in nature. You, the customer, are trying to understand the supplier's quotation better and are not attempting to be an auditor.
We would like to work with valued partner suppliers who think of us as someone special." The package included information about the customer's supplier relationship management program and its vision of being one of the largest manufacturers of automobiles in the United States within the next 10 years.
It's not that the supplier's price is unimportant; it's just that there also are so many opportunities for reducing your own costs. That is, for the acquisition price to drop, the total cost of the supply base has to decrease. As long as the prices are within a reasonable range, you can create an average price profile from the cooperative suppliers to estimate the cost structure of the uncooperative ones. If you were to go further, then you could do a similar Cost Activity Worksheet for the supply base, in which direct material becomes the bottom line for the supplier (we'll use A instead of X). Here, it must be made clear that under no circumstances should you share the specific numbers of one supplier with another. That means we have to sit down with a cross-functional team, including key suppliers or customers where necessary, agree on the need to manage costs, and begin Step 2 of the AIM & DRIVE process: identifying critical costs in the supply chain.



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