BUYER SELLER PARTNERSHIP BY TEJ MAGAZINE
Jan 10, 2016
BUYER
SELLER
PARTNERSHIP
BY
TEJ MAGAZINE
HIGHLIGHTS
• WORKING TOGETHER WORKS
• INDUSTRIAL BUYING PHASES
• TRADITIONAL V/S MODERN
• STAY AND MOVE FORWARD
• BUYERS EXPECTATIONS
• -QUALITY - PRICE - SERVICE
• Contd….
• Contd…...
• VENDOR EVALUATION
• SELLER EXPECTATIONS
• TECHNICAL -COMMERCIAL -DIGNITY
• AGREEMENT ON PROCUREMENT SYSTEMS
• INTER ACTIVE PROCESS
• ALL INDIA VENDOR MEET
-EXPERIENCE SHARING
WORKING TOGETHER WORKS
“THERE IS NO LIMIT TO WHAT A MAN CAN DO, AS LONG AS
HE DOES NOT MIND, WHO TAKES THE CREDIT. TEAM
BUILDING WORKS. BUILD A CORE GROUP AROUND
YOURSELF
Contd….
Contd…...
AS AMERICAN BILLIONNAIRE OIL TYCOON J.
PAUL GETTY CALLS THEM “MEN WITH THE MILLIONNAIRE
MENTALITY . PEOPLE, WHO ARE FORWARD THINKING,
COST CONSCIOUS AND PROFIT ORIENTED, AND, THEY WILL
BUILD TEAMS AROUND THEMSELVES, WHICH, SURE WILL
BECOME A PYRAMID, REACHING FOR THE MOON”.
INDUSTRIAL BUYING PHASES
• LOWEST PRICE
• RUPEE SAVED IS RUPEE EARNED
• BUDGET PRICING & PROFIT CENTRE CONCEPT
• IMPORT SUBSTITUTION & VALUE ENGINEERING
LIBERALISATION OF ECONOMYNEW CHALLENGES ON BUYING
CUTTING EDGE COMPETITION /SURVIVAL OF THE FITTEST COST BENEFIT ANALYSIS THRUST ON OUTSOURCING JUST IN TIME (JIT) SUPPLY MANAGEMENT CONTINUOUS QUALITY IMPROVEMENTS CONTINUOUS COST REDUCTION ENVIRONMENT FRIENDLY BUYING
OR GREEN PURCHASE CULTURE
COMPUTERISATION / NETWORKING / ECOMMERCE
Contd…..
Contd…… ULTIMATE RECIPE FOR SURVIVAL
• SUPRA PURE QUALITY
SUPRA LOW COSTS
FOOL PROOF SAFETY NORMS
ZERO EFFLUENT DISCHARGE
•BUYER - SELLER PARTNERSHIP & BUSINESS UNDERSTANDING ACHIEVES SIGNIFICANT IMPORTANCE
•CHALLENGES TO MATERIALS MANAGER INDIAN MM PROVED HIMSELF ADAPTABLE TO CHANGE
CONQUER DIFFICULT SITUATION TO KEEP THE INDUSTRY’S WHEEL MOVING
NOW FULLY GEARED UP TO MEET MODERN DAY CHALLENGES OF GLOBALISED BUSINESS ENVIRONMENT
CUSTOMER IS THE KING GETTING SUBSTITUTED WITH
CUSTOMER & SELLER ARE EQUAL PARTNERS IN PROGRESS
BUYER AS RIGHT ARM
SELLER AS LEFT ARM
INPLANT MANUFACTURING V/S OUT SOURCING EUROPEAN/US CONSERVATIVE PRACTICE : INPLANT MANUFACTURING
JAPANESE PRACTICE:MAXIMUM OUTSOURCING
INDIA IN BETWEEN BOTH, BUT NEW THRUST ON OUTSOURCING
EXAMPLES OF OUTSOURCING CANON PROCURES 89.9% COMPONENTS BY
OUTSOURCING
SONY PROCURES 98.8% BY OUTSOURCING
CASIO NO. MFG.FACILITIES,ONLY VERY STRONG DESIGN FACILITY
Contd…..
Contd….
OUT SOURCING ADVANTAGES
SUPPLIES ON JIT BASIS
LOGISTICS ADVANTAGE
LEAST INVENTORY CARRYING COST
LEAST OPERATIONAL OVERHEADS
LEAST HUMAN RESOURCES DEPLOYMENT
PAY FOR ACCEPTABLE QUALITY/QUANTITY
VENDOR EVALUATION
MOST IMPORTANT IN BUYER/SELLER ALLIANCE
PROCESS (POINTS ALLOCATE)
60% : QUALITY
25% : DELIVERY
10% : SERVICE
5% : PRICE
INCORPORATE IN SYSTEM AS ON GOING PROCESS LINKED WITH EACH P.O / RECEIPT.
Contd...
Contd…...
ONLINE DATA
QUARTERLY REVIEW
EDUCATE DEFAULTERS
CONTINUOUS REJECTION
SUSPEND VENDOR
RE-INSTATE ON NORMAL NEW VENDOR DEVELOPMENT PROCEDURE
AWARDS /RECOGNITION
VENDOR’S ROLE VERY IMPORTANT TODAY.THEREFORE, THE CONCEPT OF PARTNERSHIP
MR. CONCORD COEN, DIRECTOR-CHRYSLER MOTORS,USA,
MENTIONS THAT “LONG TERM RELATIONSHIPS WITH FEW
VENDORS, WOULD BE NECESSARY IN THE NEW CENTURY”. HE
FURTHER MENTIONS THAT U.S. COMPANIES ACHIVE RESULTS
IN ENSURING “ZERO DEFECT” MATERIALS SUPPLIES,
THROUGH “QUALITY EXCELLENCE AWARD”
• CONCEPT OF QE AWARDS NOW PREVALENT IN INDIA, TOO.
TRADITIONAL V/S MODERN APPROACH
TRADITIONAL BRAND LOYALTY CONCEPT CONSISTENT RELATIONSHIP & CONFIDENCE IN EACH OTHER
DEVELOPED OVER A LONG PERIOD NO ATTEMPT IN IMPROVEMENTS OR CHANGE LIKE DEDICATION TO KIRANA SHOP/ DHOODWALA/
AKHBARWALA
MODERN KAIZEN:CONTINUOUS INCREMENTAL IMPROVEMENT GEMBA KAIZEN : CONTINUOUS IMPROVEMENT AT
WORKPLACE CCQM: CONTINUOUS INCREMENTAL
IMPROVEMENT,CULTURAL CHANGE & QUALITY MANAGEMENT
HENCE THE VENDOR GETS FULLY INVOLVED AS THE PARTNER IN PROGRESS & NOT MERELY AS A SUPPLIER OF GOODS.
STAY & MOVE FORWARD IN BUSINESS
ACHIEVE WORLD CLASS QUALITY
IMPROVE FURTHER WITH ACCENT ON EXCELLENCE
ACHIEVE THROUGH QUALITY:
MATERIALS
OPERATIONS
PEOPLE
PROCESS
PRODUCTS
CUSTOMER SERVICE
Contd…...
Contd...
VENDOR MUST UNDERSTAND BUYER’S CULTURE & BUSINESS PHILOSOPHY,ADOPT THE SAME IN HIS OPERATIONS, FINE TUNE FOR ULTIMATE CUSTOMER DELIGHT.
VENDOR ROLE HIGHLY IMPORTANT
CREATE WIN WIN SITUATIONS.
BUYER’S EXPECTATIONS FROM A SELLER
• QUALITY
• PRICE
• SERVICE
QUALITY
FIRST & FOREMOST IN BUYER SELLER RELATIONSHIP
ANCIENT SAY: “PREVENTION IS BETTER THAN CURE ” APPROPRIATELY APPLIES IN MAINTAINING CONSISTENCY IN QUALITY.
EGYPTIAN PHARAOHS “BOOK OF THE DEAD” DOCUMENTED QUALITY SYSTEM RELATED TO BURIAL OF THE DEAD BODIES OF THEIR NOBILITY.
“HALL MARK “ SYSTEM FOR GOLD & SILVER 1140 AD
ISO 8402 DEFINES QUALITY AS :
“THE TOTALITY OF FEATURES AND CHARACTERISTICS OF A PRODUCT OR SERVICE, THAT BEAR ON ITS ABILITY TO SATISFY STATED OR IMPLIED NEEDS”
Contd…...
Contd…….
WE CAN FURTHER SUPPLEMENT ISO DEFINITION WITH:
FITNESS FOR PURPOSE: VALUE FOR MONEY
RELIABILITY : CUSTOMER SATISFACTION
CONFORMANCE TO REQUIREMENTS
WORLD WAR II EXPERIENCE BROUGHT IN COMPLEXITIES IN MFG. PROCESSES & PRODUCTS
ORGANISED QUALITY INSPECTION TOOK FIRM ROOTS.
TODAY’S THRUST
• ZERO DEFECT
1P.P. MILLION
VENDOR PERFORMANCE IN QUALITY DEPENDS ON BUYER EDUCATING THE VENDOR
TOTAL QUALITY CULTURE
QUALITY AUDIT
PRODUCT REQUIREMENT & SPECIFICATIONS
INPUT STANDARDS
Contd…….
Contd…..
PROCESS REQUIREMENT
INDENTICAL QUALITY TESTING STANDARDS & INSTRUMENTS
TRAINING AT ALL LEVELS
INTERACTION WITH DIRECT USER-ANALYSER/R&D/CUSTOMER PURCHASE-MAJOR ROLE IN CO-ORDINATION
OUTCOME
QUALITY ASSURANCE PRACTICES COUPLED WITH THE THEME “VENDOR AS A PARTNER IN PROGRESS “ ENSURES THE VENDOR TO PERFORM TO DEMANDING QUALITY EXPECTATIONS OF THE BUYER
PRICE
A BIG NO TO: LOWEST-FIXED-ARBITRARY-GOVT. ADMINISTERED-
CANALISED PRICES.
YES TO:
COMPETITIVE OR OPEN MARKET ECONOMY PRICING
RIGHT PRICE FOR THE RIGHT QUALITY
BALANCED PRICE FOR REQUIRED QUALITY
WIN WIN PRICE FOR THE BUYER & SELLER
LINKAGE PRICE (COMMODITY EXCHANGES)
TRANSPARENCY IN COSTING
KEEP PRICES FIRM FOR LONGER DURATIONS
WIDE ACCESS TO MARKET INFORMATION
SERVICE STRICT ADHERENCE TO COMMITED DELIVERY
RIGHT QUANTITY AT RIGHT TIME
HELP BUYER TO OPERATE ON LOW INVENTORIES (JIT OR “SHOP FLOOR TO SHOP FLOOR “ CONCEPT)
ENSURE CONTINUITY IN BUYER’S MANUFACTURING OPERATIONS UNDER ALL SITUTATIONS
KEEP CUSTOMER’S CUSTOMER IN MIND
ADEQUATE & ECO-FRIENDLY PACKING & PACKAGING
Contd……
Contd…
ZERO OR NEGLIGIBLE DEFECT QUALITY
PRODUCT SHELF LIFE
QUICK REPLACEMENT OF REJECTION
RESPONSE TIME TO COMMUNICATION
GENUINE GOODS / NO ADULTERATION / DUPLICACY
Contd…...
• Contd…….
• CORRECT WEIGHT / MEASUREMENT
INTEGRITY OF HIGHEST ORDER
MEETINGS & VISITS BY PRIOR APPOINTMENTS
CORRECT DOCUMENTATION
SELLER SHOULD NOT TAKE ADVANTAGE OF MONOPOLISTIC SITUATIONS
•SELLER’S EXPECTATIONS FROM BUYER HIGHEST INTEGRITY & HONESTY FROM BUYER
VENDOR REFLECTS BUYER’S HONESTY IN PRICE
• EDUCATING VENDOR ON QUALITY / PROCESS / SYSTEMS/IMPROVING VENDOR PLANT
EDUCATION A CONTINUOUS PROCESS
DETAILED TECHNICAL REASONS FOR REJECTIONS
NO TO “POOR QUALITY” / “ BAD WORKMANSHIP ETC.
Contd…..
Contd…
GUIDING VENDOR ON : IMPROVEMENTS
GUIDING VENDOR ON:COST REDUCTION
GUIDING VENDOR ON : TECHNOLOGY UPGRADATION
GUIDING VENDOR ON: ECO-FRIENDLY MANUFACTURING
Contd……
Contd…...
GUIDING VENDOR ON : SAFETY
GUIDING VENDOR ON : RIGHT SOURCING
GUIDING VENDOR ON : LOGISTICS / RETURNABLE PACKAGING
GUIDING VENDOR ON : “ISO - 9001 / ISO-14001”
OTHER INTERNATIONAL STANDARDS
• Contd…….
Contd….
COMMERCIAL SUPPORT TO VENDOR
ONE WINDOW SERVICE: PURCHASE DEPT.
LOCATING MISPLACED DOCUMENTS
PAYMENTS AS COMMITED
DEDUCTIONS NOT ARBITRARY, REASON TO BE GIVEN
TIME BOUND RESPONSE TO OFFERS & FINALISATION OF PURCHASE ORDERS
FINALISATION OF ORDERS ON STRICT TECHNO COMMERCIAL MERIT
Contd…..
Contd……
C FORMS & ALLIED DOCUMENTS IN TIME
NO SUDDEN CANCELLATION OF P.O’S
HELP VENDOR IN LIQUIDATING RM STOCKS
HUMAN RELATIONS IMPORTANT
BUYER SHOULD BEHAVE AS ELDER BROTHER
NO UPMANSHIP OR UPPER HAND BEHAVIOR FROM BUYER
TREAT SELLER WITH DIGNITY
RECEPTION AT ENTRY CREATES BETTER CORPORATE IMAGE (L&T EXAMPLE)
COURTESY / GOOD BEHAVIOUR
AGREEMENT ON PROCUREMENT SYSTEMS
SUPPLIER QUALIFICATION
PRODUCT SPECIFICATION
PRODUCT TESTING METHODS
QUALITY ASSURANCE
TOTAL QUALITY MANAGEMENT
PRODUCT INSPECTION
HOUSE KEEPING
ENVIRONMENT & SAFETY
OPERATING SUPPLY SYSTEM (JIT)
LOGISTICS
DISPUTE SETTLEMENT
RECYCLING OF WASTES ETC.
*
INTER-ACTIVE PROCESS
VISIT VENDOR REGULARLY GUIDE VENDORS EMPLOYEES AT VARIOUS LEVELS ONE TO ONE MEETING WITH INDIVIDUAL VENDORS ALL INDIA (WORLD) VENDOR MEET ONCE IN A YEAR MOTIVATIONAL AWARDS / RECOGNITION LOW VENDOR BASE HIGH VOLUMES WIN WIN SITUATIONS
Contd...
• Contd…..
• BETTER INTERACTION
LONG TERM RELATIONSHIPS
PARTICIPATE IN SOCIAL FUNCTION OF VENDORS
INVITE VENDORS TO YOUR FUNCTIONS
CREATE SENSE OF BELONGING
MUTUAL RESPECT / FAITH & CONDFIDENCE IN EACH OTHER
ALL INDIA VENDOR MEET EXPERIENCE SHARING
MY PERSONAL INVOLVEMENT IN FOSTERING VENDOR / VENDEE RELATIONS DATES BACK TO 1981, WHEN I STARTED FOR THE FIRST TIME REGULAR ANNUAL VENDOR MEETS IN THE COMPANY, I WORKED FOR SINCE THEN SUCH ATTEMPTS CONTINUE . IT WOULD BE INTERESTING TO SUMMARISE THE FINDINGS OF ONE OF THE VENDOR MEETS, AS UNDER:
THE DATA WAS COLLECTED FROM THE VENDORS PRESENT, BY CIRCULATING AN ANALYTICALLY DESIGNED QUESTIONAIRE.
Contd…..
• Contd…... VENDORS WERE REQUESTED NOT TO SIGN OR WRITE
THEIR RESPECTIVE NAMES, SO THAT THEY COULD EXPRESS THEIR VIEWS FREELY AND FRANKLY.
OUT OF 49 VENDOR PRESENT, 29 RESPONDED.
THE COMMON PROBLEMS HIGHLIGHTED WERE REQUEST FOR REASONS OF REJECTIONS.
INTIMATION AND DESPATCH OF REJECTIONS WITHIN A REASONABLE TIME.
DELAYED PAYMENT, AND PAYMENT TO BE RELEASED BY DD ONLY AND DD CHARGED TO VENDOR A/C.
PERMANENT GATE PASSES TO REGULAR VENDORS FOR VISITING FACTORIES.
ENQUIRIES & P.O.s TO BE ISSUED WITH COMPLETE SPECIFICATIONS.
NEW PRODUCTS TO BE ENCOURAGED.
DELAY IN SENDING C FORMS, ETC . ETC
• Contd…...
Contd…. OTHER HIGHLIGHTS OF VENDOR RESPONSE :
1. PURCHASE ORDERS FINALISATION. 70.8% VENDORS SENT PROPER QUOTATIONS AND 29.2% DID
NOT. 72.4% VENDORS MENTIONED THAT THEY DID NOT RECEIVE
ANY RESPONSE ON QUOTATION, WHEREAS 20.7% MENTIONED THAT THEY RECEIVED RESPONSE. REST SILENT ON THE POINT.
24.1% SAID THAT THEY RECEIVED ORDERS WITHIN A WEEK AFTER SUBMITTING QUOTATIONS. 20.7% RECEIVED WITHIN 16 - 30 DAYS. 27.6% WERE SILENT ON THE POINT.
93.1% MENTIONED THAT THEY DID NOT FACE PROBLEMS, WHEREAS 6.9% MENTIONED THAT THEY FACED PROBLEMS, WHICH WERE NOT SPECIFIED.
48.3% FELT THAT PERSONAL CONTACT HELPS IN THE PLACEMENT OF ORDERS. 34.5% DID NOT AGREE WITH THE VIEW . 17.2% WERE SILENT.
Contd…
Contd… 2. PRICES & PAYMENT
91.7% CASES, PRICES REMAINED FIRM, ONLY IN 8.3% UNFAVOURABLE FOR THE BUYER.
3. QUALITY
THE STUDY HIGHLIGHTED THAT 64.6% VENDORS CONSISTENTLY SUPPLIED QUALITY MATERIALS, WHEREAS 35.4% VENDORS HAD PROBLEMS IN THEIR SUPPLIES.
4. BEHAVIOUR
86.1% VENDORS RATED BEHAVIOUR OF PURCHASE PERSONNEL FROM “QUITE SATISFACTORY “TO” EXCELLENT ”, WITH MAXIMUM 27.6% WITHIN THE PERCENTAGE, RATED THEM AS “GOOD”. 3.4% FELT THAT BEHAVIOUR WAS NOT PROPER, WHEREAS 10.3% DID NOT SPECIFY.
IN 95.8% CASES VENDOR’S BEHAVIOUR WAS FOUND GOOD.
Contd…….
4. BEHAVIOUR
86.1% VENDORS RATED BEHAVIOUR OF PURCHASE PERSONNEL FROM “QUITE SATISFACTORY “TO” EXCELLENT ”, WITH MAXIMUM 27.6% WITHIN THE PERCENTAGE, RATED THEM AS “GOOD”. 3.4% FELT THAT BEHAVIOUR WAS NOT PROPER, WHEREAS 10.3% DID NOT SPECIFY.
IN 95.8% CASES VENDOR’S BEHAVIOUR WAS FOUND GOOD.