These three important and cutting-edge topics, which can all be viewed as part of supply-chain management, are brought together in a new chapter. In particular, e-commerce contributions to supplier and customer management are emphasised. New concepts that are covered in this chapter include enterprise resource planning (ERP) systems, customer relationship management (CRM), and B2B (business-to-business) relationships. | Chapter 16 Managing suppliers, customers and quality Supply-chain management Processes of streamlining the supply chain by managing costs, accelerating time-to-market of new products, and creating close relationships with supplier and customers May include the adoption of e-commerce technologies and cost management techniques Analysing supplier costs Activity-based costing can be used to estimate the costs of dealing with suppliers Costs associated with dealing with a particular supplier, other than the cost of purchased material and components Costs of purchasing - ordering, receiving and inspection Costs of holding inventory Costs of poor quality Costs of delivery failure Managing suppliers Evaluating supplier performance Supplier performance index: the ratio of supplier cots to total purchase price Measures may include ability to supply at the contact price, material quality, supplier delivery performance, quality of relationships between employees, union and management . | Chapter 16 Managing suppliers, customers and quality Supply-chain management Processes of streamlining the supply chain by managing costs, accelerating time-to-market of new products, and creating close relationships with supplier and customers May include the adoption of e-commerce technologies and cost management techniques Analysing supplier costs Activity-based costing can be used to estimate the costs of dealing with suppliers Costs associated with dealing with a particular supplier, other than the cost of purchased material and components Costs of purchasing - ordering, receiving and inspection Costs of holding inventory Costs of poor quality Costs of delivery failure Managing suppliers Evaluating supplier performance Supplier performance index: the ratio of supplier cots to total purchase price Measures may include ability to supply at the contact price, material quality, supplier delivery performance, quality of relationships between employees, union and management Measure may also focus on the purchasing firm’s performance within the relationship Managing inventory Why hold inventory? Cope with uncertainties in customer demand and in production processes Qualify for quantity discounts Avoid future price increases in raw materials Avoid the costs of placing numerous small orders with suppliers Conventional approaches to inventory management Focused on balancing Ordering costs: the incremental costs of placing an order for inventory Carrying costs: the costs of carrying inventory in stock Shortage costs (or out of stock costs) Economic order quantity (EOQ) The optimum order size for individual inventory items, to minimise the total ordering and carrying costs Timing of orders under EOQ Inventory re-order point (ROP) The level of inventory on hand that triggers the placement of a new order (or setup) Safety stock The extra inventory kept on hand to cover any above-average usage or demand Assumptions underlying EOQ Demand is .
