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.