Question

Remaining competitive means that supply management must contribute to profitability by focusing on growth and innovation as well as cost saving. World class supply management requires that leaders align with business unit stakeholders, understand their requirements for success, develop a deep insight into the global supply market’s ability to meet these requirements and negotiate contracts, manage supplier relationships that create a competitive advantage. Making sourcing decisions is a dynamic and difficult task, given the complexity and challenges that exist under current market condition. Select and visit an organisation you are familiar with. As a Supply Chain Management consultant tasked with guiding the organisation, you are required to develop a report that will provide a competitive advantage through strategic sourcing. Your report should cover the following aspects of strategic sourcing: 2. Categorise the criteria used for supplier evaluation at Nike footwear. Explain how this could be improved, providing suggestions on other criteria. (15)

Answer 1

Competitive conditions on markets have gone through changes in the last decades, which have led to a need for companies to adapt to new requirements imposed on them either by consumers or competition. Competition is affected by market changes and the requirements for companies to stay competitive in these markets. Conditions effecting the environment are changed buyer preferences, increased globalization, shorter product life cycles and technology changes. Due to changed market situations companies are driven to give first priority to cost and cycle-time reduction, quality improvement and focus on core activities. It could also mean opportunities for companies to take advantage of new needs or minimize threats of competition. To do so they need to recognize these opportunities and develop effective strategies to ensure their success.

SMEs can gain competitive advantages by implementing a strategic thinking in the organization. The applied theory is not as simple and uncomplicated in reality. The process of implementing strategic purchasing is long and a constant project that preferably has to penetrate the whole organization, especially management level. The process of implementing a strategic plan for SMEs can be seen as relatively difficult, due to the limiting factors mentioned before. The theories are more appropriate for larger enterprises but there are some aspects of the strategic sourcing which SMEs can apply to enhance their competitiveness. Information technology is one of these aspects. It has long been considered an area where SMEs can’t develop since they lack the resources but technology is constantly under development, because of it there are more realistic options for SMEs to adopt to their sourcing plan and an area where managers should follow the market changes. To keep in mind is that supplier’s performance matter, but it is the resources of suppliers that are the main competitive advantage and it is in this area where supplier development and sourcing strategies should focus.

Use of Internet in strategic sourcing may generate advantages by joint resources, insight in supplier’s organization and make the implementation of network sourcing effective, saving resources. Using a common database or communication channel allow the buyer and supplier to have a more streamlined collaboration, where less human resources is needed for both operational and strategic interaction. The process is long and implementation in the organization can cost more than the use of the technology, that is why long-term goal has to be defined, to make sure that the wanted advantages is fulfilled.