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Sourcing

Sourcing. Outline. cross-functional sourcing team examples of sourcing. 2. Cross Functional Sourcing Teams. 3. Cross-Functional Sourcing Team. firms surveyed in 1993 rising trend of cross-functional teams 70% planned to have such teams by 1997 expected impact from such teams

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Sourcing

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  1. Sourcing 1

  2. Outline cross-functional sourcing team examples of sourcing 2

  3. Cross Functional Sourcing Teams 3

  4. Cross-Functional Sourcing Team firms surveyed in 1993 rising trend of cross-functional teams 70% planned to have such teams by 1997 expected impact from such teams 107 cross-functional sourcing teams at 18 US-based corporations, with more than 700 individual participants industries: communication, automotive, computing devices, electrical, pulp and paper, electronics, electrical devices, photographic, auto components, industrial engines, farm equipment, transportation equipment, consumer products Robert J. Trent and Robert M. Monczka (1994) Effective Cross-Functional Sourcing Teams: Critical Success Factors, Journal of Supply Chain Management, 30(4), 211. 4

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  6. Factors Important for Success key organizational resources participation & involvement of suppliers level of decision makers team leadership effort spent in team assignment 6

  7. Example of Sourcing  Material for Flea Market 7

  8. Material for Flea Market keys cheap supply variety in supply scrapped goods, over stock, closing of firms, moving, etc. 8 肥跳蚤 年收百萬的秘密 商業周刊 2009-4 .

  9. Material for Flea Market seraching and receiving infomration searching: industrial parks information from bitter nut shops for factories around from cleaners, management and security office of building complexes, recyclers, moving companies, possibly with payment from infomration of failing shops to large wholesalers to exchange for the option of small batches from these large whoesalers 9 肥跳蚤 年收百萬的秘密 商業周刊 2009-4 .

  10. Example of Sourcing  Recycler 10

  11. Recyclers 15 legions in「第一資源合作社」 with more than 2800 persons 450,000 metric ton waste paper NT$ 6b profit margin 10% 11 街頭傳奇魏進益 商業周刊2008-4.

  12. Recyclers buying, not picking, paper balancing interest among legions two-part bonus system, one on revenue the other on location of material maintaining sense of belonging training, with examination to establish the co-op culture holding discipline, on family value and on loyality to co-op 12

  13. Example of Sourcing  Apparel on Web: Small Scale 13

  14. Apparel on Web: Small Scale 人氣衣著館!網拍開店完全攻略 a web company by a sophomore in 2000 starting with less than NT$15K to sell apparel initially supply from「五分埔」 photos of models to sell apparels later self-design clothes from subcontractors talking care of the whole process: design, sample, material sourcing, manufacturer selecting subcontractors by site visits in Taiwan and mainland small orders to test quality and reliability of subcontractors 14 大陸工廠當靠山 商業周刊 2006

  15. Apparel on Web: Small Scale small-size orders for customer reactions and large-szie orders for winners most effort on marketing and logistics management before 2004 monthly revenue NT$500k 2004 monthly revenue NT$1mill 2005 annual renvenue NT10 m, profit NT$200k 2005 annual renvenue NT12 m 15 大陸工廠當靠山 商業周刊 2006

  16. Example of Sourcing  Apparel on Web: Large Scale 16

  17. Year Rev. (NT$) 2007 2008 2009 2010 2011 Apparel on Web: Large Scale • lativ: set up in 2007 • polo shirt 600K pcs in a year • Disneyland T-shirt 200K pcs in a year 10 million 100 million 370 million 1.5 billion > 4 billion

  18. Selling on Web three issues: quick, cheap, good quality abilities: marketing in web, establishing brand name, and supply chain management hurdles by revenue, 10 million, 100 million, 1 billion 18

  19. lativ Founder: electronics by training and web designer in early career self learning the whole process; design, material, cutting, tailoring, sewing, laundry, ironingapparel simple clothes 19

  20. lativ stress on quality strict requirement e.g., industrial laundry for cotton material to clean, shrink, and remove defect destroy defective items send technicians to factory to guarantee quality 20

  21. lativ 2011: annual output 14 million items, only one possible supplier in the world to align with the supplier 3 months to meet various levels to establish relationship 6 months to 1 year teething period on-site technicians 21

  22. Home Depot 22

  23. History found in 1978 first opened in 1979 went public on NASDAQ in 1981 on New York Stock Exchange in 1984 2012 revenue US74.754B operating income US$ 7.901 billion net income US$ 4.535 billion (2012) 23

  24. Business Model large discount retailer specialized tools and material for home improvement and home decoration by passing wholesalers, the then standard channel, and dealing directly with manufacturers to save the 15% to 20% regarded as an infeasible business model stores too big hard to turn goods into cash insufficient cash flow hard to get bargains from suppliers with 2 to 4 stores 24

  25. Early Day Sourcing of Home Depot convinced suppliers by projecting the vision and the blooming prospect of Home Depot in retailing for home improvement networking and socializing with manufacturers  at least 3 dinners/weeks in high-end restaurants with suppliers promising large amount, often regarded as impossible by suppliers strength of Home Depot: expertise in sales long, repetitive but varying sale talks to make suppliers yield spent long time, e.g., four years, or even longer, to get a desirable supplier often several levels, convincing sales, then financial controller, and then CEO of suppliers 25

  26. Early Day Sourcing of Home Depot understanding the psychology of suppliers greed, passion on ideology, fame of their products asking for discount, e.g., additional 2% discount if sales reaching US$100K another 3% discount if adding sale US$150K another 5% if total sales reaches US$400K asking for long delay payment, one month common, but two to three months possible, and even 5 months for some cases sourcing and purchasing personnel in Home Depot constantly on business trips, in US and overseas 26

  27. Selection of Goods goods of high demand goods associated with Home Depot by customers, keeping even if not profitable omitting goods not matching image of Home Depot, e.g., leaving kids’ plastic swimming pools for ToyRus; goods related to home improvement and decoration 27

  28. Sourcing After Getting Large requiring suppliers growing with Hong Depot production capacity, distribution network, goods display, cooperation in sales, expenses in advertisement providing expansion plans of 4 to 5 years time frame to suppliers requiring the lowest price from supplier with absolutely no shortage, however powerful the supplier loyal to suppliers to some extent, but swapping to cheaper suppliers of better quality if no change after warning brands brand contractor, including development, for others creating brands of Home Depot having personnel from suppliers in Home Depot and Home Depot persons in suppliers 28

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