e-Sourcing

As shown in above imgae which clearly represent the cycle and the boundary lines of e-procurement and e-sourcing.
As shown in above image which clearly represent the cycle and the boundary lines of e-procurement and e-sourcing.

e-Sourcing can be use as complete procurement solution where in same system procurement (paperless) process and Sourcing process coexists. However most of companies has implemented the other way i.e. they use this tool frequently as negotiation tool which helps them to negotiate specially in the circumstances where human factor involvement is more to elaborate more our team has covered all the buying item n industry being a automotive parts, being allocation of share of business, buying of general purchase items, capex one time investment related items or being the consumable item in canteen facility a salt, cabbage or even the liquid detergent soap.

When ever we use e-sourcing as tool or platform where all seller comes together and in real time they decide the selling price of item without knowing who is there competitor online and also with a transparent approach from buyer as well as seller side. This we term as ‘reverse auction’.

And in case of selling e.g. scrap where all buyer comes online and place their bid to get the business we call this event as ‘forward auction’.

Virtually, where ever transaction of money is involved and possibility of buying from more than one equally competitive source exists we can apply the e-sourcing tool and it give unbelievable benefit. Let me share the case of buying packing wood (where ever we could not avoid the usage ) our existing buying rates was near to INR 205 per cubic feet ( figures are notational only) existing supplier has quoted INR 220 per Cub ft and there was other interested source among same state who has inter quoted varying from 210 to 290 INR per Cubic feet. With such a wide gap first time we decided to go for e-sourcing i.e. n line bidding or on line reverse auction to our surprise we not even avoided the increase we landed with saving of approx INR 8 per cu feet which resulted in good saving.

Success of any forward or reverse auction event depends on how well the terms and clauses ans RFQ document is prepared which guards the interest of buyer as well seller may be against commodity fluctuation, supply scope, technical-commercial requirement packing conditions whom to approach in case of clarification and define contract period.

Most of the cases where we always fails by manual negotiation we get more satisfaction by getting good result thru e-sourcing



Avobe is the table, which show various area where we can apply the e-sourcing. However when it is clear that user is require some specific brand like if you want SONY brand TV then this tool is not effective.

New Delhi: Pulse of Auto Expo 2010

Delhi Auto Expo 2010:

New Delhi’s Auto Expo is Largest after China’s motor show. Indeed a great place for automobile admirer and also to sourcing professional around the world, Why around the world?
If we look in to below fact this would be answered :
1. India is second largest two wheeler market
2. Fourth largest Commercial vehicle manufacturing hub.
3. 11th largest passenger vehicle manufacturing car market.

Also with the fact that all global brands present in India.

Certainly, the show has grown much faster and at matured stage and attaracting sourcing professionals, as well as sellers.
It is also in media that entry fees to be Increase by ten times this time like Rs 100 to Rs 1000 per person to restrict unwanted crowd.

How to reach Auto Expo:-
1. By Air: There is Direct Taxi available to Pragati Maidan from Air port also, We can approach Dawarika Metro Station and from their to Pragati Maidan if willing to travel Metro train and save travel timing significantly.
2. By Train: We can either get the Local Auto, hired Taxi to Pragati Maidan or else we can take Metro train (there is underground station if we exist from plateform no 14 -16 side ).
3. By Road: Pragati maidan gate no 1 & 2 is situated on Bhairon Road opposite to bus stand of pragati maidan and gate no 3 to 8 are on mathira road .opposite national sports club and back of supreme court building.
Not to forget get register yourself as visitor online on site autoexpo.in.

Area if interest for sourcing professional:
Auto Expo has revealed to the world, the rapid developments in the industry and has been the launching-pad for many new vehicles as well as new technology components. even though sourcing or development person has to be at factory end for one or other development issues or projects but now a days buyer or sourcing professional more or less limited to the supplier base for the commodity being handled by them. So this is very good place to know what is new buzz in technology and what alternative can be explored for different manufacturing processing.
The Auto Expo is therefore not only a networking ground, but also a place to find business partners and strategic alliances for manufacturing, outsourcing, sub-contracting, design and development as well as direct marketing.

Events lined up in Auto Expo
Events
6th January 2010 --->SIAM – SMMT (UK) Seminar on Low Carbon Vehicle Technology
7th January 2010 ----->Seminar on “Recycling of Vehicles”
7th January 2010 ----->Seminar on IP Management Through Brand Protection
7th January 2010 ---->SIAM IVth Styling & Design Conclave
8th January 2010 ---->SIAM Auto Trade Dialogue
9th January 2010 ---->Conference on Transport

New Car launches during Auto Expo 2010:
Tata: Aria, Magic iris, Venture
Maruti: R3
Toyota Etios
GM: Beat, Spark Electric, Aveo CNG

Source information:
Auto Expo Site: www.autoexpo.in,Vicky.in
Layput plan of Auto expo can be excess through: http://www.autoexpo.in/images/Auto_expo_2010_Exhibition_Layout.jpg

Advance Sourcing- overview and steps

In today’s world customer is more demanding then ever before, off course customer too want to have VFM (value for money), this quick change of flavor of customers creates demand or chain of more products at faster pace. This chain of demand force product to extinguish or vanish from market much faster pace thus on other hand it also reduced the effective life time when companies can charges premium on product.
Our designers and development team continuously keep on working to launch new products to continue their (Company's) presence in market. Thus it has also put up the pressure on people in organization responsible, or more accurately worried, for cost controlling (we will talk in other blog over cost controlling).As product changeover time has squeezed, now gone the days when more than 70-80% part remain common in new models.
On the one side, it has put pressure to implement any conventional way of reduction idea or suggestions, also on positive side it has open up more numbers of parts to consider for innovative approach of reducing the material cost rather than keeping focus on same item for year and year on.
Before we move further we should also understand the situation of our supplier/vendors/ channel partners (whatever term you give), unless their organization motive of existence is not taken care then it may happen they may help today but surely fall back under critical times like once seen in FY 0809, due to liquidity crunch. There is also conventional easy way out, by passing all the pressure to our supplier/vendor in terms of commercial negotiation. I knew there would be contradicting views, certainly would be there and that should be because personally I too believe supplier should be put under certain pressure level which will force them to find new way of reducing waste of process, time or material. It has been observed when you remove the tracking on supplier's processes either supplier will not at all pass the benefit of reduction generated by ongoing improvement in process or any innovative method use to optimized productivity or marginally passed on. It is also quite evident, when development agencies like vendor development or supplier quality development group taken under lenses of reduction initiatives, these hidden process improvement or reductions surfaces. Organization where price controlling department and development are totally isolated, company have advantage to have centralized controlled, less expose to fraud, processes on cost control but also losses the advantage of passing information from development person, who keeps watch on day to day activities at supplier end. We can also justify like it is heard that for a Maruti's supplier it is mandatory to reduce certain PROCESS cost every year, being a market leader in certain categories, they may adopt this approach but most common approach in industry is to have special prices for certain models, where underlines are under pressure.
Now coming to our main point of discussion, We use advance sourcing to reduce material cost, classic and effective examples can be taken as TATA MOTORS’s ‘Nano’ , ACE or even companies like Sterlite, Dabur exploring and implementing such options. If one open the Sterlite site where supplier registration itself is on service provider of e-Sourcing. one of unique buyer in this category is A. P. Govt. who floats On line tender to get advantage and transparency in system.
Advance sourcing: This is systematic effective way to short list the probable source of material by calling most technology qualified suppliers available in market and quoting for best competitive pricing for a given product or part. This is most effective in budget base projects, because before starting the exact development we come to know more accurately, what would be the final material cost looks like compare to convention method of developing at one supplier then look for alternate source.
If we draw graph of time versus amount saved it goes exponentially from design stage to regular in procurement part i.e. more early we go for negotiation more chances and scope for savings later with stabilize design and processes leaves very limited scope for innovate and puts pressure on supplier only.
General steps followed in advance sourcing:
Supplier pool selection: This process is treated to be the backbone of whole process unless we have equally qualified and technologically capable supplier base we can not consider them to compete on price front for example in India we can not compare logistic solution provider ‘GATI’ services with any transporter operating with few nos of fleet of trucks,it may not always fetch same level of service result.
RFI & Freedom for design: after short listing of equally qualified suppliers like any other development process RFI should be floated. Remember more freedom you give supplier to design better the chances of competitive pricing however we can put constraint of technical requirement very clearly like usage on RM, overall Size, what desired function is expected from part/product. What certificate or approval should product qualifies or provision for future changes in product. It is observed that more freedom we give under restricted requirement better result came from supplier itself this is more effective in proprietary nature product.
Shortlisting based on approval of design: Supplier desin must qualify in basic desired parameters before going further and development lead time along with cost can be taken major shortlisting criteria.
Initial quote round: As mentioned in point 4 before going for final negotiations of bidding supplier quote can be taken for shortlisting commercially competitive supplier utill nos of finall supplier remains more than finally desired nos.
Final negotiation: different companies adopts different ways for final negotiations few takes sealed bids, few call one to one negotiations, few goes for open tendering or bidding for limited suppliers and best one is using negotiation tools available e-Sorucing.
Next session will share and cover experience of e-Sourcing usage for sourcing of in component manufacturing and services

Total Cost Management

Recently I had attended the program on total cost management by CII, before we strat tour for direct material topic it would be nice to have overview of total cost mangement.

Total Cost Management

overveiw:

Traditionally, when we refer to project management it only begins with initiation of project.does not address what happens before a project is initiated; i.e., how is the project identified and decided upon among other operating, maintenance, or investment options available to an enterprise. Total Cost Management maps the process upstream of project management

What is TCM (Total Cost Management) ?
Many people label TCM as cost cutting methods on the contrary, it is not a stand alone cost cutting method rather it is distinct approach to cost management built around technique, system & tools. A unique element of the TCM process is that it integrates all the steps that an organization must take to deploy its business strategy.
Total Cost management is company wide systematic and structured approach , which provide holistic framework to control, reduce and eliminate costs, throughout the value chain.

Component of Total Cost:
Prime Cost: Price Cost consists of cost of direct materials, direct labors and direct expenses. It is also known as basic, first or flat cost.
Factory Cost: Factory cost comprises of prime cost and in addition works or factory overheads that include cost of indirect materials, indirect labors and indirect expenses incurred in a factory. It is know as works cost, production or manufacturing cost.
Office Cost: Office cost is some of office and administration overheads and factory cost. This is also termed as administration cost or the total cost of production.
Total Cost: Selling and distribution overheads are added to the total cost of production to get total cost or the cost of sales.

Table can be reffered to summrized way:-





We can say there are four pivots for TCM
1.Total Cost Consciousness.
2.Total Cost Measurement.
3.Total Cost Responsibility.
4.Total Cost Improvement.

Before we understand TCM we should be aware what is cost cutting and cost management?
Cost Cutting:
1. It is random and not based on business plan.
2. It is rarely relates to profits.

Cost management:
1.to identify and eliminate non value added costs.
2.to identify and evaluate new activities that can improve the future performance of the organization.

last not the least this not the complete TCM explaination but to give brief idea major aspect covered,It also cover ABC ( activity based costing), ABM( activity based mangement), breakeven analysis, invetory management and target costing
Not all but in next topic shortly,I would cover ABC ( activiy based costing).

Cowboy Wisdom: Seen in the workplace

Cowboy wisdomCowboys know that when you discover you are riding a dead horse the best strategy is to dismount and change horses. In business, however, it seems that we try other strategies with dead horses:
1. Buy a stronger whip.
2. Change riders.
3. Say things like, "This is the way we always have ridden this horse."
4. Appointing a committee to study the horse.
5. Arraging to visit other sites to see how they ride dead horses.
6. Increasing the standards to ride dead horses.
7. Appointing a tiger team to ride the dead horse.
8. Creating a training session to improve our riding ability.
9. Change the requirements to declare "the horse is not dead."
10. Hire a contractor to ride the dead horse.
12. Harness several dead horses together for increased speed.
13. Declare "No horse is too dead to beat."
14. Provide additional funding to improve the horse's performance.
15. Purchase a product to make dead horses run faster.
16. Declare the dead horse "better, faster, and cheaper."
17. Form a quality circle to find uses for dead horses.
18. Revisist the performance requirements for horses.
19. Promote the dead horse to a supervisory position.

Unfortunately the option of budgeting for a new horse and feed to keep said horse alive is almost never considered.
(source: net)