010411Ac-Bestpracticeindustryexamples Key player in computer industry – key figures Percent Average in computer industry ? ? 1999 revenues: $10 million 1999 headcount: 25,000 79.8 34.1 11.8 8.2 0.4 12-month -1.6 Net profit margin 12-month revenue growth net income growth Source: Hoovers online 30 010411Ac-Bestpracticeindustryexamples Key features of direct material procurement of computer manufacturer (1/3) Product development Procurement strategy design Supplier selection Material specfi- cation Procure- Forecasting ment Production Fulfillment Supplier develop- ment ? All manufacturing outsourced to contract manufacturer ? Mission critical components suppliers selected by company ? Standard components manufacturer selected by contract manufacturer ? Mission critical components purchased through electronic marketplace ? Concentration on fewer suppliers, 40 suppliers for 90% of production material need Source: Purchasing Magazine, McKinsey 31 010411Ac-Bestpracticeindustryexamples Key features of direct material procurement of computer manufacturer (2/3) Product development Production Procure- Forecasting ment Fulfillment Supplier develop- ment Procurement strategy design Supplier selection Material specfi- cation ? Supplier evaluation program determines which suppliers to keep and which to be added for the future ? Criteria for evaluation are: – Quality – Delivery – Cost – Technology – Service – Responsiveness – Lead time reduction ? Criteria for evaluation are weighted depending on the commodity to be supplied ? Suppliers strategic direction and technology development is investigated thoroughly Source: Purchasing Magazine, McKinsey 32 010411Ac-Bestpracticeindustryexamples Key features of direct material procurement of computer manufacturer (3/3) Product development Procurement strategy design Supplier selection Material specfi- cation Procure- Forecasting ment Production Fulfillment Supplier develop- ment ? Supplier
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