Sourcing plan

Sourcing plan for future requirements

Executive summary

The paper specifically associated with the detailed sourcing plan for the future requirement in the clothing business. Certain challenges are discussed in the paper to understand the formulations of the sourcing plan and made contingency planning to confront such challenges in a good manner. In the next section role of procurement and supply in managing purchasing expenditure and advance techniques for the improvement in purchasing discussed in the paper. The main theories of strategic sourcing are used in the paper like Leverage game theory in strategic sourcing as well as KRAJLIC MATRIX. RACI analysis also indicates the major composition of sourcing plan. The main measurement in sourcing plan indicates to understand the effective planning of purchasing, in last integrative negotiation strategy is use for the current sourcing plan for win-win relationships.

Table of contents

Executive summary. 2

Introduction. 4

Challenges in sourcing. 4

Technology and capacity weaknesses. 4

Transportation delays in global sourcing. 5

Longer inventory life cycles. 5

Custom and trade regulations. 5

Managing spend creep and ensuring cost containment 5

1.      Role of procurement and supply in managing purchasing expenditure. 5

1.1 Input from stakeholders. 5

2.      Techniques for the improvement in purchasing. 7

2.1 RACI analysis. 8

2.2 Leverage game theory in strategic sourcing. 9

2.3 KRAJLIC MATRIX.. 10

2.4 Traditional purchasing process. 10

2.5 Strategic sourcing. 11

3. Inclusion made in the contract 11

4.      Measurement of selection effective suppliers. 12

4.1 Price and quality. 12

4.2Delivery. 13

4.3 Supplier performance evaluation. 13

4.4 Feedback from suppliers. 13

4.5 Technical capabilities. 14

4.6 Risk identification. 14

4.7 Key deliverables. 14

5.      Aspects of purchasing or supply in negotiation. 15

Conclusion. 15

References. 17

Introduction

The sourcing plan creation has immense importance to meet the demands of customers.  The paper provides the detailed information regarding the execution of sustainable supply chain operations.  The area of expenditure is the purchasing clothing from Asia pacific that includes all types of fabric for the clothing business. In this regard, sourcing plan has been executed towards supply chain management for the initiation of major considerations in the production of clothing business. There are certain challenges faced under the composition of sourcing plan for the clothing business around the globe. The document provides detailed execution of procurement techniques and sourcing plan to intake major consolidations in supply chain management. (Faes & Matthyssens, 2009)

Challenges in sourcing

There are certain challenges in the sourcing plan that includes domestic as well as global procurement.  The main issues based on the capacity and technology weaknesses, delays in transportation in global sourcing, longer life cycles of inventory managing spend creep, trade and customs regulations and managing cost containment as well.

Technology and capacity weaknesses

When purchasing finish goods, lack of supplier technology and capacity reveals the major weakness in the sourcing that indicates the major threat for the company to regulate the firm supply chain management. Specifically in purchasing of clothing business, differentiation, as well as product development, are the main areas of company success.  Lack of technological capabilities and capacity utilization in the supplier selection process creates challenges in the planning of procurement.  (Olson & Wu, 2011)

Transportation delays in global sourcing

Longer cycle time as well as longer lead times initiates the major issues to meet the demands of the customer. For the sourcing plan, future requirements like measurements of distances should be taken to execute the best planning of sourcing finish goods.

Longer inventory life cycles

Longer distances of purchasing finish goods create issues in demand forecasting to the main planning of procurement to reveals best practices in the future requirements. 

Custom and trade regulations

The specifications of trade regulations need to be identity when purchasing from the global business environment.  The government rules and regulations and regulations of trade face challenge in the souring of finish goods.

Managing spend creep and ensuring cost containment

Implants of high charges towards differentiated sourcing and import of finish goods in the global supply chain operations. Highly motivated teams recognized to take best practices in the procurement for the future requirements.

1.                 Role of procurement and supply in managing purchasing expenditure

1.1 Input from stakeholders

There is the strong role of procurement in the supply chain management to execute the expenditures in the underlining of inputs.  There are certain activities included in the procurements that specifically include services, capital equipment, maintenance, repair and operating MRO for the exchange of integrated supply chain management towards sourcing plan. The primary goal of sourcing is optimized networks of the supply chain with the improvement in quality assurance with low-cost implementations.

 The role of procurement in the supply chain is right quality, right price, right place, right quantity, right time, right services and right source to retain the sustainability of supply chain management. Global supply chain operations, as well as shorten product life cycles, intake the major consolidations for the procurement and sourcing plan. Supply chain agility and flexibility has immense importance in the procurement of goods. Optimization of supply chain feasibility has been attained through agility of supply chain. The supply chain flexibility as well as strategic sourcing initiates for the confrontation of sustainable operation towards procurement.

Achievements in supply chain resilience are the main part of procurement to retain values of the supply chain.  In this regard, careful planning towards strategic souring builds to manage disruptions in the supply chain. Changing demands of the customer in clothing business creates challenges in purchasing.  In this regard, companies need to focus on the technological changes for best sustainability in supply chain executions. Procurement in an organization is the fundamental concept to retain the values of business. The integration of Sourcing, access, identification and management of the external resources is to meet supply chain strategic sourcing planning. Events and activities are included in the procurement before and after signing of contract. (Hasan & Alim, 2010)

The sourcing contracts specifically related to the need identification, planning, analysis and sourcing to integrate all function to generate effective outcomes. Supply chain management activities and contract management help in creating best result towards sourcing of clothing business.  The compliance of regulatory with the relationship of suppliers and planning of risk management provides the credibility in the best role of procurement in the supply chain executions. (MIAMI, 2015)

2.                 Techniques for the improvement in purchasing

There are certain techie needs to be identified in the purchasing for the improvement and sustainable supply chain operations. Single source procurement, two stage tendering, restricted tendering, request for quotations RFQs, request for proposals RFPs and open tendering are the main methods helps in improvement in purchasing with effective sourcing planning. Single source procurement is non-competitive technique and could be used only in the exceptional circumstances like emergency situations. In the single source planning that includes direct procurement form suppliers, sole-source selection, single source procurement and sole source procurement included in the acquiring of finish goods. (Steinru¨cke & Jahr, 2012)

 Two stage tendering as same as request for proposals where bidders assist technical requirements. The request for quotations specifically used for the small value procurements that are readily available for finished goods.  Invitation to quote is to select best quotation with high quality with low prices. Procurement through restricted tendering limits the request for tenders for the selection of contractors as well as suppliers. Selective tendering, limited bidding which is recognized as competitive bidding procurement methods reveals to generate effective outcomes in the sourcing plan.  On the other hand, open tendering technique recognized as competitive public procurement for the initiation of acquiring goods. Competitive bidding is identified under the open tendering. (Xiangling & Jaideep, 2014)

Request for proposal as well as the request for quotation are the common technique used for the procurement and attain competitive bidding in essential and adequate manner. Compelling type of proposals and unique documents has been identified for the execution of procurement method. Best price and best qualification of the supplier with effective cost assurance help in managing the supply chain execution in procurement. (Qureshi and Kumar, 2007)

In addition, there are others techniques in the supply chain management to initiates best quotation from suppliers. Supply market concentration, supply positioning, supplier referencing, supplier competitive strategies and supply market soundings are the most considerable procurement techniques in the supply chain management. In addition supplier selection process is also used for the execution of procurements technique for the procurement of goods.

2.1 RACI analysis

 The RACI analysis is the main methods that help in examining the role of stakeholders in the project execution. This analysis describes various roles and deliverables for the sourcing plan. It really helps in clarification of roles and responsibilities in the business processes. Responsible, accountable, consultant and inform are the abbreviated form of RACI analysis. 

Project: sourcing plan

Task Roles
  Procurements Engineer Designer Marketing
Business need recognition R A C C
Development of selection criteria RA C I  
Supplier sourcing RFI RA I    
Short listing suppliers RA C C  
Invitation of suppliers RFP RA I    
Visiting supplier facility C R A  
Negotiate RA C C  
Award contract RA      

R=Responsible

A= Accountable

C=Consultant

I=Inform

2.2  Leverage game theory in strategic sourcing

Applicability of game theory in sourcing process  
IMPACT   HIGH   Critical Strategic
LOW   Tactical acquisition Leverage

                        LOW                                                   HIGH

The buyer financial performance in terms of margin, revenues and risk exposure has best obtaining commercial terms. The impact and leverage of different categories of execution model indicate the specific knowledge and abilities in the sourcing practice. Efficient souring options raise its game as well as rapid payback by utilization of game theory.  Bidding metrics consolidates the spend category indicated by profile incorporated with the game theory principles to obtain efficient results towards strategic sourcing. (Genpact.com, 2013)

2.3 KRAJLIC MATRIX

Impact of profit   HIGH   Leverage products(Maximization of commercial advantage) Strategic products( Development of strategic relationships)
LOW   Non-critical products ( Effective procurement process) Bottleneck products (Supply continuity)
Supply risk  

                                                HIGH                                                              LOW

This matrix helps in demonstration of standardized strategic approach for the execution of best sourcing plan. This matrix helps in identification of supply chain risk in procurement of goods. Controlling of supply chain initiatives, centralized decision making, drive efficiency, product visibility and synergy identifications are the common characteristics of this matrix. Major improvements have been taken in this matrix like optimization, procedures, processes, system tools and standardization in the sourcing execution.    

2.4 Traditional purchasing process

 The process of traditional purchasing consist of different steps like soliciting bids, requisitions, shipping advice, payments, purchase orders and then invoices  for the unacceptable slow as well as labor intensive as slow.  The traditional purchasing model provides right quality and right quantity to negotiate in well manner. Divide and conquer approach in the purchasing also reveals that price concession from procurement of small batches. Many of the time certain companies does not focus on the career track positions that unable to survive in the competitive business environment. (Wei, Liu, Wang, & Wang, 2012)

2.5 Strategic sourcing

Evaluation of purchasing activities reveals to generate the strategic sourcing in essential and adequate manner. The strategic sourcing specifically integrated within the organization and reports to top management as well. The suppliers are resources and execution with eh suppliers are build under the strategic sourcing. In addition to this, resources focus on acquisition where the people create information. Creative & proactive, long-term decision frame and broad knowledge and skills are the main attributes of strategic sourcing.  The seven-stage process of strategic sourcing recognized in the following

1.    Understanding spends category

2.    Market of supplier assessment

3.    Development of supplier survey

4.    Development of strategy

5.    Request for proposal

6.    Selection and negotiation

7.    Communication with the new suppliers

3. Inclusion made in the contract

There are certain inclusions in sourcing plan that need to consider in the supply china to attain high operational excellence.  Execution of best possibility in cost budgeting for negotiation of suppliers to generate desired aim and objectives. There are certain factors influencing procurement decision making like fluctuations in pricing, handling finish goods, marginal benefits and delivery of goods.   The current research study implants the purchasing of clothing goods that are specifically involved in the cost-benefit analysis as well that need to consider in the current project of the sourcing plan. There are certain elements need to consider in the direct procurement includes acquiring production goods and maintenance repair operations MRO. The direct procurement has immense importance in the supply chain management that reveals to obtain desired aim and objectives in an effective way.  (Hasan and Alim, 2010)

There are certain activities included in the purchasing of goods that need to identify in the sustainable operations of supply chain management. Selection of vendors, the establishment of payments, negotiation with the suppliers and strategic vendor selection consider in the inclusion of development of the contract. The P2P process procures to pay has immense recognition in the effective contract and procurement planning.  Authorization of supplier selection as well as obtaining the quotation from suppliers is the main inclusion in the contract management for specification of procurement. (Blome, 2014)

Advance shipment notice as well as purchase order acknowledgment that is given to final receive of goods for the product associations.  After the receipts of goods, recording of the invoice has been taken for the evaluation of payment to suppliers to consolidate gain of effective procurement. E-procurement solutions also help in the procurement of goods which depends on of the size of an organization.   (Boone, 2012)

4.                 Measurement of selection effective suppliers

There is certain measurement of procurements that provides the credible values how the process of procurement going to be effective. Staffing, cost, leverage of technology and cycle time provide the values for the determination of efficacy in the procurement towards supply chain management. (Tate, 2011)

4.1 Price and quality

Price and quality of products is the major element that reveals the major consolidations towards the effective strategic sourcing.  The supplier price and quality initiate creation of win-win scenario for both buyers and supplier. Effective communication between supplier and buyer about product quality as well as the meet specification is to generate the best sourcing of goods. 

4.2Delivery

 Delivery of goods within given lead-time reveals the best sourcing plan in the given scenario. Achievement of lead-time efficacy sustains the supply chain operation to provide given output. Identification of non-compliance of supplier indicates for the confirmation of contract.   The value added features of suppliers specifically includes throughput time, the satisfaction of stakeholders, lead-time efficacy, operational performance and logistics indicate the best measurements of sourcing plan.

4.3 Supplier performance evaluation

For the evaluation of supplier performance AHP analytical hierarchy processes as well as lead time consolidations are recognized to indicate the performance characteristics of the supplier. Categorical method cost ratio model and weighted point model utilized for assessing the performance characteristics of suppliers.   The operational performance of supplier assesses under the demonstration of cooperation, quality and logistics performance towards supplier f goods and services.

4.4 Feedback from suppliers

The feedback from the supplier provides the indication of what are the major consequences in the supplier performance and inventory replenishment.   The feedback from the supplier helps in accumulations of identification of gaps in performance. Appropriate metrics are developed for the receipts of professional improvement in procurement. Collaboration and integration with the suppliers reveal the buffering stock and levels of stock to meet the customer requirements.  Elimination of waste, as well as sustainability in supply chain operation, provides the credibility of procurement efficiency. Wal-Mart, Best Buy, and another retail chain provides the best indicated example for the measurement of supplier evaluation programs. 

4.5 Technical capabilities

Packaging material, a system of production planning and quantity of capacity planning indicate the sourcing planning effectiveness. If the technical capabilities are lack in sourcing planning, then the planning goes to unusual means without any obtaining purpose of research. The design of finish goods, as well as a transformational change in logistics operations, generates effective technical capabilities in the sourcing plan. (Steinru¨cke & Jahr, 2012)

4.6 Risk identification

 Identification of risk, as well as visibility of finish goods in multi-layer supply chain, provides the achievement in the sustainability of supply chain.  Communication between the suppliers and company helps in generating effective outcomes. The role of supplier’s product specification demonstrates the value of procurement efficiency that reveals the how the procurement sustained in the supply chain operations. The probability of risk occurrences is that disrupts the procurement need to consider adequately. The determination of supply chain risk management SCRM provides the contingency planning before the occurrence of risk and becomes resilient.  (Finch & Peter, 2004)

4.7 Key deliverables

There are certain key deliverables in the sourcing plan that ensures the sustainability in the sourcing plan of clothing business. Efficacy of lead time with the high-quality products is the main of the study to retain best operations of supply chain management. Supply chain standards of quality of suppliers with controlling functions and logistics system reveals best sourcing plan for future requirements.   An optimized network of supply chain ensures the organizational goals in the sourcing plan. (Finch and Peter, 2004)

5.                 Aspects of purchasing or supply in negotiation

The negotiation strategies have immense importance in the supply chain management to quote the best price and quality to remain sustainable in the competitive business environment.   The strategies of negotiation based on the compromising, competitive, collaborative, and accommodating and avoiding negotiation strategies that provide in-depth values analysis for the delivery of services in sourcing plan. Certain strategies need to consider in the supply negotiations to get the best quotation from the suppliers. Distributive negotiation strategy is the major strategy in best procurement planning. Integrative negotiation strategy both the parties collaborative produced results with the win-win scenario.   This means that collaborative strategy is best negotiation strategy for the perfect sourcing plan. While on the other hand compromising negotiation strategy split into difference for both the parties. (Zachariassen, 2008)

 There is two bargaining strategy of the negotiation strategy that includes integrative and distributive strategy as well. Intensive and aggressive dealings are associated with the reduction in price as well as the reduction in delivery times, such type of negotiations based on the mutual understanding, need for trust, openness and sense of empathy to generate effective outcomes in a sourcing plan. For the current sourcing plan, integrative negotiation strategy is used that reveals major consolidations of win-win relationship for both parties. (Zachariassen, 2008)

Conclusion

Thus to sum up all discussion about the sourcing plan is that indicates the major consolidations of strategic sourcing of clothing items. The paper provides the clear indication of strategic sourcing that helps in generated best outcomes. The management of supply and procurement is every need of business to generate effective results. There is the strong role of procurement in supply chain expedite that reveals the profitable values to the organization.  RACI analysis for the identification of stakeholders values for the execution of project management. The main theories of strategic sourcing are used in the paper like Leverage game theory in strategic sourcing as well as KRAJLIC MATRIX to indicate the supply chain risk and best procurement standardization in essential and adequate manner. The contract inclusion is like termination options, logistical operation, delivery dates, prices and quality measurements and negotiation strategy needs to consider for best execution of strategic sourcing.  In last, the negotiation with the suppliers made in terms of quality, quantity and price with lead-time efficacy. 

References

Blome, C. (2014). Supply chain collaboration and sustainability. International Journal of Operations & Production Management, , 34, 639-663.

Boone, T. (2012). Sustainable Supply Chains: Models, Methods, and Public Policy Implications (International Series in Operations Research & Management Science). Springer.

Faes, W., & Matthyssens, P. (2009). Insights into the process of changing sourcing strategies. Journal of Business & Industrial Marketing , 24 (3/4), 245 – 255.

Finch, & Peter. (2004). Supply chain risk management. Supply Chain Management: An International Journal , 183-196.

Genpact.com. (2013). Leveraging “Game Theory” in strategic sourcing. Retrieved May 10, 2016, from http://www.genpact.com/docs/resource-/leveraging-game-theory-in-strategic-sourcing

Guercini, S., & Runfola, A. (2005). SOURCING STRATEGIES IN CLOTHING RETAIL FIRMS: PRODUCT COMPLEXITY VERSUS OVERSEAS SUPPLY CHAIN . IMP .

Hasan, R., & Alim, M. A. (2010). Factors Affecting Supply Chain Management Efficiency in Cross Border Outsourcing:A case study of H&M and its Outsourcing Operations in Bangladesh. Retrieved november 12, 2014, from gupea.ub.gu.se: https://gupea.ub.gu.se/bitstream/2077/23882/1/gupea_2077_23882_1.pdf

MIAMI. (2015, March 24). For 2015, Procurement Organizations Focus on Supporting Enterprise Agility by Becoming More of a Trusted Advisor; But Capability Gaps in Key Areas May Cause Challenges. Retrieved May 9, 2016, from http://www.bloomberg.com/research/markets/news/article.asp?docKey=600-201503240930BIZWIRE_USPRX____BW5159-1

Olson, D. L., & Wu, D. (2011). Risk management models for supply chain: a scenario analysis of outsourcing to China. Supply Chain Management: An International Journal .

Puschmann, T., & Alt, R. (2005). Successful use of e-procurement in supply chains. Supply Chain Management: An International Journal , 10 (2), 122 – 133.

Qureshi, M., & Kumar, D. (2007). Modeling the logistics outsourcing relationship variables to enhance shippers’ productivity and competitiveness in logistical supply chain. International Journal of Productivity and Performance Management , 56 (8), 689 – 714.

Ramanathan, U., Gunasekaran, A., & Subramanian, N. (2011). Supply chain collaboration performance metrics: a conceptual framework. Benchmarking: An International Journal , 18 (6), 856 – 872.

Scm.ncsu. (2011). Sourcing Strategy. Retrieved May 10, 2016, from https://scm.ncsu.edu/scm-articles/article/sourcing-strategy

Steinru¨cke, M., & Jahr, M. (2012). Tactical planning in supply chain networks with customer oriented single sourcing. The International Journal of Logistics Management , 23 (2), 259 – 279.

Tate, W. L. (2011). The Essentials of Supply Chain Management Strategic Sourcing: Cost Management. Retrieved May 10, 2016, from http://www.scmr.com/article/the_essentials_of_supply_chain_management

Wei, Y., Liu, X., Wang, C., & Wang, J. (2012). Local sourcing of multinational enterprises in China. International Journal of Emerging Markets , 7 (4), 364 – 382.

Xiangling, H., & Jaideep, M. (2014). Minimizing downside risks for global sourcing under price-sensitive stochastic demand, exchange rate uncertainties, and supplier capacity constraints. Int. J. Production Economics , 147 (1), 398-409.

Zachariassen, F. (2008). Negotiation strategies in supply chain management. International Journal of Physical Distribution & Logistics Management , 38 (10), 764 – 781.

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