Sourcing Group Assignment

Group C

Introduction
Product
Surf CA-20 (Ceteth-20)
a chemical, which is used for hair care products Fatty alcohol polyoxyethylene ether

Uses
Emulsifying Agent Solubilizing Agent Surfactant Surfactant - Cleansing Agent Surfactant - Solubilizing Agent

The process of sourcing

It commonly involves (1) purchase planning (2) standards determination (3) specifications development (4) supplier research and selection (5) value analysis, (6) financing (7) price negotiation (8) making the purchase (9) supply contract administration (10) inventory control and stores (11) disposals and other related functions.

Objective of Sourcing
Develop and implement purchasing plans for products and services that support operations strategies Continuity of the companys core activities Control and Reduction of all sourcing costs Reduction of Risk exposure in relation to Supply markets. Contribution to product and process innovation

Sourcing Cycle
Receiving a requisition Selection of Supplier Placing the Order Monitor orders Receive orders

Selection
Profile the Category
This is the initial most time taking step of the cycle.

We have to analyze :
Currently what is the price we spend for this item: For our selected Item Average USD 4.00/ Kg. What type of results we expect from this ingredient in our final ingredient? ( Thickening & ability of the Hair Conditioner Product.) What type of characteristic it should have (technical and physical) ? Standard data of this particular item as per the R&D and laboratory requirements. Study the current competitive situation of this product. (Comparatively there are few suppliers in the world market for this item.)

Selection
Search and identify the potential suppliers. For this product
Croda Co.-UK Jeen International Co.-USA Luen Chiang Co.- China

Generate the supplier portfolio.

None of potential supplier will discard at this stage. Infomation such as Price, MOQ, Country, Mode of Transport, Lead-Time, technical data are used and analysised to create the portofolio

Selection
Select the implementation path Obtain the product specification details such as Techinical Data Sheets, quality standards Obtained from these suppliers. Negotiate and select suppliers Integrate suppliers When we change the old supplier to new one we should plan in time according to the changed features of the new supplier considering

New Vender Development and Enlistment

Supplier Capability , Trustworthiness Capacity Minimums Lead-Time/ Geographical location Payment terms Reliability Price competiveness Flexibility

New Vender Development and Enlistment

Establishing the supplier screening process
Understanding the supplier capabilities Commitments On time / correct assortment delivery fulfillment Flexibility to adjust the supply, based on the customer demand Maintaining Price competiveness Service Prompt

Continue supplier research

New Vender Development and Enlistment

Item Supplier Country Price /Kg Payment MOQ (Kg) Mode of Transport Ceteth 20 Croda Co. Jeen International Luen Chiang China Co. USD 3.75 CAD-CIF Col. 400 Sea 3 Weeks UK USA EURO 5.75 USD7.00 TT-CIF Col. 600 Sea Sea 4 Weeks 5 Weeks Lead time L/C-CIF Col. 1000

The selected supplier Luen Chiang co for the Surfer CA-20 is offering the best Price , Lead time, Minimum in comparison to the rest of the global suppliers

Supplier Selection and Negotiation

Supplier selection
Though the single supply Luen Chiang could provide the best price it can create a supplier monopolistic situation, also it increase the risk

Negotiation
Obtaining the best bargaining surplus also to consider a win win situation

Supplier Relationship Management Effective supplier relationship management

can provide step change impact to a business

Risk mitigation
Different manufacturing locations has help to overcome the chemical shortage in the market. Country of manufacturing was not changed the final product cost

Long-term cost savings

Long term planning & demand forecasting help to reduce the cost of operations

Contract/consistency in compliance
Consistency in chemical concentration / following the correct packing methodologies has avoid compliances issues

Competitive advantage through innovations

Working together to introduced high performing hair care chemical solutions gives the marcket edge

Supplier Performance and speed initiatives

Supply to the demand with high consistency have reduced the inventory & write offs

Increases understanding the business requirements

Created a relationship to synchronize the company needs to get the maximum benefits

Contract Management
Why Important ?
Hair care chemical products is one of the niche segments of the chemical industry critical to make sure the product range should be with top highest standards directly in touch with the most critical part of the human body highly competitive and fragmented, with large numbers of small/big and specialized suppliers scatted around the world

 How to overcome such issues?

Key areas of contract
Environment Regulations Government Policies and Governing laws
In-Country Policies Export Policies

The price, Payment terms & Foreign Currency hedging Clear description of the goods
Chemical concentration Chemical composition & component dynamics molecular Biology & molecular dynamics Chemical liquidity ratio Qty per bottle Colour of the bottle Number of bottles in a pack Number of packs in Shipping Box

The duration of the contract and specific delivery dates Testing parameters & performance frequency Quality Standards and acceptance criteria Compliance Rights of termination

Strategic Sourcing & Risk Management in Sourcing

High risk product High sensitive Product Need to be extreme careful when handling High tendency to get expire if its not in the correct condition
Risk Price increase due to cost inflation in china Ways of overcome risk With strong relationship able to reduce the

inflation by split the orders with different geo

locations. New development in conflict regulation Developed high performing product but with the government regulations we cannot procure the requirement. Modification with reduced concentration sort the issue

Risk Logistical limitation

Ways of overcome risk Agreements with the logistic partners to specify the space for the consignments in all cases

Inaccurate formulation calculation analysis

Incorrect purchasing than the government regulations will make conflict and government can destroy the consignment. With

understanding the requirements well all the agreements with in the regulations Inaccurate forecasts Preplanned demand management mechanism to overcome the uncertainty

Manage supply chain uncertainties

Regular risk assessment and have redundancy

built in

Environmental procurement
Environmental procurement within the UNDPs procurement principles As per UNDPs Financial Regulations and Rules, the following general principles must be given due consideration while executing procurement on behalf of the organization: Best value for money Fairness, integrity, transparency Effective international competition Best value for money In the context of the procurement process,obtaining best value for money means selection of the offer, which presents the optimum combination of life-cycle costs and benefits, which meet the business units needs.

Environmental or green procurement

Environmental or green procurement is defined as the purchase of products and services which have less impact on the environment and human health compared with competing products or services that serve the same purpose.

Environmental or green procurement

This comparison may consider the source of raw materials, production, manufacturing, packaging, distribution, potential for reuse and recycling, operation, maintenance, or disposal of the product. These may include: Energy-efficient and greenhouse friendly products Products that are water efficient and reduce water use Less toxic products to reduce health effects Products using less packaging or with a provision for packaging take- back Products that use fewer resources or in other ways create reduced environmental impacts Throughout their life cycle; Products made from recycled materials, such as recycled road construction materials Recycled green organics and recycled plastic products.