Sourcing 1 Outline crossfunctional sourcing team examples of

Sourcing 1

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

Cross Functional Sourcing Teams 3

Cross-Functional Sourcing Team è firms surveyed in 1993 è rising trend of cross-functional teams è 70% planned to have such teams by 1997 è expected impact from such teams è 107 cross-functional sourcing teams at 18 US-based corporations, with more than 700 individual participants è 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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Factors Important for Success è key organizational resources è participation & involvement of suppliers è level of decision makers è team leadership è effort spent in team assignment 6

Example of Sourcing Material for Flea Market 7

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

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

Example of Sourcing Recycler 10

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

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

Example of Sourcing Apparel on Web: Small Scale 13

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

Apparel on Web: Small Scale è small-size orders for customer reactions and large-szie orders for winners è most effort on marketing and logistics management è before 2004 monthly revenue NT$500 k è 2004 è 2005 monthly revenue NT$1 mill annual renvenue NT 10 m, profit NT$200 k annual renvenue NT 12 m 大陸 廠當靠山 商業周刊 2006 15

Example of Sourcing Apparel on Web: Large Scale 16

Apparel on Web: Large Scale è lativ: set up in 2007 è polo shirt 600 K pcs in a year è Disneyland T-shirt 200 K pcs in a year Year Rev. (NT$) 2007 10 million 2008 100 million 2009 370 million 2010 1. 5 billion 2011 > 4 billion

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

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

lativ è stress on quality èstrict requirement èe. g. , industrial laundry for cotton material to clean, shrink, and remove defect èdestroy defective items èsend technicians to factory to guarantee quality 20

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

Home Depot 22

History è found in 1978 è first opened in 1979 è went public on NASDAQ in 1981 è on New York Stock Exchange in 1984 è 2012 è revenue US 74. 754 B è operating income US$ 7. 901 billion è net income US$ 4. 535 billion (2012) 23

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

Early Day Sourcing of Home Depot è convinced suppliers by projecting the vision and the blooming prospect of Home Depot in retailing for home improvement networking and socializing with manufacturers è at least 3 dinners/weeks in high-end restaurants with suppliers è promising large amount, often regarded as impossible by suppliers è è strength of Home Depot: expertise in sales è è è 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

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

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

Sourcing After Getting Large è requiring suppliers growing with Hong Depot è è è 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 è è è production capacity, distribution network, goods display, cooperation in sales, expenses in advertisement providing expansion plans of 4 to 5 years time frame to suppliers 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