CIPS L4M2 Defining Business Need

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1. Types of new buy, straight rebuy, modified rebuy 13. Public sector Provide services not available by non
Purchases Mission and profit organization.
Purpose
2. Straight Routine purchases of the same products under
rebuy approximately the same terms of sale 14. Terms of RAQSCI Regulatory
purchase Model Availability
Quality
3. Modified When new-task purchases are changed on
Service requirement
rebuy repeat orders or straight rebuy purchases are
Cost
purchase modified
Innovation
4. New A purchase of an item for the first time
15. RAQSCI Covers any legal requirements or
purchase
Regulatory requirements of regulatory bodies
5. Examples Utilities (gas, water, electricity)
16. RAQSCI Covers the continuing supply of goods
of straight MRO ( Maintenance, repair and operating items)
Abailability and services when required and is based
rebuy Raw materials (steel, chemicals)
on factors , such as capacity , financial
purchases
stability and risk.
6. Examples Services (Consulting)
17. RAQSCI Quality this is the consistency, repeatability and
of Components or semifinished products
how fit for propose the procured goods
modified ICT
and services are
rebuy
purchases 18. RAQSCI Service are factors associated with the way
requirements services are supplied for example
7. Examples Capital Items
flexibility, support and help desk.
of New Finished products
purchases Products from resales 19. RAQSCI Cost Cost and price: target cost, total cost of
ownership, benchmarked prices,
8. Task in a Understand the business requirement
continues improvements.
new Writing and effective communication
purchasing Researching the supply market 20. RAQSCI improvement customer experience
Researching key suppliers in that market Innovation
Deciding on the key capabilities that suppliers
21. Use of RAQSCI Identified business requirements
must have
Model
Writing invitation to tender documentation
Managing the tender process 22. Business Collect Information
Negotiating requirements categorize potencial stakeholders
Selecting the supplier. things to Identify individuals who contribute to the
consider acquisition
9. straight A purchase decision resulting from an ongoing
On completion analisys
re-buy purchasing relationship with a supplier
decision 23. Straight rebuy List of approved suppliers
steps New suppliers are not considered
10. modified a purchase decision that occurs when a buyer
the process for ordering is a procurement
rebuy has experience in purchasing a product in the
approved and routine
decision past but is interested in acquiring additional
Buyers experience
information regarding alternative products
and/or suppliers 24. Why is the Provide special skills
capability of a World-class processes
11. new A purchase decision that made when the buyer
supplier Qualification from regulatory bodies
purchase identifies a new requirement. (New Product,
important to a a (ISO)
decision technology change, changes in the legislation to
buyer? Leading edge software
offer a new service)
Specific capital equipment
12. Private Supply the needs and improve the enduser lives Uniq or dominate access to rare
sector maximizing the profits and provide a financial resources (including human skills)
Mission return to its share holders.
and
Purpose
25. Reasons to A contract is coming to an end and the 37. Step 1. What is Step to identify a close problem using
prepare a product or service need to be procured going on? performance monitoring systems
business case again.
38. Step 2. What Data-gathering step: Interview,
Cost reduction need to be made and this
do we know? Questioners, Observations, Documents and
requires changes to the way that the
records
organization operates.
An alternative product or service has 39. Step 3. What Step to analyze the data collection and
been found that potentially delivers a are the draw conclusions that help to develop the
number of benefits underlying problem definition: maps, flip charts,
issues?
26. business case 1) state problem 2) solution 3) resources
approach 40. Step 4. What Step to generate options to addressing
could we do? issues and achieving the target: (SCAMPER
27. problem solving the process of finding ways to correct
Technic)
situations (closed problems or unblock
Substitute
the blockages (open ended problems).
Combine
28. Groups of Closed Adapt
problems Open-ended Modify
Put to other issues
29. Closed problems These appears when something happen
Eliminate
that should not have happen.
Reverse
30. Open-ended these are where something is stopping
41. Step 5. What is Select solution step: checklist
problems the achievement of an objective or
the best thing 1.Define the ideal solution
blocking progress
to do? 2.Eliminate those which do not meet any
31. Buying off- The purchase of an item without a constrains that there may be
contracts contract when a contract for that item 3.Evaluate the remaining solutions against
already exist. the ideal solution definition
32. moving from the Problem > Problem definition > Data 4.Asses the risk associated with the best
problem to the collection > Analysis > Insight > solution.
solution steps Hypotheses > Test > Solution 42. Step 6. How do step to choose a sourcing strategy plan,
33. 5 Whys stretegie Helps to describe a problem. Why this is we go about roles and responsibilities need to be
happening? it? defined (milestones) RACI MATRIX

34. Kepner-Tregoe -Relies on 3 key activities 43. RACI Matrix Responsible, Accountable, Consulted,
Method 1) Describe problem in terms of identity, Informed
location, timing and magnitude 44. Step 7. Have Plan implementation and test step using six
2) Compare problematic conditions with we achieved step process
similar situations that are normal our objectives? 1.Create a team to implement the plan
3) Identify changes suggesting possible 2.Create a project Plan with activities,
causes dependences, outputs and dates
-Works best if showing something 3.Create a dashboard for tracking and
abrupt (stop vs go) demonstrating Progress
35. Kepner-Tregoe What is the problem 4.Communicate ongoing activity and
aproach What is not the problem results
What is distinctive about it? 5.Adapt the plan to changing
Where is the problem circumstances
Where isn't the problem 6.Document the results when the project is
completed
36. steps for problem 1. What is going on?
solving process in 2. What do we know? 45. Step 8. Can we This step recognize there need to be
procurement? 3. What are the underlying issues? improve on trigger events that start the process all
4. What could we do? what we have? over again.
5. What is the best thing to do?
6. How do we go about it?
7. Have we achieved our objectives?
8. Can we improve on what we have?
46. Sections to prepare a Business Executive summary 50. Supply The demand of the product or service is
case for a procurement new Long-term strategy market growing or shrinking?
purchase or modify rebuys consideration trends What are the general economic and market
Business requirements questions trends?
Price and Cost analysis How might the customer requirements and
Market Analysis behavior change in the future?
Supply analysis What new products are in the suppliers
Technical developments pipeline?
Vulnerability analisys How are the competitors in the supply market
Sourcing Objectives changing, what are their plans?
Implementation Plan Is there any forthcoming legislation that might
Competitive advantages affect the market?
47. Framing a business plan should Return on Investment 51. Request used to gather information about suppliers and
be include (ROI) for capabilities prior to a formal procurement
Time to market information process
Customer satisfaction (RFI)
Improving Productivity Document
Managing Risk
52. Request used as an invitation to suppliers to bid on
48. procurement activities to identify 1. Data that can provide for specific products or services
the estimated costs and prices price and cost Quotation
information (RFQ)
2. difference between Document
direct and indirect cost
53. Request used to canvas potential solutions from
3. How to produce
for suppliers when the specification still unclear
estimated costs and
Proposal
budgets
(RFP)
4. Approaches to total
Document
cost of
ownership/whole life 54. Value chain Model that highlights the primary or support
cycle costing model activities that add a margin of value to a firm's
products or services where information
49. Types of Market Data Local Business reference
systems can best be applied to achieve a
Trade associations
competitive advantage.
Official statistics on the
economy 55. In the direct cost and most directly related to the
Reports in business value chain production and distribution of the firm's
magazines model, products and services that create value for the
Local authorities and primary customer.
chambers of commerce activities
Internet are Inbound Logistics: Received from the suppliers
Commercial Publishers Operations: goods and services can be sold to
of market reports the customers
Own business data Outbound Logistics: received from operation
Sales and marketing: keep customers aware
Service: after sales customer care
56. In the indirect cost and most directly related to the
value chain infrastructure, procurement, hr, technology
model, development
secundary
activities
are
57. fixed costs costs that do not vary with production or sales
level
58. variable costs costs that vary directly with the level of 66. WASH&GO is a
production cleaning
company. it has a
59. Fixed Cost (FC)
standard price of
$ 10 per item. You
estimate that the If the sales are greater than 5231 then it
variable cost are makes profit, and it makes a loss if it
$3.50 per item, sells les than this
and its accounts
show it has a fixed
annual cost of
$34,000. How
cost that does not vary with the quantity
Many items does
produced
WASH&GO have
60. Variable Cost (VC) to clean every
day before is
starting making
profit?
67. What is the Brake Helps you to better understand a
even point? supplier price offer. If an offer is below
its total cost then you need to
cost that varies with the quantity understand what this is. is it because the
produced supplier is substantially above its break
even point , or its because it has too
61. Semi-variable little business and needs to keep the
costs workforce busy? if the latter, is this
sustainable or does it creates a supply
risk for you.
68. Purchase Cost Is a tool that is used to analyze the cost
Analysis (PCA) of things bought so that the strategies
can be developed for reducing costs
and the same time improving supplier
relationships.
69. Total Cost Model process using algorithms designed to
arrive at the probable cost of a product
or service.
costs that have both a fixed and a
variable cost element 70. Target Cost Analysis of market price, volume and
Analysis profit, from which a target production
62. Direct and
cost is delivered.
Indirect /Fixed
and Variable Cost 71. total cost of Structured approach to calculating the
ownership full cost associated with buying and
63. Direct Costs costs that are incurred directly as the analysis using an asset or acquisition over its
result of some specific cost object entire life cycle

64. Indirect costs costs that are not directly tied to any 72. Competitive bids Supplier's submission in the process
specific cost object which an organization selects from a
number of competing suppliers to
65. Brake even point can be stated as the fixed cost divided
award a contract.
by the marginal profit
73. Market an approach for assessing the price of a
comparisons product or service by comparing it to
similar once available in the market.
74. arm's-length the relationship between two parties
relationship each of whom has no obligation to the
other.
75. Strategic those who have an integral role in a 87. Whole life-cycle Technique used to arrive at the total
suppliers organization's value chain over and above Costing (WLC) cost of the ownership and takes into
the provision of a product or service. account disposal, decommissioning
and other end-of-life costs. there are
76. non-profit a business that does not earn profits for its
three stages to the aproach.
organization owners but invest any revenue back into
Planning
the organization.
Preparation
77. Value analysis a systematic analysis and challenge of the Implementation
component parts of a product or service to
88. (WLC) planing set the objectives to determine a
ensure that the cost is fair.
stage budget for the asset been procured,
78. Target cost is = Sales price - profit help to clarify the contents of the
79. Quality A structured approach for defining contract, Identify any support &
Function customer requirements and translating them Improve the specifications
Deployment into product specification. 89. Basic groups of Decision support models:
(QFD) WLC Model during Simulation Models
80. attractiveness the planning phase Optimisation Models
of the market 90. WLC Decision Identification of the problem. (problem
vs support model solving)
attractiveness
91. WLC Simulation Tell you which variable is the biggest
of the account
support model impact on the result, enabling you to
focus on this item to try to get more
accurate value.

81. Supplier suppliers will be defended their position 92. WLC Optimization Used to calculate support cost , such
Strategic vigorously, can lead to power pricing and support model as inventory levels of maintenance
position matrix add value to the buyers. regimes.

82. Supplier supplier will try to expand their business 93. (WLC) preparation mainly about testing various models
Develop with the buyers and sell new opportunities. stage of calculating the WLC
position matrix 94. (WLC) model implementation to get the
83. Supplier supplier will seek to drive a premium price implementation results and then make arrangement for
Exploit stage regular recalculation to find further
position matrix opportunities.

84. Supplier supplier will seek to maximize the prices as 95. What are the three External
Nuisance they have low interest in this market of the trends that can Internal
position matrix buyers account help you to decide Performance
if an objective is
85. Sources of Prices that have been paid the past strategic or not?
Price Published prices
comparator Pricing formula 96. External Trends trends in the global marketplace,
Competitive bidding economical and political factors,
emergency of the markets and
86. TCO (Total An economic measure of the full cost of technologies.
Cost of owning a product TCO includes direct
Ownership) costs such as purchase price, plus indirect 97. Internal Trends are trends within organization and
costs such as training, support, and include the size and the complexity of
maintenance. the organization, roles, definitions and
management styles.
98. Performance Are trends in the organizational
Trends growth, profitability and organizational
flexibility.
99. Hybrid startegies strategic that combine the best parts
of two or more strategies.
100. Lean a management process for reducing waste 117. functional Where similar or identical practices
and thereby creation more value in a set of benchmarking are compared with those of an
activities. organization outside of the
immediate industry sector
101. Six sigma Management technique for identifying and
reducing variability in any process. 118. Generic Looks at unrelated business process
Benchmarking or functions in organizations
102. Value a review of an existing product with the aim
regardless of the industry
Engineering of reducing cost and increase the vale of the
customer. 119. Internal Same Organization different
Benchmarking department
103. business case 1) state problem 2) solution 3) resources
examples
104. Business case Market interventions
120. competitive Other organization same industry
interventions Technical Interventions
benchmarking
Cost structure interventions
example
Work process interventions
Supplier relationship interventions 121. Functional Same function different industry
Supply Chain interventions benchmarking
examples
105. Market Over and above bidding interventions make
interventions vs buy strategies 122. Generic Different function different industry
benchmarking
106. Technical simplify specifications, innovative
examples
Interventions technologies, create intelectual properties.
123. financial budgets A plan in terms of money for a
107. Cost structure Technics such six sigma, lean and value
defined period, usually twelve
interventions analysis enginering
months, showing either revenues or
108. Work process joint planning , collaborative process with cost, or both
interventions the suppliers.
124. How procurement To control the resulting spend.
109. Supplier levering or changing relationships with the use financial
relationship suppliers and better access to suppliers budgets?
interventions capabilities or supplier performance.
125. Propuse of financial helps to improve the performance.
110. Supply Chain design the right supply chain eliminating budgets
interventions unnecessary intermediares or using
126. Three main activities Planning: prepare a business case
outsourcing to gain expertise or scale for
that are involved in Controlling : managing money
cost reductions.
budgeting and Decision Making: How to bring the
111. cost-benefit A technique for deciding weather to follow managing spend back in the control
analysis a particular case of action based on its
127. Planning Budget is prepared before the period begins
financial impact.
and is valid for only the planned
112. risk The process for identifying and dealing with level of activity
assessment any potential hazards that a project could
128. controlling budgets managing money
face
129. plan-do-review Plan: Develop budget based on the
113. Benchmarking a process by which a company compares its
cycle business case approved
performance with that of high-performing
Do: Monitors variance and take an
organizations (Compare and Improvement
acction
Tool)
Review: Evaluate Budget
114. Types of 1. Competitive performance and re-plan
Benchmarking 2. Functional
130. Main steps in the -Receive raw materials and products
3. Internal
Cash flow cycle -Manufacture products
4. Generic
-Store in inventory
115. Internal Where a business process is compared to a -Pay suppliers
Benchmarking similar process in the same organization -Sell products
116. competitive Where a product, service or processes is -Receive funds from customers
benchmarking benchmarked against that of a director 131. revenue incoming money
competitor
132. overheads The costs not directly associated with the 149. How every Low Cost = Cost leadership & Cost Focus
production process but necessary for company can Differentiation = Pure differentiation &
providing and maintaining business be differentiation focus
operations (indirect costs) rent, electricity, etc. competitive?
133. Depreciation A decrease or loss in value 150. six major Manufacturing
markets Construction
134. Bank loan This create cash flow at the time of the draw-
Retail
down
Financial
135. Investment this may or not be purchased on credit Agricultural
136. Dividends payments of cash from a corporation to its Services
stockholders in return for investing in the 151. Generic Differentiation, cost, and focus
company through shares Strategies
137. Types of Incremental budgeting 152. Cost A business-level strategy through which a
Budgeting Zero-based budgeting Leadership company seeks cost efficiencies in all
138. incremental adding new funds (increment) onto the operational areas.
budgeting amount previously budgeted (in last year's 153. Differentiation making a product different from other
budget) similar products
139. Zero-based starts from zero every year and must justify 154. Focus (Narrow) width of segment (geographical distribution
budgeting every item in the budget, rather than simply (e.g. online), customer profile (age, sex etc.).
adjusting the previous year's budget amounts. NPF generally fit in differentiation focus as
140. Cash-Out Raw Material they are low cost and high speciality
into cash Manufature (porter)
flow cycle Store 155. segment
Pay suppliers analysis
141. Cash-In into Receive Founds (Michael
clash flow Sells Porter)
cycle
142. Working the difference between current assets and
Capital current liabilities
143. profit The financial gain made in a transaction
144. income Money received
145. expenditure An amount of money spent. Identifying the supplier buyer can design
an strategy
146. budget any difference between actual spending and
variance budgeted amounts 156. Michael
Porter's Five
147. Labour Whether actual labour cost more or less than Forces Model
variance expected by comparing actual cost with
flexed budget. Comprises:
1. Labour rate variance - whether actual
hourly rate paid more or less than standard
rate.
2. Labour efficiency variance - whether staff
took more or less time than expected per
unit.
analyzes an organization, its position in the
148. Overhead the difference between actual overhead and marketplace, and how information systems
Variance applied overhead could be used to make it more competitive
Volume Variance
157. distribution network from producer to end user
Expenditure Variance
channel
158. rivarly a competition between companies
159. Types of Product or service 167. What are the When the market analysis determines
Segments Buyer relative bargaining who gets the biggest share of the
Channel power of buyers available profit
Geographical and suppliers?
160. Product or Price levels (discounts) 168. Complexity/Supply
service Features chain risk
segments Design
Packing
Performance
New vs replacement
161. Segments Strategy: quality product
based on Size: Annual purchase value
buyers Ownership: Influence the motivation of that
company
Provides a segmentation between high
Financial strength: Frequency of purchases
risk and low risk and includes a
162. Segments Localities, regios or countries: water companies consideration of the complex of buying
based on can serve locally only. form that market
geography Weather zones: different weather climate
169. Industry Analysis A method to (1) identify an industry's
countries
profit potential and (2) derive
Country groupings: countries packing or
implications for a firm's strategic
logistical infrastructure
position within an industry.
163. Market Objectives (achievement)
170. new entrants the threat of new competitors entering
Analysis Drivers (key factors)
the market
Factors Governance (rules, structures to improve
efficiency) 171. Substitutes Goods and services that can be used
Ownership (desisicion-making power) for the same purpose.
Commodity or Non-commodity (extent of the 172. Buyer Power The ability of one or more groups of
goods) buyers to keep prices low and so take
164. Kraljic more of the profit that is available.
Matrix 173. rivalry competition
174. Factors that Many or equal size of suppliers
determine the Slow industry growth
intensity of rivalry. High fixed costs
Lack of differentiation and switching
costs
Capacity is added in significant amounts
High exit barriers
175. Buyer of strengths Buyer concentration
Size of account
A tool for portfolio analysis: a four-box matrix Undifferentiated product
that reflects the segmentation of spend based Switching Costs
on an assessment of the value of the spend Threat of integration
relative to the market risk to acquire Information
Price sensitivity
165. Bargaining the ability of a company or individual to
Availability of substitutes
power influence another
176. what is Buyer When few buyer have a big size
166. order The manner in which customers purchase
Concentration?
patterns goods or services
177. What is Size of When the Buyer spend more than the
account? supplier business
178. What is When the buyer can buy for anyone 190. economies of a proportionate saving in costs gained
Undifferentiated supplier. scale by an increased level of production.
product?
191. new entrants to the probability pf the existing companies
179. What is switching when the buyer manipulates the costs an industry in an industry.
Costs? that make customers reluctant to switch reduce
to another product
192. What are barriers -Economies of Scale
180. What is Buyer When the buyer has more information to entry? -Product Differentiation
Information? than the supplier -Capital Requirements
-cost advantages independent of size
181. Price sensitivity when the buyer knows the price of a
-Access to distribution channels
product affects consumers' purchasing
-Gov't & Legal Barriers
behavior.
193. Value chain inbound and outbound logistics,
182. availability of When the buyer has more substitutes to
direct costs are? operations, sales, marketing and
substitutes buy
services.
183. Stages of Product 1. Introduction
194. Value chain Technology and infrastructure
Life Cycle 2. Growth
indirect costs
3. Maturity
are?
4. Decline
5. Extension (opcional) 195. Market Analysis 1. The Consumers
Components 2. The Company
184. When suppliers - Small number of suppliers
3. The Competitors
have power - Few substitutes exist and the buying
4. The Conditions
industry must have the product/service
to survive 196. Information on Company Annual reports
- Suppliers are not dependent on the supplier costs Market Data
buyer for a lot of their sales Technical data
- Suppliers can get accurate information Request for information (RFI)
on the buying industry Plant visits
- Suppliers have differentiated their Discount list
products
197. line of best fit
- Suppliers can easily vertically
integrate forward - Suppliers have made
it costly to switch suppliers
185. When you can When the supplier is in the maturity
negotiate with period. During the introductory period
the supplier? you cannot negociate.
186. Why is important To negotiate with the suppliers
for the buyer to
understand the
market? A line that is very close to most of the
data points in a scatter plot
187. What happened The prices of the products or services
when the bargain are high. 198. Bill of Materials a document that lists the type and
power is high for quantity of each type of direct material
the supplier? needed to complete a unit of product
188. What are the role Look for a substitute that can meet the 199. An important Purchasing budget
of the substitutes needs but a lower price. document to
products? controlling an
organization
189. Mentioned two Airlines companies cannot control the
costs for
examples, when fuel and the aircraft. Fuel is subject to
products and
the suppliers has fluctuation and global price of oil, and
services
a high level of Boeing and airbus are the only two
bargain power major suppliers of aircrafts.
200. An important the direct and indirect costs of the supplied 211. Conformance Is the ability of a product or service to meet
and essencial item. Specification its design specification.
input to Performance, Dimension, Branded,
preparing a Standards, Samples
budget
212. Performance Gives a description of the Outputs or
201. OWN-IT Proces for collecting and analyzing the Specifications Outcomes that are expected with the
data and information. detailed design of the product or service
Outline left to the supplier decide.
Wide search
213. Performance Outcome: focused capabilities from the
Narrow Search
Speciation supplier (Skills, Abilities, Knowledge,
Increase your stockpile of information
Types Experience, Technology.
Transform your stock pile into knowledge
Output: is visible and measured
202. steps to Be specific Statement of work: Scope of work
create a Define what is already know (Outcomes vs Outputs)
outline Create the outline
214. Conformance Functional and non functional
Define any gaps
specification
203. What is data? Raw material that has to be processed requirements
are:
204. Buyer bargain -Buyer are well informed about the product
power factors or service 215. Functional Describes east product or service should
-Product or service is undifferentiated Requirements do
-Buyers purchase in large volumes
216. Non- Describes how a product or service should
-Substitutes for the product or service are
functional operate.
available
requirements
-The amount purchased by the buyers is a
significant proportion of the seller's sales. 217. Design A detailed document that set outs the price
specification way that product must be built or a service
205. Supplier -There are no substitutes
delivered and include any technical drawing
bargain -The industry is not very important to the
standards that must be meet.
power factors seller
-The product or service are differenciated 218. Ergonomics The consideration of people's efficiency in
the work environment.
206. Statement of the definition of a business problem or
needs opportunity together with a criteria that 219. When is not In defense, pharmacy and food industry.
define it allowed the
performance
207. A is what exactly we need? and helps to
specification
specification resolve disputes
220. Business Is the starting point for writing an
208. Types of Technical, Conformance and Performance
Requirement specification and set out what the product
Specifications
Definition or service need to deliver if all stakeholders
209. Procurement Present prospective suppliers with a clear (BRD) are to be satisfied.
Specification accurate and full description of the
221. Model for RAQSCI (rack-ski)
Document organizations needs and enables them to
identified
propose a solution meet those needs.
Business
210. Technical Is a detailed technical description together Requirement
specifications with acceptance criteria that forms the basis
222. RAQSCI Regulatory
of a product design (Dimensions, Tolerance,
nemonic Assurance of supply
Materials, engineering drawings, chemical
Quality
properties) and often produced by a
Service
national or international body (International
Cost
Organization for Standardization).term-211
Innovation
223. Tool for Start-burst metod
establishing Service = Who, What, How, Why, Where,
requirements When
224. Provide an example in CONSTRUCTION of the TECHNICAL SPECIFICATION: Describe the materials to be used, quality,
difference between an outcome and output standards, volume of material to use, and the methods of preparing and using the
based specification materials a detailed bill of materials. BOM
OUTPUT SPECIFICATION: Describes what is needed for example 3m wide bridge
with a hard surface
OUTCOME SPECIFICATION: Why the ridge is needed? convenient way form A
point to B point.
225. What is statement of Work? (SOW) detailed description of the specific tasks or services a contractor must perform
under the terms of the contract
226. Types of the Statement of Work SOW A design SOW: How the work should be done?
Level of effort and materials/unit rate SOW: This is often used?
Performance based on SOW: Propuse of the project or service.
227. SAMOA Technic for check the internet information
Source
Audience
Methodology(used to collect and analyze data)
Objetivity
Accuracy
228. Early Supply Involvement (ESI) The involvement of a supplier in the product development process for a very
early stage in order to use the supplier experience and expertise.
229. Advantages of Early Supply Involvement Reduce cost
(ESI) Improve time to market
Increase the value to the customers
230. Disadvantages of Early Supply Involvement Depending from the supplier
(ESI) Confidentiality
Supplier can influence in the benefit
231. Product Life Cycle stages were the cost are Planing
added Predesign
Detail Design
Production
Logistics support
232. Key steps in a typical ESI Programe 1.Establish Customer need
2. Identify a project
3. Develop Target cost
4. Prepare project plans
5. Collaborate with Operations
6. Produce list of potential suppliers
7. Engage in supplier workshops
8. Conduct Value engineering studies