UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC
4. New product development and ESI – early supplier involvement
Initial conceptFeasibility studies
Preliminary designPrototype testing
Finalised productPiloting of product and production
Release for commercial manufacturing
Stages of New Product Development
• Concern for overall product design• Concern for JIT delivery and supplier relationship
• Selection of materials• Cost elimination of materials
• Conceptual abstraction of product quality
• General view of product
• Close or near perfect parameters, specifications, features and tolerances
• Practical and economical parameters, specification, features and tolerances
• Limited regard for availability• High regard for availability
• Limited concern for cost• Lowest ultimate cost
• Use of ideal materials• Use of adequate materials
• Wide margins of quality, safety and performance
• Minimum acceptable margin of quality, safety and performance
Design OrientationPurchasing Orientation
Technological aspects….or Innovation orientation
ESI has been defined:
A practice that brings together one or more selected suppliers with a buyer’s product design team early in the product development process. The objective is to utilize the supplier’s expertise and
experience in developing a product specification that is designed for effective and efficient product roll-out.
Early Supplier Involvement in the New Product Development Process
Purchasing in the Future
Improved manufacturabilityAccountabilityInterchange of KnowledgeTeamworkJoint problem solvingOwnership of IPRSAccess to new technologyDecision makingLower development costsCost and pricing sharingEnhanced qualityTechnology sharingImproved specifications
Release of confidential business informationReduced development timeProblemsAdvantages
UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC
5. Selling and buying at right price. Tendering
Definition of Price
The value of a commodity or service measured in terms of the standard monetary unit.
Price Equilibrium
D1 S1
Seller’sMarket
Buyer’s Market
S1 D1P1
Price Elasticity of Demand
Price Elasticity of Supply
=
=
% change in quantity demand% change in price
% change in quantity supplied% change in price
Perfect Competition – Conditions
Item must behomogeneous
Item must beeasily
transportable
Must be manybuyers
& sellers
No Preferentialtreatment or
discriminationagainst any
buyer or seller
Easycommunication
must existbetweenbuyers
& sellersCompetition – Types and Conditions
UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC
Purchasing Considerations in Pricing Agreements
Purchaser’s position in the marketNature of the purchase, e.g., strategies (leverage, bottleneck....)
Is it a rebuy, etc?....new buy items, modiefie rebuy?Number of suppliers
Alternative productsPrices paid by competitors – hard to obtain
Is the learning curve applicable?
Risk attached to purchase
Period to which price will apply - tactical, strategic? What does price analysis show? – reasonable price?
QuantityWhat is a fair price?
UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC
UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC
Support Tools
CostSchedulesDesign
FacilitiesSub-contracting
Tender Negotiations - Possible Topics
Industrial relationsContract termsAfter sales service
Experience
Total cost of ownership
Coordinate interests/schedules of both/all participants…..Target dead-line
List of references
Commercial topics…. payment?, financing etc.
UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC
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