International Purchasing

Topics: Procurement, Purchasing, Strategic management Pages: 25 (2731 words) Published: May 25, 2013
ESCA Ecole de Management
By : Hadj messaoud KHABTOU

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Session 3 : February 12th, 2013

Last Session Reminder

Last Session Reminder

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Strategic decision vs Operationnal decisions

• Strategic decisions are long-term decisions that have major consequences throughout an organisation; • Tactical decisions are medium-term decisions that have less serious consequences for parts of the organisation; • Operational decisions are short-term decisions that have relatively minor consequences for specific activities. © 2013 3

The Strategic alignment

• Purchasing strategy supports the Business Strategy • And higher strategies • And other Functional Strategies • Strategic alignment occurs when all the strategies in an organisation support each other and work coherently together to achieve the overall mission.

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Translating Objectives to Goals

• Be a low cost operator
– Reduce purchasing costs • Reduce material costs by 15% next year – Reduce administrative overheads by 20% next year

• Supply high technology products
– Produce a stream of new products
• Outsource non-core activities – Qualify two new suppliers this year 5

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Steps to Purchasing strategy Design

1. 2. 3. 4. 5.

Analyse the purpose of the business Analyse the purchasing function Analyse the purchasing environment Design the supply strategy Implement the results

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Portfolio Analysis : Kraljic’s Supply Matrix

Kraljic’s Supply Matrix

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Portfolio Analysis : Kraljic’s Supply Matrix

Supply Profit

Maximize cost advantage Concentrate needs Active Sourcing Auctions ( E )

Make or Buy ? International sourcing Heavy Negotiation Substitute Products Qualify new suppliers Co design

The Less is the More Minimize purchasing administrative costs Minimize purchasing efforts

Ensure Supply Continuity Stock holding VMI Insourcing

More process automation
Delegated, De centralized purchasing

Supply Risk

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Portfolio Analysis : Kraljic’s Supply Matrix

Internal Constraints

Internal Challenges
Specifications Value Analysis New products

Difficult Task

Make or Buy ? Relationship



The Less is the More Substitute products Make decision International sourcing External Constraints

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Purchasing Strategy Case : Pharmaceutical Industrie

Aspegic production was stabilized to 12 millions units per year. In the last year, new needs has raised, specially after growing into some emerging markets, this had as impact demand fluctuation and urgent orders of big quantities ( 1 to 2 millions units ) do deliver into 2 months delay. From purchasing perspective, you will have to deal with this new situation and adjust strategy, teams and process to provide competitive advantage to your company in those new markets From information gathered for you in the following table, you will have to present your situation analyze, and strategy proposition to your company board in the next board meeting.

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Strategy Case
Bottle ( Flacon )


-Standard AFNOR -Quality issues ( défaut sur la bague des flacons ) - 30% of Purchasing TO -Econonic downturn for VERLIPACK

Label (Etiquette)


- One source but great quality and relationship, 20% of Purchasing TO - Challenging delays - 20 mm std, but specific color -Supplier recommended by quality assurance -15 % of Purchasing TO -Capsule 20 mm std - Econonic downturn for REMY - 5% of Purchasing TO -48 h delivery agreement - Good partnership, 10% of Purchasing TO -Delivery agreement every 4 weeks - 5% of Purchasing TO RAS 15% of Purchasing TO 11

Plug (Bouchons)




Notice Case (Etui pliant) Vignette

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The Way Forward : Risk and Value Analysis
Internal Non technical
Recommended Supplier Resist to change...
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