VENDOR NETWORK MANAGEMENT

ETHICAL AND TRANSPARENT SOURCING FOR ALL INDUSTRY

CUSTOMER CHALLENGES

WHO REALLY PERFORMS THE SOURCING FUNCTION?

CUSTOMER CHALLENGESPurchasing department?

• In many cases buyers are not technical people. This often leads to the incorrect goods being purchased or a reliance on the engineering department or even their suppliers to advise them on what to order.

• Relying too much on engineering could lead to friction between the 2 departments. Engineering could end up distrusting purchasing to source the correct products from the right suppliers so they end up doing the sourcing function themselves.

• Relying too heavily on suppliers for information could easily lead to suppliers taking advantage of the buyers. You the customer should always be in control of your suppliers and your purchasing.

CUSTOMER CHALLENGES• Once a customer starts relying on suppliers it makes it difficult to move

away from that supplier as a lot of information could be lost. Also, the customer could fall in to the trap of believing that they are getting the best deal from that supplier and doesn’t bother obtaining quotes from alternative suppliers.

• Suppliers who are in the position whereby they know that that their customers rely on them often up their prices as they know their customer won’t and sometimes can’t buy anywhere else. This is a dangerous and potentially costly situation to be in.

CUSTOMER CHALLENGESEngineering Department?

• Does engineering trust purchasing to perform the sourcing function or do they prefer doing it themselves?

• Artisans and foreman ultimately are employed to ensure that from a mechanical perspective a production plant runs efficiently. Yet often they feel the need to source the parts they need to keep the plant running themselves and simply pass the information on to purchasing who then raise an order. Is this due to distrust or preference?

• By doing this they are not only kept out of doing what they are supposed to be doing but because time is limited they often use the same suppliers time and again and fall in to the convenience trap. Familiarity breeds contempt!!

CUSTOMER CHALLENGES

• This could also lead to friction in the workplace as buyers could feel that engineering undermines them.

• Ultimately all parties do or should share the common goal of lowering production costs and increasing productivity. Yet too often the string is being pulled from both ends.

WHAT V.N.M. IS ALL ABOUT• The fundamental objective of V.N.M. is to provide a sourcing service to

all our clients for all their purchasing needs on a daily basis with the highest ethical standards and to be completely transparent at all times.

• The aim is to take the burden of chasing suppliers for quotations away from our clients’ buying and engineering departments. In V.N.M. our clients will have 1 contact for all sourcing needs.

• V.N.M. is not a middle man! We will not physically raise any orders but

will provide sourcing solutions and vendor management systems. You the customer still decides who you want to buy from!

• We aim to provide an expert sourcing function for our clients by identifying the right supplier for each enquiry.

• V.N.M. will use our clients’ existing vendor list and also introduce them to possible new vendors. By doing this our clients could enjoy the benefits of improved pricing, fresh ideas and keen service from suppliers who want to prove themselves.

WHAT V.N.M. IS ALL ABOUT• V.N.M. is also able to advise our clients which supplier to use if parts

need to be manufactured or identified. • In a breakdown situation our clients are welcome to contact a

supplier directly as well as contacting V.N.M. We understand that with regards to a breakdown the criteria for supply is different but we will however scrutinise the transaction afterwards to make sure that our client has not been taken advantage of. Be a preferred suppler is a privilege that must be earned and does not give the supplier the right to dictate terms to the customer.

• With regards to specialised machine parts we can appreciate that there is little we can do as our clients are compelled to be buy from that machine supplier e.g. Krones, KHS, etc.

WHAT V.N.M. IS ALL ABOUT• At V.N.M. we believe that all information we gather on behalf of our

clients should be freely available to our clients at all times. We are completely transparent .

• If we are unable to source a product for whatever reason or are not able to find a supplier who can deliver within our clients request, we will communicate that back to our clients. We will not keep our clients waiting for nothing

COST STRUCTUREThe cost for our service depends on what service level our customers would like from us:

BASIC SERVICEThe basic service would be only a sourcing function by means of the supply of quotations for each enquiry. Each enquiry would have an urgency rating. One the quotations have been forwarded to our clients V.N.M. would have no further involvement.

2nd LEVEL SERVICEThe 2nd level service would include the basic service and also the rating of suppliers as per our customers expectations with regards to price, delivery, general service and quality of goods supplied. The aim is to determine which supplier offers the best package and make them preferred suppliers.

COST STRUCTURE

3rd LEVEL SERVICE Our 3rd level service includes the basic and 2nd level as well as setting up price agreements between preferred suppliers and our clients. We would constantly monitor the preferred suppliers pricing. The supplier will have strict guidelines to which they would have to adhere to as per the clients expectations. V.N.M. will ensure these guidelines are followed.

4th LEVEL SERVICEOur 4th level service includes the basic to the 3rd level as well as stock monitoring and profiling. We will analyse purchases of regularly purchased items and advise our clients on what the stock levels should be. This can only be done once we have a procurement history of those items.

COST STRUCTURE

• The costs above are based on V.N.M. obtaining a maximum of 3 quotes per enquiry.

• The amount of enquiries is per day.

service level max. 10 enquiries 10-15 enquiries 15-20 enquiries 20-25 enquiries 25-30 enquiries

basic level R 4 000 R 4 500 R 4 850 R 5 150 R 5 300

2nd level R 6 000 R 6 500 R 6 850 R 7 150 R 7 300

3rd level R 8 500 R 9 000 R 9 350 R 9 650 R 9 800

4th level R 11 100 R 11 400 R 11 700 R 11 900 R 12 100

THIS IS POSSIBLE! HOW?• We need a 100% buy in from our customers. Our customers need to

be committed to V.N.M. and it’s procedures.• Our customers need to understand that we are not here to take

anyone’s place but are here to save our customers time and money. • V.N.M. would require a formal letter from our clients stating that

they are using the services of V.N.M. We would use this to inform suppliers and prevent confusion.

BY WORKING TOGETHER THIS CAN WORK!