Question

Globalization represents the opportunity to deliver improved value to end customer to developing a world class supply relationships in terms of cost,quality,deliver and performance.More and more buyers will have to learn to develop a supply chain base in more than one country in order to remain competitive in the complex and dynamic global business environment.

Identify a company of your choice(in a vehicle manufacturing industry) on which you will base your study.

Write a detailed report on the above statement considering the following questions:

Question 1

Critically analyse reasons that may cause your company to consider an international supplier over a local supplier. (20)

Question 2

Critically discuss the reasons why your company (a vehicle -manufacturing company) should consider ethical conduct in its purchasing structure.(10)

Question 3

Examine the various types of contracts available to your company(a vehicle-manufacturing company)when dealing with international suppliers and advise them on which contracts would be most beneficial to achieve a competitive edge.(15)

Answer 1

Qst 1: First of all brand is most important factor for global business. To become a successful brand, it has to go through multiple phases like quality, consistency, good services after sales, availability. Supplier always go with the demand from the consumer. Consumer always look for the brand. If I talk about Hyundai, its a South Korea vehicle manufacturing company. But the sales and revenue comes from all over the world. If I talk about supplier Bosch, Denso, Magna, Continental are the biggest supplier. These are not having their presence in local but these are Multinational Suppliers. So they always provide the best product and the services throughout the world. To have a presence in local is not much effective than having the footprint in around the world. It is not that easy it takes huge revenue, brand promotion, deliverables, trust etc.

Qst 2: Ethical conducts is very much important before purchasing a product. Products should have a excellence in quality, certification for the best longevity, and the policy should have written, the company must maintain the availability of replacement parts. The Company should have a installation instructions for all the products where appropriate. Honesty and Ethical products. Zero tolerance for Corruption. Reporting of Potential violations. Correct and accurate documentation and records. These are stuff need to be consider as ethical conducts while purchasing.

Qst3: It is very much important to have a negotiable while choosing the right deal with the suppliers. Both the parties should conclude a negotiation feeling comfortable and happy with the agreement.

Objective set up while negotiate with the suppliers and these includes price, money value, delivery, terms, services after sales, quality.

Understanding the supplier is also an important aspect.

Both the parties should agree on what the contract will cover, details of price, payments terms and delivery scheduled.

A clause stating the suppliers right to ownership of the products until they are fully paid for.

A clause limiting the seller's contractual liability- considering the purchaser's statutory rights.

It is always good that to keep a written record of all assurance given.

Make sure that the contract covers the level of after sales service require. Always taking a legal advice when drawing up the standard terms and conditions. Before signing a contract with the suppliers it is very much important to carry out due diligence to check it can fulfil the agreement. Credit check must be needed for potential suppliers to ensure they have the cash flow to deliver what you want when you need.