Dynamism is Pinoy

Challenging times bring out the best in Pinoys. That’s because Filipinos find ways to optimize results regardless of the value of resources that fall into their hands. Moreover, this value creates even bigger results, based on Pinoys’ sense of community involvement, or what we commonly refer to as "damayan." Perhaps, what prods most Filipinos to adhere to these practices is the fact that we all aspire to achieve some sense of "balance," ensuring that whatever directions we go through, will always be in sync with the needs of the community we are in.

Such positive and strong cultural aspect is similarly practiced within the e-arena via e-Marketplaces. Despite differences in market focus and breadth, enterprises aim to survive changes within a competitive environment. In fact, it’s everyone’s goal to maximize efficiency and productivity, at the least possible cost. Building your private exchange seems easy, that is, if you have a large cash chest to begin with. But reality exists that not all firms have enough cash to survive the fast-changing technological tide. Worse, some make technological investments on the wrong note, especially if their go-live targets run behind schedule.

For costs to be appropriately managed, tech followers need to follow examples set by firms that have succeeded in aligning their supply chain management with their main corporate strategy. To do this, purchasing strategies must consider the essential processes: defining business requirements and outlining the strategic importance of these requirements.

Professional supply chain managers typically start this process by jotting down their ideas in "quadrants" to determine the value of a product to a specific buyer or end-user. These are matched accordingly, based on the number of capable suppliers that can efficiently fill the requirement. Oftentimes, the quadrants are segregated into items considered strategic, related to acquisitions, or those that are leveraged or multiple. In simple terms, items of high value to the supplier are referred to as strategic (ergo, few capable suppliers are present to service the requirement), while those of low value can be classified as acquisition. Meanwhile, buying firms can also attain leverage as the number of capable suppliers increases. This process is usually done via consolidation so supplier resources are reduced to achieve immediate and significant cost reduction.

Here are the basic suggested guidelines: (1) Determine your present purchasing strategy; (2) Identify historical expenditures for both item and supplier; (3) Determine the aggregate spending for the item considered as a percentage of the total spending for the specified business unit; and (4) Identify currently used suppliers and potential suppliers. The next stage is for the supply chain manager to define an appropriate marketplace to secure his/her requirement. The generic guideline is an e-Marketplace’s ability to complete transactions where learning is easy and you achieve the best price and, at the same time, extend your trading reach. Public e-Marketplaces can help widen your avenues as they complement speeding up the learning curve.

The second phase involves the supply chain managers’ ability to determine expected trends in pricing. Here, value-adds are created as purchasers are more able to perform supplier analyses and learn approaches to how to effectively establish contracts per item.

The advanced phase involves determining your information technology requirements once budgets are approved for large-ticket undertakings. Here, incidences of more accurate forecasting can be developed as supply chain managers are more able to determine current and future volumes. Benchmarking will occur as a result as firms identify opportunities to leverage the item expenditure with other similar counterparts.

Remaining suppliers also benefit as their average costs decline, as fixed costs are appropriately allocated over large volumes. In other words, it becomes easier for producers to forecast buying behavior, and utilize enough resources to service the requirement. What’s more, variable charges also decrease as higher productivity is achieved due to improved volume via consolidation. Through this scheme, buying firms are more equipped to determine if their supplier-partners have enough capability to handle additional business, in a manner that won’t make the quality of the product or service suffer.

All told, dynamism goes hand-in-hand with effective planning, especially if you want to seize opportunities in the e-arena. Be involved in communities. Source-IT-Straight from the Philippines.

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Elyn M. del Carmen is a senior applications associate of SourcePilipinas.com, specializing in conglomerate food manufacturing, organic chemicals and logistics. For comments or queries, e-mail her at [email protected].