Consultancy Management Techniques - Essay Example

Consultancy Management Technique Table of Contents Introduction 3 Decision-making frameworks of supplier section for JLR 3 Final selection of suppliers 6 Managing the relationship between JLR and supplier 9 Source of information and data shared with the suppliers 9 Legal and ethical compliance of information that are shared with the supplier 10 Conclusion 10 Reference list 11 Introduction In the contemporary world, the purchasing function has received increased attention and purchasing decision making has become significant. Every organisations aims at developing perfect output such as services or products by using appropriate raw materials that are supplied by suppliers. Therefore, selection and evaluation of suppliers have become one of the vital necessities in the process of sourcing raw materials. The main aim of the process is to reduce the excessive cost that is attached to unqualified suppliers. There are various decision making framework for supplier selection, which are required for evaluating and selecting the right supplier for a company, so as to avoid extra cost of raw materials and production. The main aim of report is to select the appropriate decision-making frameworks of supplier selection for JLR. JLR needs raw materials or automobile parts for its new electric, Land Rover. Therefore, suppliers should be selected and evaluated with the help of appropriate frameworks. Decision-making frameworks of supplier section for JLR The automotive industry is regarded as the most important customer for various industrial branches; this includes light metals, iron and steel, glass, petro-chemicals and tires. Therefore, the industry develops large volume of business and employment along with the suppliers and the auxiliary sectors such as distribution, marketing, fuel etc. There are different decision making frameworks that support the apporpriate supplier selection for automobile industry. These frameworks are detailed henceforth and the best one is chosen for implementing it within JLR. Analytical Hierarchy Process: Camelettin (2012) had integrated many models to generate the best supplier selection and evaluation method. One of the important models was Analytic Hierarchy Process (AHP), which was developed by Saaty (Öztop, Aksoy and Öztürk, 2013). The model “addresses process for determining the relative significance of different activities in multi-criteria decision making problems” (Özkan, Başlıgil and Şahin, 2011). It enables the process to incorporate the judgements that are related to intangible qualitative criteria along with the quantitative criteria. The model is formed on the basis of three principles; firstly, the structure, secondly, the comparative judgement of criteria and judgement and thirdly, synthesis of the priorities (Özkan, Başlıgil and Şahin, 2011). The main objective of AHP is to arrange the alternatives and criteria in hierarchical structure, which is similar to the family tree. The hierarchy has at least three levels. The following figure highlights AHP, which is used for determination of the best supplier for an automobile company (Özkan, Başlıgil and Şahin, 2011). Figure 1: Supplier selection process with AHP (Source: Özkan, Başlıgil and Şahin, 2011) From the above figure, it is evident that the main criteria that are considered for selection of the best suppliers includes organisational and general structure of the company, production capacity, service quality and lastly the price at which the supplies are purchased (Özkan, Başlıgil and Şahin, 2011). Fuzzy AHP: Fuzzy AHP highlights the basic fuzzy theory to the model that was developed by Saaty. Presently, the tools are highly used for decision making purposes (Ayhan, 2013). In the AHP, it does not include vagueness for determining the personal judgements; thus it has been improved by fuzzy approach (Ayhan, 2013). In fuzzy AHP, there is pair-wise comparison of criteria and alternatives, which are performed with the help of linguistic variables represented through triangular numbers. Figure 2: Fuzzy AHP applied for selecting the best supplier automobile company (Source: Ayhan, 2013) From the above figure, it is evident that the criteria for evaluating the best supplier are origin, quality, cost after sales and delivery (Ayhan, 2013). The above mentioned models can be integrated to form a hierarchical model, which considers the important criteria for choosing the best supplier from both the models. The model is described henceforth. Final selection of suppliers The following framework is developed by combining the AHP and fuzzy AHP, which are the best supplier selection methods. The new integrated framework is generated for using it in procuring raw materials or automobile parts for the new electronic Land Rovers of JLR. The framework will help the organisations to choose the best supplier among the lot, which will reduce the cost of production and also cut down the extra cost. Figure 3: Hierarchical decision making framework for selecting the best supplier for JLR (Source: Author’s creation) The criteria that are developed after combining the two models are depicted henceforth. Quality: Here, quality refers to both service and product quality. The supplier should deliver the package at the right time at a specified place after packaging the products very carefully. This assures the company, who is receiving the supplies that the qualities of the products are good and are trustable (Özkan, Başlıgil and Şahin, 2011). The suppliers should operate in a flexible manner such that it can change the order when required. The raw materials or the automobile parts required for the manufacturing of electronic land, River should be supplied from a near-by location so that the time taken for delivery is limited. The customer or JLR should be satisfied with the quality of the products so that they can manufacture good quality Land Rover and their reputation is not questioned later. Therefore, the supplier should adhere to the ISO Certification status so that JLR has the confidence to accept the products and the certification code is not followed then the parts are returned to the supplier. Company capabilities and structure: The organisational structure of the supplier company should be stable enough to support the large volume of orders that are made by JLR for manufacturing the new electronic Land Rover. The company should employ a large number of qualified employees, who have experience in the automobile sector so that they can understand the trend and products needed for JLR. The supplier company should exercise string communication with the customers so as to build trust. The infrastructure of Supplier Company should be satisfactory, which have integrated experience and knowledge in the industry (Javanmardi, et al., 2011; Singh and Sharma, 2011). Price and promotion: This is one the most significant criteria that should be considered so as to select the right supplier for JLR. The supplier who asks for the cheapest price will be favoured by JLR. However, the quality of supplies should also be considered along with the price so that JLR does not experience any problem during manufacturing of the electronic Land Rovers. Delivery and service: The delivery of supplies is significant for any supplier as it determines future contracts with companies. The supplies should be delivered on time and to the specified place. The timely delivery of raw materials and products are important so that the production is not hampered (Chan and Chan, 2004) Hence, it can be stated that JLR should collect information regarding the timely delivery of the suppliers from different references so that they can trust them to place the order for obtaining automobile parts. Therefore, the framework assists in selecting the appropriate suppliers for JLR for sourcing automobile parts. Managing the relationship between JLR and supplier After selecting the appropriate supplier, the relationship between JLR and supplier is very important as it may harm the contract to a great extent. If the supplier fails to deliver the raw materials on time and to specific place, then JLR can cancel the order. Therefore, the supplier should maintain good terms and satisfy JLR with quality products and timely services. The relation between the two will enhance if the communication process is clear. This is done with the help of complete planning and organisation of meetings, where both the parties discuss regarding the issues and how to improvise (Chan, Chan and Lau, 2007; Lee, 2009; Chamodrakas, Batis and Martakos, 2010). Source of information and data shared with the suppliers When appropriate suppliers are selected, JLR has to reveal data and information related to its business to the former. The supplier becomes the new partner of JLR, who expects that the company will share information that will contribute towards the development of their relationship. The data related to the company assets and liabilities are significant for the supplier along with the profit. Therefore, the financial statements of JLR are crucial for the supplier in order to understand the liquidity position of the company and whether it can pay for the supplies in the short run. Apart from the financial data, information about their business and their status in the market are considered so as to develop a deep understanding regarding the operation of JLR. Legal and ethical compliance of information that are shared with the supplier The information that is shared between JLR and the suppliers has both legal and ethical compliance. JLR can share all this information with the suppliers as it is necessary for having deep knowledge regarding the operation of the company (Javanmardi, et al., 2011). Conclusion The decision-making framework for supplier selection is essential in the contemporary world as due to the increase in competition, the number of suppliers have also increased. In order to avoid receipt of raw materials from unqualified suppliers, the companies should adopt certain supplier selection method for identifying the right supplier. JLR should use a hierarchical model for selecting the best supplier. The model is developed after integrating two models such as AHP and fuzzy AHP. Both have different criteria and thus both are combined together to identify the evaluation criteria for the new hierarchical model. Reference list Ayhan, M., 2013. A Fuzzy AHP Approach For Supplier Selection Problem: A Case Study In A Gearmotor Company. International Journal of Managing Value and Supply Chains, 4(3), pp. 11-23. Camelettin, K., 2012. A hybrid intelligent approach for supply chain management system. Journal for Intelligent Manufacturing, 23(4), pp. 1237-1244. Chamodrakas, I., Batis, D. and Martakos, D. 2010. Supplier selection in electronic marketplaces using satisficing and fuzzy AHP. Expert Systems with Applications, 37, pp. 490–498. Chan, F.T.S. and Chan, H.K., 2004. Development of the supplier selection model – A case study in the advanced technology industry. Journal of Engineering Manufacture. 218, pp. 1807–1824. Chan, F.T.S., Chan, H.K. and Lau, H.C.W., 2007. A decision support system for supplier selection in the airline industry. Journal of Engineering Manufacture , 221, pp. 741–758. Javanmardi, N., Kaboli, A., Mahdavi, I. and Shirazi, B. 2011. An economical multi- criteria decision-making process for supplier selection. International Review of Business Research Papers, 7(5), pp.168-183. Lee, A.H.I., 2009. A fuzzy supplier selection model with the consideration of benefits, opportunities, costs and risks. Expert Systems with Applications , 36, pp. 2879–2893. Özkan, B., Başlıgil, H. and Şahin, N., 2011. Supplier Selection Using Analytic Hierarchy Process: An Application From Turkey. Proceedings of the World Congress on Engineering, (2), pp. 1-6. Öztop, D., Aksoy, A and Öztürk, N., 2013. A Supplier Evaluation System for Automotive Industry According To Iso/Ts 16949 Requirements. International Journal of Engineering Research and Applications, 3(4), pp. 2356-2362. Singh, R. and Sharma, S.K., 2011. Supplier Selection: Fuzzy-AHP Approach. International Journal of Engineering Science and Technology, 3(10), pp.7426-7431. Read More