Guideline for the Development of Chinese Suppliers: Improving the Buyer Supplier Relationship using the Balanced Scorecard

Matthias Vodicka

Dec 2006 · diplom.de

About this ebook

Inhaltsangabe:Abstract: Nowadays companies all over the world face global competition. Because the bought-in part cost of engineering goods represents a big share of the overall production cost of engineering goods, procurement developed to be a major leverage to save cost in the recent years. As part of it, the supplier management is increasingly considered to be an important business function. Further, the development of supply bases in low-cost-countries (LCC), as China is, over the past years rapidly gained significance, since it is one of the remaining levers to reduce costs. After years of mass production of mostly simple products, today Industrialized-Country (IC) companies from the mechanical engineering industry strive for the sourcing of bought-in parts from Chinese suppliers. The scope of this thesis is to examine the existing methods, especially the Balanced Scorecard (BSC), and other concepts of supplier development and supplier improvement for their application with Chinese suppliers. Based on the strengths and weaknesses of these approaches a new procedure is developed. Therefore the first step is the examination of the supplier development process theoretically and practically. The theoretic view is based on literature research while the source for the examination of the practical problems of German buyers as well as of Chinese suppliers is a questionnaire based interview study among involved companies. Generally occurring threats of the buyer supplier relationship should be analyzed and weighed upon their relevancy especially for the Chinese supply market. Taking these issues into account, the existing procedures for supplier development and improvement are optimized for their application to Chinese companies. Finally the thesis closes with a general risk examination and the development of an applicable FMEA (Failure Modes and Effects Analysis) based methodology for the assessment of purchasing risk especially in China. IC companies penetrating the Chinese market with the target to source locally have to develop a supply base first. The supplier development identifies the required suppliers, assesses them upon their capabilities and establishes a co-operation. A successful supply needs supplier improvement, since fundamental capabilities are lacking frequently. Further, risks weigh heavier due to the high investments required in advance. Considering mainly small and medium sized enterprises in investment goods industry, the [...]