Okay, we are now going to cover the supplier level. So what we've done is we've started at the macro level, very, very strategic, looking at the supply markets and what the commodity or raw material packaging or services that you're looking for. You've now taken it to an industry level which is the next level down. You've analyzed the industry, looked at what a group of suppliers look like and now you're down to what I call operational, and you're actually going to select suppliers. Some of this we've been through in the supplier management course, so some of this will be repetitive but we'll go a little bit deeper as I said earlier, into some of these concepts. So let's get started. So, you know these three things, you've seen these things in supplier management course, so let's get through it. So as usual, sometimes we pose a question. Can you name some information sources that you or your procurement people could use to find suppliers? Give you about 30 seconds here. Okay, so information sources, you've seen this list before and I'm just going to review it briefly. But you have all sorts of information sources you can use. People, current suppliers, we looked at performance metrics that you know, how well they're doing, you probably develop that long list into a bunch of preferred suppliers. Those are the first kind of go to thing that you would do. But you also might had a sales representative come in and give you some information. You're stuck it in the file for the next time. You're going to go out for bid. You might have visited a trade show. Certainly, Internet is the common way to find things. And I mentioned earlier that there are tools on the Internet such as the ThomasNet, which is a group of industrial suppliers that you can look for a conveyor or a motor or a pump and you go in there and basically find all the suppliers names, addresses location ratings, etc, etc. It's called ThomasNet, if you looking for it. So as I said earlier, your stakeholders can be helpful in this particular area. So you have a lot of different information sources you can leverage to find good suppliers. So what's critical here is you want to use all this information that you developed in your macro-level analysis and the PESTEL analysis, a couple of supplier names might have been thought of. And certainly, when you did your industry analysis, when you're looking at groups of suppliers, you might say, these are the suppliers I think we need to look at. Remember that for example, National MRO Suppliers. So, you know that's the suppliers you want to use. So you want to leverage what you learned in the first supply market areas tools that you can now use it to get suppliers. So you get the suppliers and what do you do next? Well again, we touched upon this, but you can do a SWOT analysis. And its strengths, weaknesses, opportunities, and threats. Again, 101 taught in MBA schools used to evaluate all sorts of companies for financial investments or for mergers and acquisitions, etc, etc. But it also equally works well on procurement. So you could take a supplier, you can see some examples, we've been through this chart before. And my hunch would be, somewhere you've seen this or heard about it or used it in another way, but this isn't meant to be anything particular. But if maybe the weakness is they have low product innovation, right? Or they have unions, the time to renegotiate the contract is coming up. These would be weaknesses, right? Threats, right? A good one would be maybe emerging markets are coming in from overseas that are your existing suppliers. And there's, maybe they're not good at new product development, some of these people. So you could list looking at individual suppliers. Opportunities, again, the flip of it. Maybe you want to have emerging markets coming in here. And so, it could be a lot of opportunities out there in the marketplace and these suppliers could be good to use. Like I mentioned in the in the print example, we talked about having some technology to be able to make our print quotations and buying and implementation efficient and effective. So that was an opportunity, we would have listed the suppliers that had. And then, what are the strengths? As I said earlier, these customers broad-based. For example, we looked at the segmentation, those national suppliers like Granger and McMaster-Carr, if you're looking, that's a strength there. And they have, as you might expect, Internet catalogs you order on, etc, etc. So you can do this for all the suppliers that you've identified. One of the basic things you're going to have to do as a way of analyzing which suppliers you want to do business with, is financial analysis. Again, we touched about this. And you want to do this because you certainly don't want to do business with suppliers going out of business. You certainly don't want to do it with a supplier, for example, that doesn't have sufficient resources to be able to invest in new plant and equipment that you might need. What happens if he's a week supplier and you're the largest customer, and you pull out, you're bankrupt, that can be problems in the press. So the question would be, you have to do financial analysis. I'm seeing this chart before, I'll take a little more time with it, so you understand it. And as I said earlier when we went through this before we go through some of the details, that you can usually get this from Dun & Bradstreet or Bloomberg. And if you aren't using it in your purchasing department to analyze suppliers and you don't think you have it, before you go out and buy it, check with your financial people. They typically use these types of reports to, guess what? Analyze customers, they want customers to pay bills. Well, you want suppliers that aren't going to go bankrupt. And what you want to do is a couple of key things here. You want to have these ratios, hopefully, you understand them. Just take a few of them so you understand them. You want to say current ratio should be greater than 1, right? But always, always, always look at industry averages. So for example, you can't compare the current ratio of Apple versus some chemical plant, right? Or any other industry. So the point would be is that whatever it is, take a look at all the people in your category of industry averages. Make sure that's the right list, and compare it against the supplier you looking at. So you can see here, quick ratio, inventory turnover, can be an indicator if cash is tied up at that they may need for other things, total asset turnover, days outstanding sales. These are all critical things you might remember if you took a financial course or accounting course. There are others, the critical one, right? Net profit margin. Is this guy profitable, right? What's the return on assets? What about their debt? Here's a good one. If they're greater than 3, it means they're highly leveraged, but again, compared against industry average when you do it. So I think this is a good tool. I think it's something that you could take this list and then use your Dun & Bradstreet or Bloomberg reports or Internet to analyze them and then be make a determination which are your top suppliers. Make sense? It's something that quite frankly, that many current people don't actually do, but they should do, all right. It's got to be one of the major way that you pick suppliers. So what's the takeaway here? Well, I think the takeaway on a supplier level is that you eventually want to get to the point where you select suppliers. And this is where we talked about this in supplier selection evaluation. But you want to get to the point where you feel comfortable using these tools at the supplier level to be able to pick a supplier that meets your needs of the company, the needs of your stakeholders, the needs of your procurement leaders, whatever they think is important. So let's go ahead and wrap it up here. So what we looked at in supply market and process is we looked at three levels. The macro level is very strategic. We looked at tools like PESTEL, which is a common tool that you can use to look at an overall supply market. Then we took it down a notch in the industry level, we looked at segmentation, we looked at supply chain mapping, those types of tools, very tactical trying to look at, what does this industry look like that I'm going into to look for suppliers? And the last one is very operational, supplier level. Which suppliers are we going to do business with? Which ones are we going to select to do business with? So with that, I'll wrap it up. And I think the important thing here is that the goal of doing the macro industry and supplier level is to select the best suppliers for your company and your customer that you're working for or stakeholders. So that wraps up supply market analysis. We're going to be heading next week into a new course on negotiation. And look forward to seeing you then.
