Abstract:
The number of suppliers at Drive Technology Division (DTD) expanded due to many
factors, making its existing supplier base too complex to be managed effectively and
efficiently. The improper supplier management may have drastic impacts on end
customers and also disturbs the fulfillment process, thus impacting the overall
supplier management process and creating hurdles in the achievement of ultimate
objectives of supply chain management i.e.; cost effectiveness and responsiveness.
This study is based on a single case company division (DTD), a division of the
Industry Sector at Siemens Pakistan, and action research is the methodology chosen to
perform this research. DTD is already working on optimizing its supplier base;
therefore the study aims to check the overall optimization procedures devised and
implemented by the DTD to manage its supply base performance effectively. The
ultimate purpose of the study is to embrace the detailed process that covers all the
aspects needed to optimize the supplier base successfully, so that any company in
Pakistan with a similar issue may refer to the SBO of Siemens’ DTD. The process
explained in this study has its basis from a conceptual process formed based on the
literature analysis and the best practices available for optimization. The process is
cyclic and systematic involving four major segments incorporating eight intermediate
stages.
The testing of the overall procedure resulted in abolishing 1200 suppliers out of a base
of 1500, showing a reduction of 76% in the current supply base. The results seem to
be quite satisfactory, promising a long term outcome and a supplier base that is easily
manageable comprising a list of preferred suppliers which work jointly with DTD as
strategic partners in the supply chain.
Optimization does not stop at reducing the number of suppliers only, the process goes
even beyond incorporating the evaluation, development and relationship management
of suppliers, but this study is mainly focused at reducing the number of suppliers,
however the supplier development and evaluation initiatives developed by Siemens
are discussed and their position in the SBO procedure is also briefed.
