MARKET AND MATERIAL MANAGEMENT ANALYSIS

Submitted by, Neetu BBA S6

Who is a Vendor?
A vendor is any person or company that sells goods or services to somone else in the economic production chain.

Vendor Development
Vendor Development can be defined as any activity that a Buying Firm undertakes to improve a Supplier's performance and capabilities to meet the Buying Firms' supply needs.

Vendor Selection Process

Analyze the Business Requirements

Assemble an Evaluation Team Define the Product, Material or Service Define the Technical and Business Requirements Define the Vendor Requirements Publish a Requirements Document for Approval

Vendor search
Compile a List of Possible Vendors Select Vendors to Request More Information From Write a Request for Information (RFI) Evaluate Responses and Create a "Short List" of Vendors

Request for Proposal(RFP) and Request for Quotation(RFQ)

Submission Details Introduction and Executive Summary Business Overview & Background Detailed Specifications Assumptions & Constraints Terms and Conditions Selection Criteria

Proposal Valuation and Vendor Selection

Preliminary Review of All Vendor Proposals Record Business Requirements and Vendor Requirements Assign Importance Value for Each Requirement Assign a Performance Value for Each Requirement Calculate a Total Performance Score Select a the Winning Vendor

Contract Negotiation Strategies

List Rank Your Priorities Along With Alternatives Know the Difference Between What You Need and What You Want Know Your Bottom Line So You Know When to Walk Away Define Any Time Constraints and Benchmarks Assess Potential Liabilities and Risks Confidentiality, non-compete, dispute resolution, changes in requirements Do the Same for Your Vendor (i.e. Walk a

Contract Negotiation Mistakes The smallest mistake can kill an otherwise

productive contract negotiation process This part of the process will be shorter and less complex for basic part and commodity vendors (eg. basic raw materials, office supplies, gas/electric, etc.) and fundamental services (eg. janitorial, heating/cooling system maintenance, office machine service contracts, etc.). It will take longer for more complex parts and multifaceted services (eg. Software outsourcing, call center services, etc.). Regardless of the size and scope of the material or service that you will be selecting a vendor for, following these steps will help insure the success

Direct and Indirect cost in Material Management

Part of the process ofpricing your product is including the costs of producing that product. Those costs include the direct and indirect costs associated with producing your product.

Direct Costs
Direct costs are costs that can be easily traced to a particular object such as a product, the raw materials used to manufacture a product, or the labor associated with the work to produce the product.

The most common Direct Costs are Direct Materials and Direct labor Direct materials are the materials that can be specifically identified with the product.

Indirect Costs
Indirect costs are usually called Indirect costs are those which affect the entire company, not just one product. They are costs like advertising,depreciation, general supplies for your firm, accounting services, etc.

Indirect Materials and Indirect Labor

Materials such as tools, cleaning supplies, and office supplies make production of a company's products possible but can't be assigned to just one product. These are classified as indirect materials Labor costs that make production of a product or products possible but can't be assigned to one particular product are classified as indirect costs.

Market Development

Market Development
Marketing development is a market development strategy employed by a company to increase its market, broaden its customer base, and ultimately sell more products

The first step for a company to increase its market size is usually to discover the segments of the market that are currently being supplied convincing current customers to buy new products and services that they are not already purchasing. Untapped market segment-Marketing development can concentrate on drawing them to a company or product market penetration to increase its

Market Feasibility

For industry/market feasibility analysis, there are three primary issues that a proposed business should consider: i. industry attractiveness

ii. market timeliness iii. identification of a niche market.

i. Industry Attractiveness
A primary determinant of a new ventures feasibility is the attractiveness of the industry it chooses Industries vary considerably in terms of their growth rate

In general, the most attractive industries are characterized as the following: (1) Are large and growing; (2) Are important to the customer; (3) Are fairly young rather than older and more mature; (4) Have high, rather than low, operating margins; (5) Are not crowded.

Although the criteria shown on the preceding slide is an ideal list, the extent to which a new businesss proposed industrys growth possibilities satisfy these criteria should be taken seriously. (2) In addition to evaluating an industrys growth potential, a new venture will want to know more about the industry it plans to enter. (3) This can be accomplished through both primary and secondary research

ii)

Market timeliness considerations

Major Considerations Is the window of opportunity open or closed? Is now a good time for a new market entrant (i.e., are customers buying, are industry incumbents making money?) Should we try to capture a firstmover advantage?

Nature of Product or Service Introduction Improvement on something already available in the marketplace

Breakthrough new product or service, which should establish a new market segment

 A niche market is a place within a larger market segment that represents a narrower group of customers with similar interests For a new firm, selling to a niche market makes sense for at least two reasons: a) It allows a firm to establish itself within an industry without competing against major competitors head on. a. A niche strategy allows a firm to focus on serving a specialized market very well instead of trying to be everything to

iii) Identification of Niche Market

Another useful way of thinking about this topic is to distinguish between vertical and horizontal markets : A vertical market, which is analogous to a niche market, focuses on similar businesses that have specific needs. Startups typically start by selling into vertical markets. A horizontal market meets the specific needs of a wide variety of industries, rather than a specific one.