ESourcing Strategy at Sun Microsystems
ESourcing Strategy at Sun Microsystems
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ESourcing Strategy at Sun Microsystems
After reading and analysis carefully the case, I strongly suggest that Sun Microsystems pursues dynamic bidding and in doing so, they should use the full service SRM. The main reason for such recommendation is that the dynamic bidding will save the company $2.7 Billion per year in material procurement. Furthermore the electronic bidding method will increase the supply-chain velocity, increase gross margins, time savings in negotiation process, gains in efficiency and finally it will meet the goal of the supplier management group which is to be the best in supplier management; And the overall goal of the company which is to increase stockholders’ value.
The recommendation to use full-service vendors and specially a larger company than Owner Market is based on the fact that since this will be a new, large scale, evolving and complex project, the guidance of the vendor will be necessary to optimize the program, troubleshoot and fix any glitches that may occur. The full service vendor will train not only Sun Microsystems but it will also guide Sun’s vendors in adapting the automated bidding process. However since this will be a long term partnership with Sun Microsystems, they should develop in the full service systems, solutions that automate the all process and that provide Sun with the ability to modify certain features or attributes.
In the incorporations of any new system there will be internal and external resistance in this case there will unhappy Suppliers, and Commodity directors who will be unhappy with the new direction the company is taking. However the solution to this problem is simply educating everyone one about the advantage of the new system and show that in order to move forwards and remain competitive this is the direction to take. It is clear that to achieve suppliers cooperation will require open and clear communication and certain assurances after all Sun has to see that the market currently favors supplier who have the leverage to choose which customer to satisfy. However due to the size of Sun Microsystems, vendors will be more than likely willing to accommodate Sun Microsystems in order to have a long last business partnership. A key component to assure that everybody is on board, is by communicating to vendors the advantages that they will gain in also using this new method, furthermore in the implementation process, Key suppliers like those in ASICs, and Memory should be invited to participate and offer their input. Along the same lines, this should be a full-blown program that has support from the top to the bottom of the hierarchy and it has to be looked at as a necessity; therefore Sun’s commodity directors have to be part of the design and implementation of the process.
Sun Microsystems realized that its competitiviness depended on cost-cutting initiatives; in this attempt from 1996 to 1999 they decrease the cost of goods sold by 7% thus increasing gross profits by the same percentage. Using dynamic bidding with a full service vendor will fit into the overall strategy of the company; which wants to increase value to the final consumer by improving delivery time. The decrease of about 30% companywide in material sourcing will put Sun Microsystems ahead of it competitors and it will increase their stockholders equity.
Disclaimer
The above essay was written by a college student and merely states opinions of a college student. However, if you feel strong about responding to the opinions stated, please write to articles@directorym.com and express your concerns.
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