UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC

1. UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC 4. New product development and ESI – early supplier involvement

2. Stages of New Product Development Initial concept Feasibility studies Preliminary design Prototype testing Finalised product Piloting of product and production Release for commercial manufacturing

3. Purchasing Orientation Design Orientation • Minimum acceptable margin of quality, safety and performance • Wide margins of quality, safety and performance • Use of adequate materials • Use of ideal materials • Lowest ultimate cost • Limited concern for cost • High regard for availability • Limited regard for availability • Practical and economical parameters, specification, features and tolerances • Close or near perfect parameters, specifications, features and tolerances • General view of product • Conceptual abstraction of product quality • Cost elimination of materials • Selection of materials • Concern for JIT delivery and supplier relationship • Concern for overall product design Technological aspects….or Innovation orientation

4. Early Supplier Involvement in the New Product Development Process ESI has been defined: A practice that brings together one or more selected suppliers with a buyer’s product design team early in the product development process. The objective is to utilize the supplier’s expertise and experience in developing a product specification that is designed for effective and efficient product roll-out.

5. Purchasing in the Future Advantages Problems Reduced development time Release of confidential business information Improved specifications Technology sharing Enhanced quality Cost and pricing sharing Lower development costs Decision making Access to new technology Ownership of IPRS Joint problem solving Teamwork Interchange of Knowledge Accountability Improved manufacturability

6. UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC 5. Selling and buying at right price. Tendering

7. Definition of Price The value of a commodity or service measured in terms of the standard monetary unit. D1 S1 Price Equilibrium Seller’s Market Buyer’s Market S1 D1 P1 % change in quantity demand % change in price = Price Elasticity of Demand % change in quantity supplied % change in price Price Elasticity of Supply =

8. Perfect Competition – Conditions Item must be homogeneous Item must be easily transportable Must be many buyers & sellers No Preferential treatment or discrimination against any buyer or seller Easy communication must exist between buyers & sellers Competition – Types and Conditions

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10. Purchasing Considerations in Pricing Agreements Risk attached to purchase Purchaser’s position in the market Nature of the purchase, e.g., strategies (leverage, bottleneck....) Is it a rebuy, etc?....new buy items, modiefie rebuy? Number of suppliers Alternative products Prices paid by competitors – hard to obtain Is the learning curve applicable? Period to which price will apply - tactical, strategic? What does price analysis show? – reasonable price? Quantity What is a fair price?

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12. UNIVERSITY OF ECONOMICS IN BRATISLAVA, SLOVAK REPUBLIC

13. Support Tools Tender Negotiations - Possible Topics Total cost of ownership Cost Schedules Coordinate interests/schedules of both/all participants…..Target dead-line Design Experience List of references Facilities Sub-contracting Industrial relations Contract terms Commercial topics…. payment?, financing etc. After sales service

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