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Strategic Procurement

Contracts-Types and Features

Buy-back Contracts v Features Ø   A buy-back or return clause in the contract allows retailer to return unsold inventory up to a specified amount, at a agree-upon price. Ø   Common in book industry Ø   In auto-industry, manufacturer provides holding-cost subsidies where manufacturer gives certain amount to retailer for every unit held in the inventory over a period. v Advantages Ø   Increases the supply chain profit Ø   More order from retailers to the manufacturer v Disadvantages Ø   Buy-back is not attractive with more cost of return Ø   Retailer may exert less effort to sell Ø   Information distortion at the retailer level Revenue sharing Contracts v Features Ø   Manufacturer charges low whole sale price to retailer and shares a fraction of retailer’s revenue. Ø   Applicable in blockbuster movie rentals and movie studios for videos. v Advantages Ø   Best suited where cost of return is ...

Auction - types of auction and their characteristics

Types of Auction and the characteristics v   Ascending-bid auction (English Auction) •        Real time interactive auction •        Bidders present physically or electronically •        Seller gradually increases price- bidders drop out until one bidder remain to win the auction. v   Descending-bid auction (Dutch Auction) •        Real time interactive auction •        Bidders present physically or electronically •        Seller gradually decreases price from high value. •        The first bidder, who accepts the current price, wins the bid. •        These auctions are called Dutch auctions because flowers have long been sold in the Netherlands using this procedure v   First price sealed bid •   ...

Upgrades - Approach and best practices

Why Upgrades   Below is the list why companies go for the upgrades. The list is not exhaustive. However, it has all the major points. 1.      Product is not supported by the vendor due to higher version available in the market. To buy the support in the lower version, the corporates has to pay premium support fees. 2.      Enhanced Security features available in the higher version which is aligned with the IT Security policy of the corporate. 3.      New business features are added in the higher version. To be competitive in the market, corporate need to implement those new features of the application. 4.      The process has been improved in the new version 5.      The dependent product required higher version. Suppose, corporate is going to implement/upgrade a product. The recommended software for higher version of the product requires upgrade of the existi...