A Study On Supply Relationship Decision-making In Henkel Company

With the market competition becoming more and more fierce, nowadays enterprises focus higher and higher attention on core competition competency. Supply management plays a very important role in corporate competitive advantage. At the same time, unstable supply relationship may lead to big risks to the corporate operations. It is convincing that good supply relationship management will better integrate and optimize the supply chain of the related enterprises, resulting from optimal resource allocation, enhanced competitive advantage, reduced risks and thus leading to the outcome of"win-win"relationship.This paper is composed of seven sections. The first part has some introduction of Henkel's current situation of supply management. Furthermore, it points out the meanings, methodology, contents and structure of the study on supply relationship. The second part touches topics of supply relationship theory, including its evolution, supplier-buyer satisfaction model and relationship positioning of the partners. The third section is about how decisions of sourcing and outsourcing are made. The fourth part talks about sourcing decisions and how Henkel is doing. In Chapter Five, analysis is made as for the theory of positioning of supply relationship, as well as Henkel's practices based on Pareto ABC analysis and the four grids model classifying the materials into four categories. The model shows what methods should be considered and what strategies should be adapted in view of different supply relationship. Furthermore, it states clearly how a supplier will make positioning analysis of its purchasing firms. Therefore, it enables the purchasing firms to adjust their positioning strategies in line with the supplier's for a good match. The sixth section is about supply risks and preventive measures. Finally, based on the supplier evaluation indicators and method, the paper gives a thorough analysis about how will be the supply relationship in different situations and emphasizes that it is critical for buying firms to adjust supply relationship strategies accordingly.