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Bottleneck Items
What are they?
The item is high risk to your company
There are few suppliers
It is not a standard item
Your annual expenditure on the item is low
Your relatively low expenditure is likely to make your
purchases unattractive to suppliers
ITC

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Bottleneck Items
What to do (II):

4

Develop a close & long-term relationship with the
supplier(s)
Negotiate a guaranteed volume (e
...
, per month) to
reduce risks & sign a long-term contract
Be a “good customer”
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Supply strategy for bottleneck purchases
Give examples of bottleneck items from your company
Current
Current number of
Purchased item
contractual
suppliers
basis

ITC

Appropriateness of the
proposed strategy

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Which operational strategy to use?
Operational strategies for bottleneck items
Strategy
Demand
forecasting

Phased release
of specification
information

Supply targets typically
affected

When to use which strategy

 Purchase price

 Where price is sensitive to volume
...


 Lead-time

 Where lead-times are long
...


Quality planning

 Conformance to specification

 When product or service quality is variable
and important t o you
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 All bottleneck purchases
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Operational strategies for bottleneck items
Give examples from your company
Operational
strategy

Bottleneck products or
services:

Issues involved in applying the strategy:

Demand
forecasting
Phased release
of specification
information
Holding stock
Quality planning

Currently using
the strategy
Would benefit
from the
strategy

Supply account
manager
Process reEngineering / Ecommerce
ITC

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Buyer Characteristics
- Bottleneck Items
The buyer should be a team player who can
work with other functions in your company to
reduce risk
It is important to maintain a good impression of
the supplier and to be a good customer
The buyer should be more of a relationship
manager than a hard negotiator

ITC

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Supply Strategy for Bottleneck Items
- Summary
Supply strategy for continuous bottleneck items
Number of suppliers:
Nature of relationship:
Type of contract:

One or two
Be a “good customer”
Term contract (probably
for a significant period)

Type of supplier
Must be particularly capable in the areas which pose the greatest
risk to your company
Will not exploit its strong bargaining position with your company
Will continue to supply the required products for the long term

ITC
ITC

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