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Interview with Mr. Vincenzo Marino, managing director of the Unitec Germany GmbH.

Explanation of the abbreviations :
F = question
A = answer

1. Interview: 6.11.2002

F: What do you understand by procurement?
A: By procurement one understands the acquisition and supply of the goods necessary for the production and utilization of the products of an enterprise.
These goods are raw -, auxiliary -, and fuels, parts, commodities which can be inserted as well as material assets. It is important that the term "procurement" is not to be confounded with "purchase".

F: What is the difference between purchase and procurement?
A: The purchase possesses a strategic meaning and has the necessary know-how, in order to find the suitable suppliers, in order to negotiate the prices and determine around the terms of payment and supply as well as the kind of relationship with the individual suppliers.
The procurement concerns itself however with the operational activities for the completion of the order process.

F: Thus is the procurement process only an operational procedure?
A: This depends on the necessary activities with the search and/or the selection of the suitable supplier. The search effected on the basis in which all who are applicable suppliers for each materials type are contained of business DATA cousin, since the enterprise has usually, from the past orders arising, Suppliers portfolio.
For well-known and/or the past the selection is usually limited ordered products to this Portfolio, whereby for "unimportant" products in normal catalogs (yellow sides, etc..) to be searched can. For important products this phase takes over a strategic meaning. The selected supplier must have the suitable technology, in order to offer the inquired product with good quality, in the necessary quantity and at low price. Further relevant conditions are the reliability, the after Sales service and the location.
After the examination of these criteria takes place the decision for one or more suppliers. An individual supplier can being selected due to special characteristics such as patents, technical conditions, available raw materials, location, etc. and because of a strategic project, e.g. in the case of a planned long-term relationship.
Different suppliers are applicable however, if none of the characteristics mentioned are present, whereby the competition can ensure lower prices and better services.
Possibly a negotiation takes place concerning the prices, delivery times and terms of payment for specific orders.
As the final conditions result, depends on negotiation power and the behavior of both parties. For standard products, with which the selection of suppliers is high, the prices are fixed in the supplier catalogs and can be negotiated only in the case of large purchase volumes.

F: The selection of suppliers is thus a strategic phase. Why is it so important?
A: Because the suppliers an important role play. From its product program the enterprise can be also completely dependent, since the quality of the products and services of the supplier can affect the business procedure of the entire enterprise strongly.

2. Interview: 3.12.2002

F: What is the difference between order and order?
A: The difference between order and order lies in the fact that the order refers to products of the supplier catalog, while the order concerns a commodity specific to the customer need.

3. Interview: 14.01.2003

F: In the procurement are specific investments transacted?
A: This happens rather on the side of the suppliers as on that of the customers, since generally each enterprise orients itself at its customer market. (1) location-specific investments, e.g., are mostly transacted by the suppliers, itself after the size, which and the prestige of their customers arrange strength. At the customers such investments are usually small. (2) system dependent investments can occur for example with the organization of the camp, if e.g. the supplied products require special conditions for the storekeeping (refrigerators, etc.). Also the use of a specific software can cause relatively high investments. (3) investments into specific human resources refer e.g. to the necessity, in the camp with special and/or. to deal dangerous materials or in the office with firm specific work procedures. But one must train the own coworkers or specialized coworkers to adjust. One finds this kind of specific investments in the procurement most frequently. (4) customer-specific investments concern the customers, but the suppliers by definition not. There can be however the case that the customer due to a large order with one its customer more commodity the suppliers necessarily and the camp must extend. In this case a relatively high investment must be transacted. (5) investments in the Reputation serve for the more successful sales and not purchase. Therefore they are transacted in the procurement only by the suppliers (see e.g. ISO certifying). (6) date-specific investments in temporally only limits for removable or profitable goods and achievements are transacted, if e.g. the customers of the procurement customer season goods or just in time produce. This can affect also the relationship with the own suppliers, and cause high investments.

F: In which extent are specific investments in the procurement thus transacted?
A: Although specific investments in the procurement area are transacted rather of the suppliers as of the customers, they are potentially relatively high. Most specific investments are transacted however for the strategic need and the so-called A-parts. For B and C-parts, which do not exhibit a strategic meaning, however the specific investments are generally small.

F: In what respect does the uncertainty in the procurement play a role?
A: Uncertainty belongs to the everyday life of the transaction "procurement", independently of whether it concerns A or B or C-parts. An enterprise can be uncertain e.g. over the quantity of the products which can be ordered, so that the agreement with the suppliers becomes more complicated. Also regarding prices, possible discounts, delivery times and quality of the commodity there can be uncertainty. Thus a procurement contract can become costly, since it cannot consider all circumstances and eventualities.

F: How do they judge the frequency of the procurement process? Highly or small?
A: The procurement process usually very often repeats itself. This applies in particular to B and C-parts, which constitute 80% of all order procedures on the average.

4. Interview: 23.01.2003

F: Which kind of contract connection represents a decision for the outsourcing of the procurement?
A: This can be very different. No firm partnership between enterprises and service supplying company can be determined, i.e. the enterprise selects and/or the most economical service supplying company most suitable in each case for each procurement transaction. Also within a firm relationship the clearance can be different. E.G. the service supplying company can worry also about additional service, like transport and logistics.

F: Is the "customer GmbH" also an example of it? How did the implementation of the outsourcing decision come with it?
A: The implementation of this decision came at the customer GmbH gradually, so that the procurement process ran from B and C-parts - despite reduced load of the purchase department - in the year 2001 still over it. Only starting from 2002 one could complete the process for B and C-parts without engagement of the purchase department.

5. Interview: 12.02.2003

F: Why your opinion after is the outsourcing economically meaningful the procurement?
A: If you observe the statistics, see a clear increase of the number of employees and a reduction of the number of workers. Behind this tendency a problem, which most enterprises recognized, is but not to against-steer can. The administration structure was modernized in the comparison to production too little. Both use resources however contrary to the production, which creates an increase in value for the enterprise, reduce the administration the increase in value. Each reduction of the increase in value is a net yield loss, which can be avoided by rationalization of the administrative processes. Today we have the means to arrange the administrative activities efficient and to reduce their costs at the same time. These means are information automation in the office activities, and the outsourcing of the processes and in particular the procurement, which represent the predominant portion of the administrative structure.

F: Why is the outsourcing of the procurement applicable only with B and C-parts?
A: A-parts possess a high value and exhibit therefore a strategic meaning. By paging of its procurement an enterprise would lose control of its own strategic function. With B and C-parts this danger does not exist.
In addition the price of B and C-products stands in no economic relation to the internal process costs, because these are often higher than the commodity value. Partially procurement costs exceed even the actual purchase price of the ordered goods. Therefore B and C-products bind substantial capacities and this despite low unit price lead to a high process/overhead surcharge.

F: Which advantages arise for the customers from the outsourcing of the procurement and/or as a result of the partnership with Unitec?
A: With the outsourcing the enterprise does not have no more on the domestic market to be limited and can to buy, where the price is most favorable. This is made possible also by the multilingual personnel of the Unitec, which overcome the language barriers and the necessity for the translation. In addition a reduction of the commodity prices results from the economy of the purchase volume (scale effects), which concentrates on the fields of technology and being, which are with the different users equal to procurement services. The delivery costs can sink drastically, since it becomes actually no longer necessary to move small quantities high costs. With the Unitec agreed upon administrative model of logistics, which makes the consolidation possible of the goods of the different suppliers in only one supply, has to the consequence that those can induce customer GmbH large quantities to low costs. This effect is naturally the higher, the ordered quantity is the larger. This permits also an improvement in the river to logistics. The entrances can be organized in such a way that the acceptance of the goods takes place irregularly regulated and no longer. The expirations of camp can be concentrated and accelerated. The idle running times are eliminated thereby and increased at the same time the efficiency of the existing structures.

F: Which cost factors play a role in the evaluation and in the comparison between enterprise-internal procurement and outsourcing of the procurement?
A: Four cost factors must be considered: Commodity price, transport costs, stock costs, process costs and if necessary price of the service supplying company.
Most enterprises are limited however with one another to compare the sums of commodity price and transport costs in order to judge the pro and cons outsourcing of the procurement. The organizational cost factors, i.e. process costs, stock costs and if necessary supplying service border RPR ice, remain however in many investigations unconsidered, also, because they are to be determined many more with difficulty and more time-consuming.
The fact that the outsourcing lowers organizational procurement costs is considered thus rarely. But are the process cost and the stock program costs reduction a stable and structure-referred saving and remain decisive therefore for the comparison between procurement organization forms.

F: They try to develop and implement also new solutions for the organization of logistics. What is the so-called virtual camp?
A: The virtual camp is to be helped a new challenge, which belong to the general goal of the Unitec of converting all potentialities for the development of the procurement and logistics into the reality as well as the industrial enterprises with a more efficient and more economical resources consumption. In practice the virtual camp consists of the stocks of the enterprises, which cooperate in this project with Unitec. By one of Unitec each of these enterprises can have specifically developed service the unrestricted entrance to each camp and stock.
This a virtual increase of the own stock results, without additional stock program costs.
Rather the reduction of the own stock is made possible by its logistic extension and by the use of this revolutionary service. The virtual camp with the automatic replacement of the situation existence and the virtual stock management by InterNet is the suitable answer to a market, which requires itself fast changed and rapid conversions.

Insurance in lieu of an oath

Here I explain on oath instead of that I made the available work independently and without use of others than the indicated aids. The out strange sources directly or indirectly taken over thoughts are marked as such.
The work was submitted or published so far in same or similar form of no other test authority.

Augsburg, 24. Juli 2003                Enrico Poli


This page has been automatically translate with Google from the German language.

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