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SCM201 - Coggle Diagram
SCM201
Chapter1
Introduction to Purchasing and Supply Chain Management
Achieving purchasing and supply chain benefits
Understanding the language of purchasing and supply chain management
The supply chain umbrella –management activities
Four enablers of purchasing and supply chain management
Why purchasing is text important
1 Increasing value and savings
1 Suppliers have substantial impact on a firm’s total cost
2 Many product features originate from suppliers
3 In manufacturing, purchased content is more than 55% of revenues
4 Avoiding costs through early involvement in product design stage
Building Relationships and Driving Innovation
1 Traditional approach is to bargain hard for price reductions
2 Newer approach is to conduct joint cost reduction with suppliers
3 Both buyer and supplier must benefit
4 Suppliers can contribute innovative ideas
Improving Quality and Reputation
1 Buyer focuses on core competencies and outsources non-core activities and materials
2 Need for ability to track materials back up through supplier’s supply chain
3 Supplier quality => product quality
Lapses in managing supplier quality can potentially tarnish a buyer’s reputation
Reducing Time-to-Market
1 Include suppliers early in product design process to take advantage of their expertise
2 Early supplier involvement can lead to an average of 20% improvement on material costs, material quality, and product development times
Managing Supplier Risk
1 Supplier risk is magnified by sourcing strategies that emphasize global sourcing, single sourcing, and JIT inventory
2 Need to develop business continuity plans to mitigate risks
Generating Economic Impact
1 The monthly ISM Report on Businessis a closely followed national economic indicator
2 A change index
3 Manufacturing and non-manufacturing components
4 > 50 means economy is expanding
5 < 50 means economy is contracting
The evolution of purchasing and supply chain management
A new competitive business environment
Widely available information sources
Balance of power between buyers and suppliers
Sophisticated customer base
-More performance at lower cost
Increasing numbers of world class global competitors
Greater levels of outsourcing
Looking ahead