CHAP 1: Introduction to Purchasing and Supply Chain Management
Why Purchasing Is Important?
Increasing value and savings
Building relationships and driving
innovation
Improving quality and reputation
Reducing time-to-market
Generating economic impact
Suppliers have impact on a firm's total cost
Many product features originate from suppliers
Both byer and supplier must benefit
Supplier can contribute innovation idea
Buyer focuses on core competencies and outsources non-core activities and materials
Supplier quality -> product quality
Include suppliers early in product design process to take advantage of their expertise
The monthly ISM Report on Business is a closely followed national economic indicator
(>50) market increase
(<50) market decrease
Language of Purchasing and SCM
Purchasing
Purchasing is the set of functions associated with acquiring the goods and services that an organization requires.
Procument
Procurement is the process of identifying, shortlisting, selecting, and acquiring suitable goods or services or works from a third-party
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Getting the “right” quality
In the “right” quantity
At the “right” time
For the “right” price
From the “right” source
Supply Management
Planning for and acquiring the organization’s current and future needs through effectively managing the supply base to achieve the organizational mission.
ISM’s Definition
The identification, acquisition, access, positioning, and management of resources and related capabilities an organization needs or potentially needs in the attainment of its strategic objectives
Defining Supply Management
Strategic responsibilities
Managing the supply base
Cross-functional
Process approach
Supply Chains and Value Chains
Supply chain orientation
§ Higher level recognition of the strategic value of managing operational activities and flows within and across a supply chain
Value chain
§ Primary and secondary support activities that can lead to competitive advantage
3 Flows:
Mterial flow
Cash flow
Information flow
The Supply Chain Umbrella
Purchasing
Inbound transportation
Quality control
Demand and supply planning
Receiving, materials handling, and storage
Material or inventory control
Order processing
Production planning, scheduling, and control
Shipping/Warehousing/Distribution
Outbound transportation
Customer service
Chain Management
Capable Human Resources
Proper Organizational Design
Real-Time and Shared Information
Technology Capabilities
Right Measures and Measurement Systems
Roadblocks
Too many metrics
Debate over the correct metrics
Constantly changing metrics
Old data