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Introduction to Purchasing and Supply Chain Management - Coggle Diagram
Introduction to Purchasing and Supply Chain Management
A New Competitive Environment
Sophisticated customer base
Widely available information sources
Increasing numbers of world-class global competitors
Balance of power between buyers and suppliers
Greater levels of outsourcing
Factors Driving SCM
Customer expectations and requirements
Ability of an organization’s supply chain to identify and mitigate risk
Low cost and wide availability of information
Competition is now between supply chains,
Higher levels of competition in domestic and international markets
Why Purchasing Is Important
Reducing time-to-market
Managing supplier risk
Improving quality and reputation
Generating economic impact
Building relationships and driving innovation
Contributing to competitive advantage
Increasing value and savings
Building Relationships and Driving Innovation
Newer approach
Both buyer and supplier must benefit
Traditional approach
Suppliers can contribute innovative ideas
Improving Quality and Reputation
Track material back-up through the suppliers supply chain
Supplier quality product quality
Buyers focus on core competencies and outsource operations
Lapses in managing supplier quality
Reducing Time-to-Market
Early supplier involvement leads to an average 20% improvement in raw material costs, material quality and product development time
Managing Supplier Risk
Supplier risk is sourcing emphasizing global sourcing, single sourcing, and JIT inventory
Need to develop business continuity plans to minimize risk
Generating Economic Impact
A change index
Manufacturing and non-manufacturing components
The monthly ISM Report on Business
50 economy is expanding
< 50 economy is contracting
Contributing to Competitive Advantage
Many supply managers have university degrees
Increasing the number of supply managers with certifications like CPSM
Increased recognition of supply management's contribution to company bottom line
Talent Management
Purchasing
Buying
Negotiation
Supplier identification and selection
Contracting
supply market research
Purchasing systems development
The Five Rights of Purchasing
In the “right” quantity
At the “right” time
Getting the “right” quality
For the “right” price
From the “right” source
ISM’s Definition
The identification, acquisition, access, positioning, and management of resources and related capabilities an organization needs
Supply Management
Managing the supply base
Process approach
Strategic responsibilities
Cross-functional
Supply Chains and Value Chains
Supply chain is Set of 3 or more organizations linked directly by 1 or more of upstream or downstream flows of products, services, finances, and information from a source to a customer
Value chain is primary and secondary support activities that can lead to competitive advantage
The Supply Chain Umbrella
Quality control
Demand and supply planning
Inbound transportation
Receiving, materials handling, and storage
Purchasing
Material or inventory control
Order processing
Production planning, scheduling, and control
Shipping/Warehousing/Distribution
Outbound transportation
Customer service
Capable Human Resources
Supplier analysis
Competitive market analysis
Purchasing strategies
Need for close collaboration with suppliers
Total cost analysis
Need for close internal coordination
Supplier relationship management
Proper Organizational Design
Coordination
Control
Division of labor
Authority
Assessing and selecting structure and formal system of communication
Responsibility
Real-Time Collaborative Technology Capabilities
Supply chain planning software
Optimize production scheduling
Improve forecast accuracy
Reduce working capital costs
Shorten cycle times
Cut transportation costs
Improve customer service
Supply chain execution software
Manage physical flows
Lean supply
Obtain materials
Key SCM Technologies
Capture and share real-time
Internet-based systems
Bar codes
Global positioning systems
Radio frequency identification devices
Right Measures andMeasurement Systems
Roadblocks
Too many metrics
Debate over the correct metrics
Constantly changing metrics
Old data
Overcoming roadblocks
Know what to measure
Have a process in place to measure it
Have accessibility to the right data
Evolution of Purchasing and SCM
The quiet years 1947 –Mid-1960s
Materials management comes of age Mid-1960s –Late 1970s
The war years 1940 –1946
The global era Late 1970s –1999
Growth of purchasing fundamentals 1900 –1939
The early years 1850 –1900