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CHAPTER 1 Introduction to Purchasing and Supply Chain Management -…
CHAPTER 1
Introduction to Purchasing and Supply Chain Management
New Competitive Environment - Factors driving SCM
Higher competitive
=> greater quickness, agility, and flexibility
Sophisticated customer base
=> Constantly changing & more demanding
Low cost, wide availability of information, outsourcing
=> More closely links members of a supply chain
Ability to identify and mitigate risk
=> Minimize disruptions
Balance of power between buyers and suppliers
Competition between supply chains, not just between companies
Importance of Purchasing
Improving quality and reputation
Generating economic impact
Building relationships & driving innovation
Contributing to competitive advantage
Increasing value and savings
Managing supplier risk
Reducing time-to-market
Enablers of Purchasing and SCM
Capable Human Resources
Analysis
Manage
Proper Organizational Design
Assess, select structure & formal system of communication
Division of labor
Coordination
Control
Authority
Responsibility
Information Technology
SC planning software
SC execution software
GPD, Bar codes, RFID, Internet-based systems
Measurement Systems
Support fact-based decision making
Communicate requirements throughout the supply chain
Improve future supplier performance
Recognize outstanding performance
Link critical measures to desired business outcomes
Determine if new initiatives are working
Language of Purchasing and SCM
Purchasing
A functional group - functional activity
(Buy G&S)
5 "RIGHT"
quality, quantity, time, price, source
Supply management
Strategic Orientation
Supply Base Management
Process- Driven Approach
Cross Functional Groups
Supply chain
Higher level recognition of the strategic value
All functions (receive => fill customer request)
Value chain
Primary and secondary support activities
Lead to competitive advantage
Extended enterprise
Loosely coupled, self-organizing network
Combine economic output to provide G&S offering to market
Supply Chain Umbrella
Purchasing
Quality control
Inbound transportation
Demand and supply planning
Customer service
Outbound transportation
Shipping/Warehousing/Distribution
Production planning, scheduling, and control
Order processing
Material or inventory control
Receiving, materials handling, and storage
Evolution of Purchasing and SCM
1850 – 1900: The early years
1900 – 1939: Growth of purchasing fundamentals
1940 – 1946: The war years
1947 – Mid-1960s: The quiet years
Mid-1960s – Late 1970s: Materials management comes of age
Late 1970s – 1999: The global era
The 21st century: Integrated supply chain management