Procurement, and Supply Chain Management Team LB Modul 2

Interrelated strategies framework

Supply chain strategy framework

Buying links in the supply chain

The five rights of purchasing

Purchasing Factors The ability of the organisation to develop and apply effective purchasing policy will be conditioned by several factors, generating alternative solutions to procurement problems, protecting the cost structure of the organisation, minimising purchasing costs, assuring long-range sources of supply, and maintaining good relationships with suppliers.

Supplies organisation structure

Negotiating links

World -Class Vision of Procurement Strategy

Performance Measurement Well-managed procurement will not only lead to lower costs and the optimal meeting of supply requirements, but also contribute to improvements in net income and return on assets. • Cash generation. Reduce the procurement process (thereby accelerating or prolonging cash generation) to a maximum of 6 weeks. • Price. Generate savings of 5% in the cost of goods and services. • Acquisition activity. Lower acquisition activity costs by 10% for example by reducing: incoming defects on material received by 50%, inventory levels by 20%, and ¤ invoice processing costs by 10%.

Issues The issues of highest importance in many organisations: leadership, strategy, marketing and waste reduction are perhaps a narrow vision of business survival. The issues of medium importance, such as supply chain management and supplier development, are not unexpected, although financial management and time to market may be of higher importance. The issues of lowest importance to the businesses, particularly small- and medium-sized enterprises, are surprising. New technology, e-commerce, benchmarking, and purchasing tend to be low priority, but

Supply Chains into the Future The increased speed and intelligence of computing systems for the control of information flows. is called “time compression.” The availability of flexible computer facilities enables supply chain companies to engage in “dynamic simulation” of problems. Finally, the realisation of the systems nature of the supply chain and of the potential importance of “trade offs” within the total system.