SJSU Bus David Bentley1 Week 12A – Procurement & Distribution Chapter 11 Purchasing, make or buy, DRP

SJSU Bus David Bentley2 Purchasing - 1 Purchasing activities and interfaces Purchasing cycle Requisition from user or inventory control Supplier selection Order placement Order monitoring and follow-up Order receipt Outsourcing Contract manufacturers

SJSU Bus David Bentley3 Purchasing - 2 “JIT” purchasing Fewer suppliers More contracts Traditional vs. partnership relationships Next 2 slides Supplier selection Supplier audits and certification May use standard industry certifications

SJSU Bus David Bentley4 Supplier Relationships – 1 Source: Schonberger & Knod, Operations Management, Fourth Edition, 1991 FactorTraditionalPartnership 1. TenureShortLong term 2. AgreementP.O.Contract 3. SourcesManyFew 4. VolumeLowHigh 5. Price (total)HighLow 6. QualityUncertainHigh

SJSU Bus David Bentley5 Supplier Relationships – 2 Source: Schonberger & Knod, Operations Management, Fourth Edition, 1991 FactorTraditionalPartnership 7. DesignCustomerJoint 8. DeliveryInfrequentFrequent 9. OrderMailKanban 10. ReceiptDockProd’n line 11. PaperworkLotsLittle or none 12. OpennessArms lengthArm-in-arm

SJSU Bus David Bentley6 Purchasing - 3 Supply Chain Tools Bar coding EDI (Electronic Data Interchange) RFID (Radio Frequency Identification) E-commerce

SJSU Bus David Bentley7 Purchasing - 4 Make or buy (breakeven analysis) Q BEP = FC / (p – v) Distribution requirements planning (DRP) Aggregate requirements from stores Assign through warehouses to factories

SJSU Bus David Bentley8 E-Commerce Areas CRM - Oracle (including Seibel), BroadVision B2B - SAP, Oracle B2C - BroadVision SCM - SAP, i2 E-Procurement - SAP, Ariba