1. Purchasing and Supply Management
Chapter 1
Purchasing and Supply Management
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2. Key Question Addressed in Chapter 1
What can supply and suppliers do to help the organization
increase revenues?
and/or
decrease costs?
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3. Purchasing, Procurement and Supply Management*
“The integration of related functions to provide effective
and efficient materials and services to the organization.”
Includes:
Operational and strategic responsibilities
The standard steps in the acquisition process
In some organizations: receiving, inspection, warehousing, inventory control, materials handling, packaging, scheduling, in/outbound transportation, and disposal
*Terms are used interchangeably in this text.
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4. Logistics Management “Logistics management is
that part of supply chain management
that plans, implements, and controls the
efficient, effective forward and reverse flow and storage
of goods, services, and related information
between the point of origin and
the point of consumption
in order to meet customers’ requirements.”
--Council of Supply Chain Management Professionals (CSCMP)
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5. Supply Chain Management
“The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer. The development and integration of people and technological resources are critical to successful supply chain integration.”
--Institute for Supply Management (ISM) Glossary
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6. Profit-Leverage Effect
After 10% Spend Decrease
Before Spend Decrease
Revenue $100M Less Purchases -60M Less Other Costs -32M Profit 8M
$100M -54M (60 x 0.9) -32M 14M (8 x 1.75)
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7. Return-on-Assets Factors
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8. Purchasing’s Operational and Strategic Contributions
1. Supply Contribution
Operational
Strategic
Trouble Prevention
Opportunity Maximization
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9. Purchasing’s Operational and Strategic Contributions
2. Supply Contribution
Direct
Indirect
Enhancing Performance
of Others
Bottom-Line Impact
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10. Purchasing’s Operational and Strategic Contributions
3. Supply Contribution
Negative
Neutral
Positive
Operationally deficient
Strategically deficient
Directly deficient
Indirectly deficient
Operationally acceptable
Strategically deficient
Directly acceptable
Indirectly deficient
Operationally acceptable
Strategically acceptable
Directly acceptable
Indirectly acceptable
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