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Chapter 1

MGT 3040 Chapter Notes - Chapter 1: Order Processing, Reverse Logistics, Strategic Sourcing

Course Code
MGT 3040
Wilf Roesler

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Chapter 1: Purchasing & Supply Management
1:10 PM
Corporate Supply
Increased outsourcing --> suppliers need to
respond to end-customer's needs
Dependence on supplier's responsibility for
design & build subassemblies and subsystems
Increased global competition
New product development
New information systems
Single sourcing with fewer key suppliers and
strategic alliances
Reduce unit costs for products and services
Increase revenue
Supply initiatives to improve customer
Reduce total cost of ownership
Improve efficiency and efficacy of supply process
Maximize value from suppliers
Work with key suppliers to provide product and
service innovations
The Supply Function
o reliable access to supply of raw materials, supplies and services
o international shortage of raw materials, and price inflation, put senior management at the
attention of the supply function
o Global supply chains and increased reliance on suppliers
o Outsourcing
o Technological developments
Supply chain integration
Lower transaction costs
Faster response times
o Sustainability, globalization, supply chain security, risk management
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Supply Chain Management (SCM)
SCM: 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.
SCM: The management of all activities, information, knowledge, and financial resources associated with
the flow and transformation of goods and services up from the raw materials suppliers, component
suppliers and other suppliers in such a way that the expectations of the end users of the company are
met and exceeded.
**Minimize costs and lead times across tiers in the supple chain to the benefit of the final customer.
Focus is on the entire value chain
o Lean production
o JIT (just-in-time production)
o TQM (total quality management)
o Purchasing, supplier selection, partnership
o Product/service design, outsourcing
Steps of SCM
1. Recognition of need
2. Translation of need into commercially equivalent description
3. Search potential suppliers
4. Selection of suitable sources
5. Order/contract agreement
6. Delivery of products/services
7. Completion of payment
Further Responsibilities of SCM
o Receiving, inspection
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