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MGT 3040 (1)
Chapter 1

Chapter 1 Purchasing & Supply Management.docx

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MGT 3040
Wilf Roesler

Chapter 1: Purchasing & Supply Management January-10-13 1:10 PM Corporate Supply Challenges Opportunities  Increased outsourcing --> suppliers need to  Reduce unit costs for products and services respond to end-customer's needs  Increase revenue  Dependence on supplier's responsibility for  Supply initiatives to improve customer design & build subassemblies and subsystems satisfaction  Increased global competition  Reduce total cost of ownership  New product development  Improve efficiency and efficacy of supply process  New information systems  Maximize value from suppliers  Single sourcing with fewer key suppliers and  Work with key suppliers to provide product and strategic alliances service innovations The Supply Function  1900-1950 o reliable access to supply of raw materials, supplies and services  1970s o international shortage of raw materials, and price inflation, put senior management at the attention of the supply function  1990s o Global supply chains and increased reliance on suppliers o Outsourcing  2000s o Technological developments  Supply chain integration  Lower transaction costs  Faster response times o Sustainability, globalization, supply chain security, risk management 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  Includes: 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 o Material handling, warehousing, inventory control o Delivery scheduling, transportation, disposal o Strategic sourcing, long-term supplier relation Operational responsibilities: day-to-day activities of the supply organization Strategic responsibilities: focuses on long-term supplier relation and commodity plans with the objectives of identifying opportunities in  cost reductions,  new tech advancements,  and supply market trends. Purchasing Purchasing: process of buying: learning of the need, locating, and selecting a supplier, negotiating price and other pertinent terms, and following up to ensure delivery of payment. A.K.A. supply management, procurement Logistics Management Logistics Management: It plans, implements, and controls the efficient forward and reverse flow of storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customer's requirements.  Transportation, handling, warehouse, capacity, etc. Activities of Logistics Management  Customer service  Demand forecasting/planning  Inventory management  Logistics communications  Material handling  Order processing  Packaging  Parts and service support  Plant and warehouse site selection  Return goods handling Reverse
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