Chapter 1

Purchasing
Click the card to flip 👆
1 / 17
Terms in this set (17)
Purchasing
A dual role:a functional group (formal entity in the organizational chart) and a functional activity (buying goods and services)
Also known as procurement or acquisition
Supply Management
A strategic approach to planning for and acquiring the organization's current and future needs through effectively managing the supply base, utilizing a process approach in conjunction with cross-functional teams (CFTs) to achieve the organizational mission.
Supply Base
The supply base consists of all the suppliers that provide an organization with its materials and services. Upstream (suppliers) and downstream (customers)
Strategic responsibilities
Supply management requires pursuing strategic responsibilities that have a major impact on the long-term performance of the organization. These strategic responsibilities are not pursued in isolation but are aligned with the overall mission and strategies of the organization. Strategies are different from tactical, routine, or day-to-day activities. To function effectively, an organization must perform both strategic and traditional (tactical). Without routine ordering and follow-up, an organization will not receive product in a timely fash-ion. A strategic activity is the development of a system empowering internal users to order routine supplies.
Five Traditional rights
Price, Quality, Quantity, Time, Source
Nearshoring
Involves evaluating suppliers located closer to the United States. Such suppliers may be located in Mexico and Central and South America.
Reshoring
Involves bringing some sourcing back to the United States
Why purchasing is important
Increasing Value and Savings
Building Relationships and Driving Innovation
Improving Quality and Reputation
Reducing Time to Market
Managing Supplier Risk
Generating Economic Impact
Contributing to Competitive Advantage
ISM Report on Business
One of the most closely followed indicators of economic activity. This monthly survey of purchasing managers in both the manufacturing and non-manufacturing sectors is closely monitored by the financial sector, and the results of both reports have the power to move financial markets. The ISM Report on Business is a change index, and generally a rating over 50 indicates the economy is expanding.
CPSM
Certified Professional in Supply Management
Supply chainsA set of three or more organizations linked directly by one or more of the upstream or downstream flows of products, services, finances, and information from a source to a customer. It is important to acknowledge that anytime business is conducted a supply chain will exist. Composed of interrelated activities that are internal and external to a firm.Supply chain managementEndorses a supply chain orientation and involves proactively managing the two-way movement and coordination of goods, services, information, and funds (i.e., the various flows) from raw material through end user. According to this definition, supply chain management requires the coordination of activities and flows that extend across boundaries. Organizations that endorse a supply chain orientation are likely to emphasize supply chain management.supply chain orientationHigher-level recognition of the strategic value of managing operational activities and flows within and across a supply chainValue chainsComposed of primary and support activities that can lead to competitive advantage when configured properly. The accumulation of these activities results in the total value added by the firm.Supply Chain umbrellaFunctional activities Purchasing Inbound transportation - from supplier to focal firm Quality control Demand and supply planning Receiving, materials handling, and storage Materials or inventory control Order processing Production planning, scheduling, and control Shipping/Warehousing/Distribution Outbound transportation - GM manufacturing line to GM dealer Customer serviceFour pillars of P/SCM excellenceCapable Human Resources Proper Organizational Design Central or Decentral? Real-time Collaborative Technology Capabilities Measurement of SuppliersTechnology in the supply chainCloud-based storage systems Mobile devices Shared software platforms Planning software Execution software Access provided on a real-time or near real-time basis