Lecture Purchasing and supply chain management (3rd/e): Chapter 1 - W. C. Benton
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Purchasing and Supply Chain Management
3rd edition
Chapter 1:
Purchasing and supply chain management
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013,
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New Era of Openness and Accountability
•
The 3 powerful forces
•
Economics
•
•
•
European Union’s (EU) financial crises
Technology
•
Internet, ERP, etc.
•
Technology displacing labor
Zeitgeist
•
Accountability of financial institutions
•
Shifting focus from labor to supply chain
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Changes in Purchasing Function’s
Environment
Present
•
•
•
PAST
•
•
•
•
Technology driven manufacturers
New technologies
More profit contribution by supply
management
But operated just like the Old
Models
Laborintensive manufacturers
Large standardized batches
Neglect materials and parts
management
Need to understand the relationship between the
purchasing function and other functional areas!
3
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Purchasing Dollar Responsibility
•
•
The cost of acquiring, storing, and moving materials is
an increasingly large portion of the cost of goods sold.
The dollar responsibility of supply management is very
large in both relative and absolute terms.
Materialsrelated costs
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Integrated Purchasing and
Supply Management (ISM)
Fundamentals of
Purchasing and
Supply
Management
Special
Purchasing
Applications
Price/Cost
Analysis
Purchasing
Administration
ISM
Materials
Management
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Supply management As a key Strategic
Function
•
Contributes to the bottom line
•
Increases efficiency and productivity
•
Improves competitive position and customer
satisfaction
•
Impacts the organization’s image and social policy
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Example
•
An order quantity decision…
•
3 Different objectives
•
Purchasing manager:
•
•
PIC manager:
•
•
“Minimize annual ordering cost.”
“Minimize workinprocess inventory.”
Traffic manager:
•
“Minimize transportation cost.”
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Organizing the Purchasing Function
•
The Two Main Decisions:
1.
Where should the purchasing functions be located in the
organization?
2.
What level of authority should the purchasing function have?
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Purchasing: Centralize or Decentralize?
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Future of Centralized Purchasing
•
•
Majority of significant dollarvalued purchases will be
centralized
•
Computerbased management information systems
•
Stronger emphasis on becoming lean
•
Stable price through Longterm agreements
Centralized procurement as a competitive weapon
•
E.g., Honda of America
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Previously…
•
The 2 Main Decisions:
1.
Where should the purchasing functions be located in the
organization?
2.
What level of authority should the purchasing function have?
11
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Example of SM Organizations
1)
Basic Supply Management Organization
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Careers in Purchasing
and Supply Management
•
This is the best time for the next generation of
managers to pursue a career in purchasing
supply.
•
•
Supply professionals must possess a
comprehensive skill set.
The average salary for a supply management
professional is $92,165.
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Requirements for ISM’s Professional
Credentials
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Questions?
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
