MNP3701 EXAM SUMMARISED NOTES 2023 STRATEGIC SOURCING

MNP3701 EXAM SUMMARISED
NOTES 2023 STRATEGIC
SOURCING.

, Introduction to Purchasing and Supply Chain Management – Chapter 1

Chapter Overview
 A new competitive environment
Page | 2  Why purchasing is important
 Understanding the language of purchasing and supply chain management
 The supply chain umbrella
 Four enablers of purchasing and supply chain management
 The evolution of purchasing and supply chain management
 Looking ahead

A New Competitive Environment
 Increasing numbers of world-class competitors
 Sophisticated customer base
 More performance at a lower cost
 Widely available information sources
 Balance of power between buyers and suppliers
 Greater outsourcing

Factors Driving SCM
 Low cost and wide availability of information more closely links the members of a
supply chain
 Competition in domestic and international markets requires quickness, agility, and
flexibility
 Customer expectations and requirements are more demanding
 Major disruptions require the ability of a supply chain to react rapidly
 Competition between supply chains, not just companies

Why Purchasing Is Important
 Purchased content is a significant part of the cost of goods sold (≥ 55%)
 Move from traditional, adversarial buyer-supplier relations to improve supply chain
performance
 Purchased content’s impact on product and service quality
 Participation in product and process design
 Use of cross-functional teams
 Early supplier involvement
 The supply chain’s impact on competitive advantage

, Language of Purchasing and SCM
 Are supply chains and value chains the same?
 What is supply chain management?
 What is an extended enterprise?
Page | 3
Purchasing
 A functional group (i.e., a formal entity on the organization chart) as well as a
functional activity (i.e., buying goods and services)
 Aka as procurement

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
orientation in conjunction with cross-functional teams to achieve the organizational
mission

ISM’s Definition
 The identification, acquisition, access, positioning, and management of resources
and related capabilities an organization needs or potentially needs in the attainment
of its strategic objectives

Defining Supply Management

, Supply Chains and Value Chains
 Supply chain orientation – a higher level recognition of the strategic value of
managing operational activities and flows within and across a supply chain
Page | 4  Value chain – primary and secondary support activities that can lead to competitive
advantage
 Supply chain – a set of 3 or more organizations linked directly by 1 or more of the
upstream or downstream flows of products, services, finances, and information from
a source to a customer (subset of a value chain)

The Extended Value Chain




Supply Chain vs. Value Chain
 Supply chain management – endorses a supply chain orientation and involves
proactive management of the 2-way movement and coordination of goods , services,
information, and funds from raw material through end user

Cereal Value Chain Example