MNP3701 EXAM SUMMARISED
NOTES 2023 STRATEGIC
SOURCING.
Page | 2
Introduction to Purchasing and Supply Chain Management – Chapter 1
Chapter Overview
A new competitive environment
Why purchasing is important
Understanding the language of purchasing and supply chain management
...
, 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?
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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
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