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MNP3701
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“Watch, Listen and Learn. You cannot do it all yourself…..anyone who thinks they do it is destined for
mediocrity.” Donald Trump
, 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
“Watch, Listen and Learn. You cannot do it all yourself…..anyone who thinks they do it is destined for
mediocrity.” Donald Trump
, 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
“Watch, Listen and Learn. You cannot do it all yourself…..anyone who thinks they do it is destined for
mediocrity.” Donald Trump
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