Introduction to Purchasing and Supply Management

What is Purchasing and Supply management?

The process of identifying,acquiring and managing the goods and services a company needs to operate.

What was the traditional view of purchasing and supply management?

• Shifting large quantities of goods by truck

• Economies of scale

• No concern over disposal issues

What does it mean when purchasing is a buying process?

Whereby a request is made within the organization & the purchasing manager then orders it.

What are the two key developments in purchasing?

1. Purchasing becomes ‘Supply Chain Management’

2. The rise of sustainable sourcing issues- e.g. rapidly rising interest in sustainability, corporate social responsibility, deliver economic returns from more sustainable goods

What are the 3 dimensions of sustainability?

Economic,Social and Environmental

What are the increasing pressures on PSM?

• Technological pressures- rapid technological innovation,social media, digital

• Political pressures

• Social pressures e.g. sustainable procurement, CSR

• Economic pressures e.g. outsourcing, re-shoring, threat of recession

What is the goal of supply chain management?

Getting the right product or service to the right place at the right time.

• Benefits are lower costs, better quality and faster delivery

What do upstream and downstream refer to in the supply chain?

upstream- supplier side, points toward the origin of materials

downstream- demand side, points toward the final market

Why is it important to differentiate between price and cost?

• Price is simply what you as a procurement officeer will pay the supplier

• Cost is what you pay to order,ship,deliver and generally maintain the relationship with the supplier.

Therefore the lowest price is not the best deal if if the item has to be shipped 1000’s of miles.

What does sustainable competitive advantage mean?

For a firm to have a competitive advantage is what differentiates it from competitors and in terms of sustainability

• A function of supply chain efficiency & effectiveness

e.g. how firms taackle the people,planet & profit challenge

What is the japanese way of PSM?

• Work in partnership with key suppliers

• Suppliers treated as an extension of organisation

• Management of risk and value across supply chain

• Continuous improvement between and within organisations

What is strategic sourcing?

Deciding which suppliers to choose that fit best with the requirements of the firm and how they can be evaluated and developed

• Focuses on long-term development