Purchasing Management

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Chapter1 Introduce to Purchasing

Why purchasing is important in the new competitive environment: 1. Increase number of world-class competitors
2. Sophisticated customer base
3. Balance of power between buyers and sellers
4. Greater outsourcing
5. Allow company to participate in product development and design

Supply chain management: a strategic approach to plan for acquiring the organization’s current and future needs through effective managing the supply chain in conjunction with cross-function team to achieve the organizational mission.

Purchasing objective:
1. Supply chain continuity
2. Manage the purchasing process efficiently and effectively * Determine staff level
* Allocate budgets
* Provide training and growth opportunity
* Introduce procure to pay systemc
3. Develop supply base management
* Select competitive suppliers by identifying suppliers with potential and build close relationship with existing suppliers 4. Develop strong relationship with other functional stakeholders 5. Develop integrated purchasing strategies that support organization strategies 6. Support organization goals and objectives

Chapter2 Supply Management Integration for Competitive Advantages

Supply chain integration: professionally managing the suppliers and developing close relationships with different internal groups.

The purpose of integration
1. Information: sharing the information about the market
2. Knowledge and expertise: obtain products knowledge and technology 3. Business advantages: enjoying favorable cost structure and economic of scale 4. Different perspectives: “fresh eyes” approach

How to achieve integration?
1. Use cross-functional team
2. Build information system
3. Integrated performance objective and measures
4. Co-location of supplier and customers
5. Councils and committee

Internal linkages: it consists of many communication flows, which needed to reach agreement. Meanwhile, it issues global sourcing of internal functional and activities and identifies global sourcing requirements for success. 1. Operation

2. Quality and assurance
3. Engineering
4. Accounting and finance
5. Marketing and sales
6. Legal
7. Environment management

Buyer and supplier collaboration
1. A win-win approach to reward sharing
2. Joint effort to improve supplier performance and resolve disputes 3. Open exchange of information
4. Credible commitment to work together during difficult time 5. Commitment to high quality, defect-free products

Advantage of close relationships
1. Trust
2. Long-term contract

Obstacles of closer relationships
1. Confidentiality
2. Limited interest by supplier
3. Legal barriers
4. Resistance to change

How to integrate suppliers successfully to develop new products and services? 1. Formalize process for selecting items
2. Use cross-functional team for supplier selection and integration. 3. Early supplier involvement for products design and volume work 4. Supplier membership and participation
5. Direct cross-functional companywide communication
6. Co-locate of buyer and supplier personnel
7. Form trust
8. Sharing technology between supplier and buyer
9. Joint education and training efforts

Chapter3 Supplier Evaluation and Selection

Supplier evaluation and selection process

1. Recognize need for supplier select
* During new product development
* Due to poor existing supplier performance
* Buying new equipment
* Expanding into new market
* At the end of existing contract
* Reduce the supplier base size

2. Identify the key-sourcing requirement
* Cost
* Quality
* Delivery performance

3. Determine sourcing requirement
* Single vs. multiple supply source
* Short-term vs. long-term contract
* Design...
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