Trends in Procurement Scm

Topics: Supply chain management, Supply chain, Procurement Pages: 16 (4907 words) Published: February 2, 2012

1. Introduction
Procurement and Supply Chain Management (PSCM) presents the new paradigm in strategic and operational business management for the 21stcentury. By offering a cooperative and integrated model of the value-creation process in a cross-organizational perspective, it also places new challenges on business management methods and instruments used, in theory as in practice. In the field of materials management, the new PSCM perspective led to major changes in the methods used and in the emphasis of the different process steps. Presented here is the classical as well as supply-chain-based Procurement methods which compares them and draws conclusion on their use in theory and practice. Procurement was long neglected by business management and economic theory. The role of Procurement & Supply chain was always seen as a secondary activity in the organization and its supportive role to production were encouraged in classical materials management. In the recent years SCM has been re-evaluated in the value chain of whole industries and therefore reemphasized the strategic role of Procurement for the supply chain. Procurement & supply chain mamagement is divided into 5 steps or activity fields: supporting activities, sourcing, distribution, storage and disposal. PSCM changed the methods used in each separate step. In supporting activities for example PSCM requires multi-dimensional, long-term and dynamic instruments to guide decision-making in materials management, using cross-organizational cooperation to succeed, such as advanced purchasing. In sourcing the strategic role of sourcing was reemphasized by SCM and new tools such as the use of procurement E-AUCTION methods, SCR, green sourcing, TCO, Ethical sourcing, PCB, strategic alliances and TPB were introduced, due to the new cooperative paradigm in SCM. In distribution and storage too, cooperative instruments are used to keep up competitiveness, such as VMI and integrated logistics. In disposal, however, SCM provides a totally new philosophy, reducing the focus on waste and enhancing material cycles, environmental programs and new recycling programs, such as reverse logistics. Overall in SCM, the main focus was relocated from scheduling and storage planning that was the main activity of Procurement in the classical perspective to strategic sourcing and disposal as the two main processes of materials management. Concluding, the comparison of classical and supply-chain-based Procurement showed, that SCM emphasizes on the strategic role of Procurement by offering an integrated and process-oriented perspective on the value-creation process. Furthermore supply-chain-based Procurement bases on communication, mutual interdependence and decreasing short-term competition to stay competitive in the long run as an entity, represented by the supply-chain. The long-term, complex and dynamic perspective of PSCM and the pursuing of multiple and conflicting goals in PSCM are mirrored in the methods used in supply-chain-based procurement function. Capitulatory, PSCM reemphasized the strategic role of Procurement as a cooperative, process-oriented primary activity within the supply-chain that has major potential for the competitiveness of the supply chain in the long-run. 2. Increased Intergration and collaboration – Collaboration Between Stakeholders in the Extended Supply Chain(ESC)

During the past 5-10 years, there has been an increased focus on procurement and SCM as a competitive weapon due to the significant effects that supply chain activities have on all elements of an organizations financial performance, including operating costs, revenue growth, and asset management.This recognition of the importance of SCM has given rise to an abundance of recent research on SCM practices flowing from business schools, industry consortia, SCM software providers, and consultancies. One of the key issues which continues...
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