Chapter one – Careers in Purchasing and Supply Management
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BADM 2160 INTRODUCTION TO PURCHASINGSupply Chain Management byBurt, Petcavage and PinkertonEighth EditionChapter 1The overall objective of this chapter is to give the reader a sense of the importance of purchasing and the supply chain and how they fit in to and impacts the business environment.Vignette:Careers in Purchasing and Supply ManagementDoes purchasing sound like a class (or career) your would be interested in? Why or why not? I am interested in operations, supply chain manaement. I am pursuing my bachelor’s degree because the need for people with these skills is very high right now. Share with your classmates what you know about the function of purchasing. Purchasing is one of the basic processes that are common to all organizations. It is the process of acquiring goods, services, and equipment from another organization in a legal and ethical manner.Can you identify someone who might be a mentor during your early days if you decided to pursue a career in purchasing? (Note: This individual may be a great candidate for your Interview Project!) I cannot think of anyone that is or has been in this industry that would have been a mentor. I am looking forward to learn more to understand the relationship between this course and operations, supply chain management. I believe they co-inside, and OSM deals with all operations in business. What are the five rights involved in the process of professional purchasing?1. Purchase of the right item or service2. the right quality3. in the right quantity at the right price4. at the right price5. at the right timeList and describe the five stages of the Supply Management process.1. Identification of item or service required;2. Identification of best supplier3. Establishment of a fair and reasonable price4. Creation of an enforceable agreement5. Management of the relationshipThe Five M’s What resources make up what management authorities refer to as the Five M’s and what is the relevance of each in the production process?1. Machines2. Manpower3. Materials4. Money5. ManagementMaterials are the lifeblood of industry. Materials of the appropriate quality must be available at the right time, in the proper quantity, at the needed location, and at an acceptable total cost. The role of the supply function in business can be seen more clearly after one explores the factors that caused the shift in the relative importance of the components of the five M’s.
Describe the shift these resources have undergone through the years. What has driven these changes?In management sense, materials became important around 1900. Before then they were taken for granted because they were simple, readily available, and cheap. During the first 100 years of the U.S. industrial system, productivity increased very little. The availability of manpower and horsepower exceeded that of machine power by almost 50-fold. That relationship started to change around 1850. Between 1850 and 1950 a remarkable increase in productivity took place. In 1950, the 1850 power relationship was reversed: 98 percent machine power and 2 percent horsepower and man power._____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Supply Management and the Bottom LineREVIEW EXHIBIT 1.2 A Graphic Reproduction of Supply Management’s Impact on the Bottom Line. Why do the authors describe supply management as a core competency of the firm?Because it directly affects the two forces which drive the bottom line: sales and costHow can Strategic Supply Chain Management help a company strengthen their bottom line?Through marketing and advertising, communications, and information technology. The whole idea is to drive sales up and cost down.List and define the ways supply management can contribute to increased sales:_Faster to market. Meaning being early to market products and services._____________________________________________________________________________________________________________________Improved quality; make products and services with less defects or errors._______________________________________________________________________________________________________________________Pricing flexibility; reducing sales price to increase sales volume.______________________________________________________________________________________________________________________Innovation; development of new technology and products.______________________________________________________________________________________________________________________Enhanced customer services; shorter fulfillmet lead times, consistent on time delivery, high fill rates, ability to meet unique or special requests.______________________________________________________________________________________________________________________The supplier of choice; becoming the supplier of choice to another channel member or to the end customer.___________________________________________________________________________________________________________________Customer fulfillment flexibility; Strategic supply chain management provides the supply support which allows a firm to be responsive to customer desires for flexible lead time and changes in product configurations._______________________________________________________________________________________________________________________Shorter cycle and lead times; these benefits result from improved supplier relationships and involvement in supplier product and process improvements._____________________________________________________________________________________________________________________