Supply Management

(Section-A) Spring-2013

Desired Scholastic Culture

Values and Dress code Late coming / Early leaving Class participation

Marking approach
Counseling hours Course pack

LEARN - dont run after grades they will follow! Have fun in learning and make it fun .for me too!!

Reference Text

Semester Plan
But since Most plans are just inaccurate predictions I may back off!!
Week
1 2 3 4 5,6 7 8 9 10 11 12 13 14 15 16 17

Topic

Readings

Introduction Chapter 1, Chapter 2 Purchasing process Purchasing process + Demand Planning + Forecasting Chapter 2 Policy and procedures , Integration Purchasings Position within Organization structure Commodity strategy Optimal Decision Making Supplier evaluation and structure Mid term Supplier management Inventory Models, Waiting Lines Global sourcing Transportation Decisions and Cost Calculations Negotiations Project presentations Project presentations Final Chapter 3, Chapter 4 Chapter 5 Chapter 6 Case study /Articles/Excel Solver Chapter 7 Chapter 8, Chapter 9 Cases/Articles/Online resources Chapter 10 Cases/Articles/Online resources Chapter 13

Grading Scheme

Where are the SC Jobs?

Supply Management Process

The process of obtaining and managing of products or services needed to operate a business.
Elements: Actual Products, Information, Budgets, Employees etc Aim/Objective: keep costs low/stable and use resources effectively to increase the profits and efficiency of the business or organization.

Customer Demand

Production Schedule

Supply Mgmt

Production

Shipping

Customer Service

Establish Identify Requirements Specifications

Assess Suppliers

Select Supplier(s)

Issue Purchase Order

Follow-Up & Expedite

Receive & Verify

Process Payment

Maintain Records

Difference between Supply Chain and Value Chain

A supply chain is a set of three or more organizations linked directly by one or more of the upstream or downstream flows of products, services, finances, and information from a source to a customer. Michael Porter, who first articulated the value chain concept in the 1980s, argues that a firms value chain is composed of primary and support activities that can lead to competitive advantage when configured properly.

Value chain is a systematic approach to examine the development of competitive advantage and it consists of a series of activities that create and build value

The supply Chain key areas of concerns are forecasting, purchasing, production planning, warehousing and distribution; In addition, manufacturing of the product and its distribution

The Extended Value Chain

A Cereal Manufacturers Supply Chain

Supply Management
Strategic approach to planning for and acquiring the organizations current and future needs through effectively managing the supply base, utilizing a process orientation in conjunction with crossfunctional teams (CFTs) to achieve the organizational mission.

Key Issues
Overcoming functional silos with conflicting goals
Purchasing Manufacturing Distribution
Customer Service/ Sales High inventories Low inventories Low transportation High service levels Regional stocks SELL

Low purchase price Multiple vendors

Few changeovers Stable schedules Long run lengths

SOURCE

MAKE

DELIVER

SECTION-1
Purchasing
Introduction A Brief History of Purchasing Terms The Role of Supply Management in an Organization The Purchasing Process Sourcing Decisions The Make or Buy Decision Roles of Supply Base Supplier Selection

How Many Suppliers to Use

Purchasing Organization International Purchasing/Global Sourcing

Purchasing Terms
Purchasing Obtaining merchandise, capital equipment, raw materials, services, or maintenance, repair, and operating (MRO) supplies in exchange for money or its equivalent Purchasing Process
The process used to identify user requirements, evaluate the need effectively and efficiently, identify suppliers, ensure payment occurs promptly, ascertain that the need was effectively met, and drive continuous improvement. Purchasing is responsible primarily for inbound or upstream, channel activities whereas logistics spans both inbound and outbound relationship and material flows

Purchasing Terms
Merchants
Wholesalers and retailers who purchase for resale

Industrial Buyers
Purchase raw materials for conversion, services, capital equipment, & MRO supplies

The Purchasing Process and its stakeholders (Manufacturing environment)

Research and Development

The Purchasing team

Finance

Customers

Quality

Inventory Management

Human Resources

Suppliers

Production

Warehousing And Distribution

Information Technology

Maintenance

Sales and Marketing

NB: The hierarchical sequence of the business functions in this chart is not meant to give prominence to one function over another, it is simply a convenient way of grouping stakeholders together in this environement

Purchasing Responsibilities

1) Evaluate and Select Suppliers 2) Review Specifications

3) Act as the Primary Contact with Suppliers

4) Determine the Method of Awarding Purchase Contracts

Purchasing Objectives
Objective 1: Supply Continuity

1. Buy products and services at the right price

2. Buy them from the right source 3. Buy them at the right specification that meets users needs 4. Buy them in the right quantity 5. Arrange for delivery at the right time 6. Require delivery to the right internal customer

Objective 2: Manage the Purchasing Process Efficiently and Effectively

1. Determining staffing levels 2. Developing and adhering to administrative budgets 3. Providing professional training and growth opportunities for employees 4. Introducing procure to pay systems that lead to improved spending visibility,

5. Efficient invoicing and payment, and user satisfaction

Dashboards and Reporting

http://www.idashboards.com/Solutions/For-Your-Industry/Manufacturing.aspx

Objective 3: Develop Supply Base Management

(1) selects suppliers that are competitive,

(2) identifies new suppliers that have the potential for excellent
performance and develops closer relationships with these suppliers (3) improves existing suppliers (4) Develops new suppliers that are not competitive (5) work directly with suppliers to improve existing capabilities and develop new capabilities

Objective 4: Develop Aligned Goals with Internal Functional Stakeholders

If a suppliers components are defective and causing problems for manufacturing, then purchasing must work closely with the supplier to improve its quality.

Similarly, marketing may spend a great deal on advertising and promotion, so purchasing must ensure that the pricing is competitive and that service-level agreements are being met.

Objective 5: Support Organizational Goals and Objectives

For example, if an organization has an objective of reducing the amount of inventory across its supply chain. Purchasing can work with suppliers to deliver smaller quantities more frequently, leading to inventory reductions.

Objective 6: Develop Integrated Purchasing Strategies That Support Organizational Strategies

Monitoring supply markets and trends (e.g., material price increases, shortages, changes in suppliers) and interpreting the impact of these trends on company strategies Identifying the critical materials and services required to support company strategies in key performance areas, particularly during new-product-Development Developing supply options and contingency plans that support company Plans Supporting the organizations need for a diverse and globally competitive supply base

Factor Rating Method Analytic Hierarchy Process (AHP)