PURCHASING AND SUPPLY CHAIN MANAGEMENT 2023.04 Dalian Procurement Vs Purchasing Source: https://procurementtactics.com/procurement-purchasing/ Procurement Vs Purchasing Source: https://procurementtactics.com/procurement-purchasing/ What is purchasing and supply chain management ? ● A complex process that involves the coordination of purchasing, procurement, production, and logistics. ● It is crucial that all parties involved have access to accurate information on the status of their activities. ● Purchasing and supply chain management involves an exchange of information between the various participants in a supply chain. Activities involved ● Purchasing is both a functional group and a functional activity. To ensure that the purchasing group adds the most value to the organization, it performs a variety of tasks. Only a few examples include supplier identification and selection, purchasing, negotiation, contracting supply market research, supplier measurement and improvement, and the development of purchasing systems. "The five rights" of purchasing 1. Obtaining the correct quality, 2. in the correct quantity, 3. at the correct time, 4. for the correct price, and 5. from the correct source The importance of purchasing and supply chain management ● Increase customer value by improving performance. (Without a supplier base, the Supply Chain is incomplete. Supplier characteristics can distinguish a producer's final product or service. ) ● A great way to save money. (In the manufacturing industry, the average purchase -tosale ratio is 55%. This means that suppliers receive more than half of the revenue generated by the sales of goods and services.) ● Have an impact on the quality of products and services.(increase the proportion of parts, components, and services that they outsource to concentrate on their core competencies and specializations. As a result, the importance of collaboration between purchasing, external suppliers, and quality is increased. Purchasing can also help to improve product and process designs.) ● Incorporating suppliers early in the design phase allows purchasing to start adding new value and contribute to their competitiveness. The evolution of purchasing and supply chain management ● More changes in purchasing have occurred in the last 15 years than in the previous 125 years. ● Purchasing became more important during World War I as a result of its role in obtaining critical war resources. At the time, the primary focus of purchasing was obtaining raw materials rather than purchasing finished or semi -finished commodities. ● During the 1930s and 1950s, there was widespread skepticism about the importance of purchasing to a business. Lewis observed that from World War I to 1945, there was a consistent but unequal appreciation of the importance of effective procurement to firm operations. ● during WWII and the postwar years , despite significant improvements in internal purchasing during this period, other disciplines such as marketing and finance overshadowed purchasing. The emphasis during the postwar years and the 1960s was on meeting consumer demand as well as the needs of a developing industrial market. Furthermore, businesses faced stable competition and had access to abundant materials, both of which historically reduced the importance of purchasing. During these peaceful years, the factors that would normally increase the importance of purchasing were absent. ● External events had a direct impact on how a typical business operated. Price and material availability concerns arose as a result of the Vietnam War, for example. During the 1970s, companies faced material shortages as a result of oil "shortages" and embargoes. Industry's reasonable answer was to become more efficient, particularly in terms of material acquisition and management. ● During this time, there was a noticeable change in purchasing behavior. Multiple sourcing was stressed through competitive bid prices, and the supplier was rarely seen as a value-added partner by purchasing management. Suppliers and buyers had an arm's length relationship. Supply contracts were mostly determined by price competition. When the severe economic recession of the early 1980s happened, along with the advent of foreign global competitors, the purchasing tactics and behaviors that had formed over the previous half -century were insufficient. In many firms, the function was demoted to a secondary role. Future directions ● Today's purchasing and supply chain management reflect a greater emphasis on the importance of suppliers. With a few select vendors, supplier relationships are shifting from adversarial to cooperative. The actions required of a modern purchasing organization are vastly different from those required only a few years ago. Supplier development, participation in supplier design, full -service supplier selection, total cost supplier selection, long -term supplier relationships, strategic cost management, enterprise-wide systems (enterprise resource planning, or ERP), and integrated Internet linkages and shared databases are now recognized as ways to create new value within the supply chain. To meet the performance demands of the new era, purchasing habits are changing dramatically. Three conclusions can be drawn about purchasing in the twenty -first century ● 1. The purchasing function in the expanding global economy is being reshaped in response to problems posed by global competition, rapidly changing technology, and shifting client expectations. ● 2. The purchasing function is becoming increasingly important, particularly for businesses competing in areas marked by global competitiveness and rapid change. ● 3. Purchasing, as well as operations, logistics, human resources, finance, accounting, marketing, and information systems, must remain more connected with consumer needs. This evolution will take time to complete, but integration cannot be avoided. What does a purchasing and supply manager do? ● The procurement, storage, and monitoring of items sold at a retail store, machinery, supplies, or other raw goods are all part of purchasing and supply management. The purchasing and supply manager is in control of this portion of the job, as well as the other employees who work there. Purchasing and supply management is one of the most significant job descriptions for most firms, particularly retailers, in terms of monitoring customer behavior and ensuring that top -selling items are well -stocked. ● negotiating with manufacturers or wholesalers when purchasing goods or materials, as well as working closely with cost analysts and marketing specialists to determine which products to buy and which are not selling well enough to justify the costs. This procedure ensures that the corporation keeps better -selling items in stock while discarding things that are accumulating dust on store shelves. What does a purchasing and supply management team do? ● Purchasing and supply management staff must continually research and learn about consumer behavior, as well as keep up with new and developing items on the market. A company's survival depends on its ability to provide the goods and services that customers desire. ● Purchasing and supply management teams are frequently made up of a number of key people. Pricing analysts, market researchers, and marketing workers, as well as managers from each of these departments, store owners, and supervisors, may be part of this group. It is critical for each member of the team to exchange notes and discuss purchasing and marketing tactics. In the case of retailers, they must also compare notes with the purchasing teams of manufacturers or wholesalers to determine which things are being manufactured and sold, as well as to whom. What does a purchasing and supply manager do? ● A purchasing and supply manager is someone who manages the process of purchasing goods or materials, while also being responsible for coordinating the distribution of these items to different departments . The main goal of a purchasing and supply manager is to ensure that the right people get the right things at the right time with minimal waste.A purchasing and supply manager is someone who manages the process of purchasing goods or materials, while also being responsible for coordinating the distribution of these items to different departments . The main goal of a purchasing and supply manager is to ensure that the right people get the right things at the right time with minimal waste.A purchasing and supply manager is someone who manages the process of purchasing goods or materials, while also being responsible for coordinating the distribution of these items to different departments . The main goal of a purchasing and supply manager is to ensure that the right people get the right things at the right time with minimal waste.A purchasing and supply manager is someone who manages the process of purchasing goods or materials, while also being responsible for coordinating the distribution of these items to different departments . The main goal of a purchasing and supply manager is to ensure that the right people get the right things at the right time with minimal waste. What is purchasing and supply chain management? ● Purchasing and supply chain management are the two core functions of any company. Purchasing is the function responsible for acquiring goods and services needed by the company while supply chain management deals with all the transactions that happen between a company, its suppliers, and its customers. The purchasing function includes anything from sourcing to marketing. Supply chain management includes everything from how products move in factories to what happens at a warehouse to how orders get delivered by couriers. Purchasing and supply chain management are the two core functions of any company. Purchasing is th e function responsible for acquiring goods and services needed by the company while supply chain management deals with all the transactions that happen between a company, its suppliers, and its customers. The purchasing f unction includes anything f rom sourcing to marketing. Supply chain management includes everything from how products move in factories to what happens at a warehouse to how orders get delivered by couriers. Purchasing and supply chain management are the two core functions of any company. Purchasing is the function responsible for acquiring goods and services needed by the company while supply chain management deals with all the transactions that happen between a company, its suppliers, and its customers. The purchasing function includes anything from sourcing to marketing. Supply chain management includes everything from how products move in factories to what happens at a warehouse to how orders get delivered by couriers. Purchasing and supply chain management are the two core f unctions of any company. Purchasing is the f unction responsible f or acquiring goods and services needed by the company while supply chain management deals with all the transactions that happen between a company, its suppliers, and its customers. The purchasing function includes anything from sourcing to marketing. Supply chain management includes everything from how products move in factories to what happens at a warehouse to how orders get delivered by couriers. Is supply chain the same as purchasing? ● Purchasing and supply chain management are two very different things. Purchasing is the act of acquiring goods or services fr om suppliers, while supply chain management is a process of ensuring that the right materials, parts, and other resources are available to make sure a company can produce its products or provide requested services. Supply chain management is not just about purchasing and procurement; it's about understanding each component in the supply chain --from raw materials to finished products--and how they interact with one another at every step.Purchasing and supply chain management are two very different things. Purchasing is the act of acquiring goods or services from suppliers, while supply chain management is a process of ensuring that the right materials, parts, and other resources are available to make sure a company can produce its products o r provide requested services. Supply chain management is not just about purchasing and procurement; it's about understanding ea ch component in the supply chain --from raw materials to finished products --and how they interact with one another at every step.Purchasing and supply chain management are two very different things. Purchasing is the act of acquiring goods or servic es from suppliers, while supply chain management is a process of ensuring that the right materials, parts, and other resources a re available to make sure a company can produce its products or provide requested services. Supply chain management is not just about purchasing and procurement; it's about understanding each component in the supply chain --from raw materials to finished products--and how they interact with one another at every step.Purchasing and supply chain management are two very different things. Purchasing is the act of acquiring goods or services from suppliers, while supply chain management is a process of ensuring that the right materials, parts, and other resources are available to make sure a company can produce its products o r provide requested services. Supply chain management is not just about purchasing and procurement; it's about understanding ea ch component in the supply chain --from raw materials to finished products --and how they interact with one another at every step.
