MNP3703
NOTES
, MNP3703S
UMMARY
STUDYUNI
T1:
Giveanoverv
iewoftheconcept
spurchasi
ngandst
rat
egi
csour
cingast
hepr
eambl
efor
suppl
ierr
elat
ionshi
pmanagement.
Pur
chasingmanagement
Pur
chasingmanagementrefer
stothesyst
ematicpr
ocessofdeci
dingwhat,whenandhowmuchto
pur
chase,theactofpur
chasi
ngitandt
heprocessensur
ingt
hatwhatisrequi
redisr
ecei
vedont
ime
i
nthequant i
tyandqual
i
tyspeci
fi
ed.
Theactiv
iti
esandpr ocesses( aswel lastheorganisati
onalfunction)ofdeci dingwhat ,whenandhow
mucht opurchase; r
espondi ngt orequestsformat er
ialbyuserdepar tment s; sourci
ngmat er
ialand
servi
cesbyident i
fyi
ngandsel ecti
ngsuppl i
ers;negoti
ati
ngter msandav ailabili
tyagreementsand
contr
acti
ngwi thsuppl i
ers;performingtheactofpur chasingther equir
edi temsorser vi
ces;
communi cati
ngor derstatusandact ualorpotenti
alsupplydisrupti
ons; andensur i
ngthatwhatis
requi
redisreceivedont imei nthequant it
yandqual i
tyspecifi
ed.Fur t
her mor e,supplymarketresear
ch,
suppli
ermeasur ementandi mpr ovement ,
andpur chasi
ngsy stemsdev elopmenthav etobemanaged.
Strategicsourcing
Inlit
eraturestrategicsourci
ngisseenf r
om bot habr oadandanar rowperspecti
ve.I
nthebr oader
sense, all
issuesofst rategi
cimpor t
anceinthesuppl yofmateri
alsandser vi
cestoamoder n
organisationarer egardedasstrategi
csourcing.Inthenarrowsensest r
ategicsour
cingcanbe
regardedasast rategicmanagementpr ocesswher ebycommodi ties(materi
alsandservi
ces)and
suppl i
ersareanal ysed,andrel
ationshi
psaref or
medandmanagedaccor dingtobestpract
icesand
appropr i
atestrategiesinsupportoflongter
m or ganisat
ional
goals.
Expl
anat
orynot
eont
het
erm"
str
ategi
csour
cing"
:
Bestpracti
cesandappropr
iatest
rategiesincl
udei
dent
if
yingopportuni
ti
es(
forexampl
ecost
reduct
ions,newtechnol
ogyadvancement sandsuppl
ymar kett
rends)t
oimprovequal
i
ty,
del
i
ver
y,
perfor
manceandcompet it
iveadvantage.
Supplyrel
ationshi
pmanagement
SRM isapr ocessthatrequir
esknowledge,acult
uralchangeandcarefulpr
edetermi
nati
on.I
tisa
processthatmustbel earnedbytheempl oy
eesandmustbel edbytheempl oyer
softhebuy
ing
organisat
ionwherevertheorgani
sati
onmayf i
nditsel
finthepart
icul
arsupplychai
n.
Ov
erv
iewofsuppl
ychai
nmanagement
Supplychainmanagement( SCM)
SCM isamanagementphi losophyaimedatpr oacti
vel
yintegr ati
ngandcoor dinat
inganet work(or
web)ofupst r
eam li
nkages( sourcesofsuppl
y),int
ernalli
nkages( insidetheorganisat
ion,accor
dingt
o
thevaluechainapproach)anddownst ream l
i
nkages( di
stributionandul ti
matecust omers)in
perf
ormi ngspeci
fckeybusi
i nessprocessesandact i
vit
iest hatwillult
imatel
ycreateandopt imi
se
val
uef orthecust
omeri nthef or
m ofproductsandser v
icesspeci ficall
yaimedatsat i
sfyi
ngcustomer
demandsandexpect at
ions.
Expl
anat
orynot
esont
het
erm"
suppl
ychai
n":
• Theupst r
eam anddownst ream l
inkagesar ethedi f
fer
entf l
owsofpr oducts,ser
vices,
fi
nancesandi nformat i
onthatbeginwithsour cingrawmat eri
alsandext endt ot
hedel i
veryof
enditemst othef i
nalconsumerorenduser .Theupst ream linkagesar eonthesuppl i
erside
ofthesuppl ychai n,whereasthedownst ream li
nkagesar et hephy si
caldistr
ibut
ionof
products/servicesandcust omerser vi
cet otheendconsumer .
• Theact i
vi
tiesar eper f
ormedbyal ltheorganisationalf
unct i
onst hatenablethepr oduct
ion,
deli
veryandr ecy cli
ngofmat eri
als,component s,endpr oductsandser vices.
1
,MNP3703S
UMMARY
2
, MNP3703S
UMMARY
I
ll
ust
rat
eandi
nter
pretsuppl
i
erper
cept
ionmodel
Fi
gur
e1.
1:Thesuppl
i
erper
cept
ionmodel
Thesupplierperceptionmodel i
dent
if
ieshowsuppl i
ersseeabuyi
ngorganisati
onbyfocussi
ngontwo
aspects(1)thev al
ueoft hebusi
nessofferedbythebuyingor
gani
sati
oni nter
msofthesuppli
er
tur
noverlevelsand( 2)thelev
elofat
tracti
venessthatt
hebuyi
ngorganisati
on’
sbusi
nesshasf ort
he
suppli
er.
I
ll
ust
rat
eandi
nter
prett
hesuppl
yposi
ti
oni
ngmodel
Fi
gur
e1.
2:Thesuppl
yposi
ti
oni
ngmodel
Thebuy ingor gani sati
onev aluatestheamountt heyspendonpur chasesofpr oduct sandser vi
cesas
i
llustrat
edbyf igure1. 2,
thesuppl ypositi
oni
ngmodel ,al
soknownast hest r
ategicsour ci
ngmat r
ix.I
n
otherwor dsabuy ingorganisati
onwi ll
executeananalysisofthelevel ofri
skandcompl exit
yani tem
orser vi
cehol dsf ortheor ganisationopposedtothevaluespendal l
ocat edtot heitem orser vi
ce.
Accor dingt ot hismodel ,product sorservi
cesarethenclassif
iedasr outine,l
ev er
age, bott
leneckand
criti
cal.Ift hebuy eri sinaposi ti
onofpowert hi
smodel wil
lbethedet erminantoft henat ureofthe
relati
onshi p.
Abuy i
ngor ganisati
onmustensur ethatthereisaclearl
inkbetweent hecategor
yofaspeci fi
c
productorser v
ice,andthepercepti
onoft hebuyingorganisati
onreservedbythedirectsuppl
iersof
thatpart
icularproductorservi
ce(i
ll
ustratedbyfi
gure1.1).Asar esul
t,abuy i
ngorganisati
on’
s
compar i
sonoft hesupplierper
cepti
onmodel andthesuppl yposi
ti
oningmodel wil
lunf ol
dasf ol
lows:
3
NOTES
, MNP3703S
UMMARY
STUDYUNI
T1:
Giveanoverv
iewoftheconcept
spurchasi
ngandst
rat
egi
csour
cingast
hepr
eambl
efor
suppl
ierr
elat
ionshi
pmanagement.
Pur
chasingmanagement
Pur
chasingmanagementrefer
stothesyst
ematicpr
ocessofdeci
dingwhat,whenandhowmuchto
pur
chase,theactofpur
chasi
ngitandt
heprocessensur
ingt
hatwhatisrequi
redisr
ecei
vedont
ime
i
nthequant i
tyandqual
i
tyspeci
fi
ed.
Theactiv
iti
esandpr ocesses( aswel lastheorganisati
onalfunction)ofdeci dingwhat ,whenandhow
mucht opurchase; r
espondi ngt orequestsformat er
ialbyuserdepar tment s; sourci
ngmat er
ialand
servi
cesbyident i
fyi
ngandsel ecti
ngsuppl i
ers;negoti
ati
ngter msandav ailabili
tyagreementsand
contr
acti
ngwi thsuppl i
ers;performingtheactofpur chasingther equir
edi temsorser vi
ces;
communi cati
ngor derstatusandact ualorpotenti
alsupplydisrupti
ons; andensur i
ngthatwhatis
requi
redisreceivedont imei nthequant it
yandqual i
tyspecifi
ed.Fur t
her mor e,supplymarketresear
ch,
suppli
ermeasur ementandi mpr ovement ,
andpur chasi
ngsy stemsdev elopmenthav etobemanaged.
Strategicsourcing
Inlit
eraturestrategicsourci
ngisseenf r
om bot habr oadandanar rowperspecti
ve.I
nthebr oader
sense, all
issuesofst rategi
cimpor t
anceinthesuppl yofmateri
alsandser vi
cestoamoder n
organisationarer egardedasstrategi
csourcing.Inthenarrowsensest r
ategicsour
cingcanbe
regardedasast rategicmanagementpr ocesswher ebycommodi ties(materi
alsandservi
ces)and
suppl i
ersareanal ysed,andrel
ationshi
psaref or
medandmanagedaccor dingtobestpract
icesand
appropr i
atestrategiesinsupportoflongter
m or ganisat
ional
goals.
Expl
anat
orynot
eont
het
erm"
str
ategi
csour
cing"
:
Bestpracti
cesandappropr
iatest
rategiesincl
udei
dent
if
yingopportuni
ti
es(
forexampl
ecost
reduct
ions,newtechnol
ogyadvancement sandsuppl
ymar kett
rends)t
oimprovequal
i
ty,
del
i
ver
y,
perfor
manceandcompet it
iveadvantage.
Supplyrel
ationshi
pmanagement
SRM isapr ocessthatrequir
esknowledge,acult
uralchangeandcarefulpr
edetermi
nati
on.I
tisa
processthatmustbel earnedbytheempl oy
eesandmustbel edbytheempl oyer
softhebuy
ing
organisat
ionwherevertheorgani
sati
onmayf i
nditsel
finthepart
icul
arsupplychai
n.
Ov
erv
iewofsuppl
ychai
nmanagement
Supplychainmanagement( SCM)
SCM isamanagementphi losophyaimedatpr oacti
vel
yintegr ati
ngandcoor dinat
inganet work(or
web)ofupst r
eam li
nkages( sourcesofsuppl
y),int
ernalli
nkages( insidetheorganisat
ion,accor
dingt
o
thevaluechainapproach)anddownst ream l
i
nkages( di
stributionandul ti
matecust omers)in
perf
ormi ngspeci
fckeybusi
i nessprocessesandact i
vit
iest hatwillult
imatel
ycreateandopt imi
se
val
uef orthecust
omeri nthef or
m ofproductsandser v
icesspeci ficall
yaimedatsat i
sfyi
ngcustomer
demandsandexpect at
ions.
Expl
anat
orynot
esont
het
erm"
suppl
ychai
n":
• Theupst r
eam anddownst ream l
inkagesar ethedi f
fer
entf l
owsofpr oducts,ser
vices,
fi
nancesandi nformat i
onthatbeginwithsour cingrawmat eri
alsandext endt ot
hedel i
veryof
enditemst othef i
nalconsumerorenduser .Theupst ream linkagesar eonthesuppl i
erside
ofthesuppl ychai n,whereasthedownst ream li
nkagesar et hephy si
caldistr
ibut
ionof
products/servicesandcust omerser vi
cet otheendconsumer .
• Theact i
vi
tiesar eper f
ormedbyal ltheorganisationalf
unct i
onst hatenablethepr oduct
ion,
deli
veryandr ecy cli
ngofmat eri
als,component s,endpr oductsandser vices.
1
,MNP3703S
UMMARY
2
, MNP3703S
UMMARY
I
ll
ust
rat
eandi
nter
pretsuppl
i
erper
cept
ionmodel
Fi
gur
e1.
1:Thesuppl
i
erper
cept
ionmodel
Thesupplierperceptionmodel i
dent
if
ieshowsuppl i
ersseeabuyi
ngorganisati
onbyfocussi
ngontwo
aspects(1)thev al
ueoft hebusi
nessofferedbythebuyingor
gani
sati
oni nter
msofthesuppli
er
tur
noverlevelsand( 2)thelev
elofat
tracti
venessthatt
hebuyi
ngorganisati
on’
sbusi
nesshasf ort
he
suppli
er.
I
ll
ust
rat
eandi
nter
prett
hesuppl
yposi
ti
oni
ngmodel
Fi
gur
e1.
2:Thesuppl
yposi
ti
oni
ngmodel
Thebuy ingor gani sati
onev aluatestheamountt heyspendonpur chasesofpr oduct sandser vi
cesas
i
llustrat
edbyf igure1. 2,
thesuppl ypositi
oni
ngmodel ,al
soknownast hest r
ategicsour ci
ngmat r
ix.I
n
otherwor dsabuy ingorganisati
onwi ll
executeananalysisofthelevel ofri
skandcompl exit
yani tem
orser vi
cehol dsf ortheor ganisationopposedtothevaluespendal l
ocat edtot heitem orser vi
ce.
Accor dingt ot hismodel ,product sorservi
cesarethenclassif
iedasr outine,l
ev er
age, bott
leneckand
criti
cal.Ift hebuy eri sinaposi ti
onofpowert hi
smodel wil
lbethedet erminantoft henat ureofthe
relati
onshi p.
Abuy i
ngor ganisati
onmustensur ethatthereisaclearl
inkbetweent hecategor
yofaspeci fi
c
productorser v
ice,andthepercepti
onoft hebuyingorganisati
onreservedbythedirectsuppl
iersof
thatpart
icularproductorservi
ce(i
ll
ustratedbyfi
gure1.1).Asar esul
t,abuy i
ngorganisati
on’
s
compar i
sonoft hesupplierper
cepti
onmodel andthesuppl yposi
ti
oningmodel wil
lunf ol
dasf ol
lows:
3
