MNP3701 – NOTES.

MNP3701 –
NOTES.

,Page | 2




MNP3701
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Source.

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Introduction to Purchasing and Supply Chain Management – Chapter 1

Chapter Overview
 A new competitive environment
 Why purchasing is important

“Watch, Listen and Learn. You cannot do it all yourself…..anyone who thinks they do it
is destined for mediocrity.” Donald Trump

,  Understanding the language of purchasing and supply chain management
 The supply chain umbrella
 Four enablers of purchasing and supply chain management
 The evolution of purchasing and supply chain management
Page | 3  Looking ahead

A New Competitive Environment
 Increasing numbers of world-class competitors
 Sophisticated customer base
 More performance at a lower cost
 Widely available information sources
 Balance of power between buyers and suppliers
 Greater outsourcing

Factors Driving SCM
 Low cost and wide availability of information more closely links the members of a
supply chain
 Competition in domestic and international markets requires quickness, agility, and
flexibility
 Customer expectations and requirements are more demanding
 Major disruptions require the ability of a supply chain to react rapidly
 Competition between supply chains, not just companies

Why Purchasing Is Important
 Purchased content is a significant part of the cost of goods sold (≥ 55%)
 Move from traditional, adversarial buyer-supplier relations to improve supply chain
performance
 Purchased content’s impact on product and service quality
 Participation in product and process design
 Use of cross-functional teams
 Early supplier involvement
 The supply chain’s impact on competitive advantage

Language of Purchasing and SCM
 Are supply chains and value chains the same?
 What is supply chain management?
 What is an extended enterprise?


“Watch, Listen and Learn. You cannot do it all yourself…..anyone who thinks they do it
is destined for mediocrity.” Donald Trump

, Purchasing
 A functional group (i.e., a formal entity on the organization chart) as well as a
functional activity (i.e., buying goods and services)
 Aka as procurement
Page | 4
Supply Management
 A strategic approach to planning for and acquiring the organization’s current and
future needs through effectively managing the supply base, utilizing a process
orientation in conjunction with cross-functional teams to achieve the organizational
mission

ISM’s Definition
 The identification, acquisition, access, positioning, and management of resources
and related capabilities an organization needs or potentially needs in the attainment
of its strategic objectives

Defining Supply Management




Supply Chains and Value Chains
 Supply chain orientation – a higher level recognition of the strategic value of
managing operational activities and flows within and across a supply chain
 Value chain – primary and secondary support activities that can lead to competitive
advantage
“Watch, Listen and Learn. You cannot do it all yourself…..anyone who thinks they do it
is destined for mediocrity.” Donald Trump