Purchasing and supply chain management
Arjan J. van Weele – seventh edition
Table of content
7 – Purchasing & business strategy .............................................................................................................................. 2
8 – outsourcing and risk management ......................................................................................................................... 7
9 – developing effective sourcing strategies ............................................................................................................... 11
10 – purchasing, innovation and quality management ............................................................................................... 14
13 – performance measurement and governance in purchasing ................................................................................. 17
14 – supplier management: cost approaches and techniques ..................................................................................... 23
15 – purchasing, corporate social responsibility and integrity .................................................................................... 28
,7 – Purchasing & business strategy
A lot of companies outsource if the ‘task’ does not fit their core business.
Main outcome of purchasing and supply
- Management is cost reduction
- Excellent negotiating tactics
- Competitive contracting
Strategic purchasing = focusses on integrating the purchasing and supply function with other
functional domains within the firm
- Intends to align purchasing and supply objectives with cooperate objectives
- Focus on value add for purchasing function
Competitive advantage derived in purchasing domain
1. Superior skills, capabilities and experience of individuals
2. Historically superior codified knowledge of markets and supply chains
3. Superior power resources over suppliers
4. Lack of transparency in how superior procurement competence is achieved
5. High cost of replication of superior procurement competence
Key issue: the power circumstances they are in with suppliers and how to leverage improvements in
these relationships.
Pursuing growth, Ansof
1. Market penetration
2. Product development
3. Market development
4. Diversification
Market growth – market share (BCG)
- Spread financial risks and be selective when investing in new
products and markets
- The stars and cows would generate the cash needed to
finance the question marks and dogs
Stars: rapid growth and expansion
Cow: ability to fund the question marks and starts
Questions marks: new ventures, risky, few become starts
other divested
Dogs: low market share and growth, consider divestment
,Micheal porter à value chain
- Excellent profitability was not only related to size
- In order to be sustainably profitable, companies need to
choose between three generic strategies
o Cost leadership
o Product differentiation
o Focus
- Stuck in the middle if you don’t choose
7S model
- strategy, structure, systems, staff, style, skills, super ordinated
goals (shared values)
Resourced based view (RBV) = differences in performance and innovation
between companies where not primarily to be attributed to the products
they delivered or the market environment in which they operate.
- Successful companies seem to utilize their resources better and
more effectively
Resources
- Human capital
- Financial resources
- Technology
- Knowledge
Core competences = those activities through which the company achieves sustainable competitive
advantage.
Non-core competences = activities that are conducted within the company that do not contribute
to sustainable competitive advantage.
Resource dependency theory (RDT) = business success is primarily achieved through deploying a
company’s external and internal resources
- Complements the RBV
Resource based view à focus on management of a firms internal resources and capabilities
Resource dependency theory à depends on external parties
Stakeholders theory à focus on the diverse stakeholder perspectives a firm needs to balance,
weight and respond to
Strategic management process (8 steps)
1. Insourcing/outsourcing
2. Develop commodity (article) strategies
3. Establish and leverage world class supply base management
4. Develop and manage supplier relationships
o Commercial suppliers
, o Preferred suppliers
o Supplier partner
5. Integration of suppliers in product development
6. Supplier integration into the order fulfillment process
7. Supplier development and quality management
8. Strategic cost management
6 enabling processes
- Establish globally integrated and aligned purchasing and supply chain strategy and plans
- Develop organization and teaming strategies
- Deploying globalization
- Develop purchasing and supply chain measurements
- Develop and implement enabling IS/IT systems
- Establish human resource development and training
Strategic products = high-tech, high-volume products, which are often supplier at customers
specification.
- 20% of the products and suppliers will represent about 80% of purchasing turnover
Arjan J. van Weele – seventh edition
Table of content
7 – Purchasing & business strategy .............................................................................................................................. 2
8 – outsourcing and risk management ......................................................................................................................... 7
9 – developing effective sourcing strategies ............................................................................................................... 11
10 – purchasing, innovation and quality management ............................................................................................... 14
13 – performance measurement and governance in purchasing ................................................................................. 17
14 – supplier management: cost approaches and techniques ..................................................................................... 23
15 – purchasing, corporate social responsibility and integrity .................................................................................... 28
,7 – Purchasing & business strategy
A lot of companies outsource if the ‘task’ does not fit their core business.
Main outcome of purchasing and supply
- Management is cost reduction
- Excellent negotiating tactics
- Competitive contracting
Strategic purchasing = focusses on integrating the purchasing and supply function with other
functional domains within the firm
- Intends to align purchasing and supply objectives with cooperate objectives
- Focus on value add for purchasing function
Competitive advantage derived in purchasing domain
1. Superior skills, capabilities and experience of individuals
2. Historically superior codified knowledge of markets and supply chains
3. Superior power resources over suppliers
4. Lack of transparency in how superior procurement competence is achieved
5. High cost of replication of superior procurement competence
Key issue: the power circumstances they are in with suppliers and how to leverage improvements in
these relationships.
Pursuing growth, Ansof
1. Market penetration
2. Product development
3. Market development
4. Diversification
Market growth – market share (BCG)
- Spread financial risks and be selective when investing in new
products and markets
- The stars and cows would generate the cash needed to
finance the question marks and dogs
Stars: rapid growth and expansion
Cow: ability to fund the question marks and starts
Questions marks: new ventures, risky, few become starts
other divested
Dogs: low market share and growth, consider divestment
,Micheal porter à value chain
- Excellent profitability was not only related to size
- In order to be sustainably profitable, companies need to
choose between three generic strategies
o Cost leadership
o Product differentiation
o Focus
- Stuck in the middle if you don’t choose
7S model
- strategy, structure, systems, staff, style, skills, super ordinated
goals (shared values)
Resourced based view (RBV) = differences in performance and innovation
between companies where not primarily to be attributed to the products
they delivered or the market environment in which they operate.
- Successful companies seem to utilize their resources better and
more effectively
Resources
- Human capital
- Financial resources
- Technology
- Knowledge
Core competences = those activities through which the company achieves sustainable competitive
advantage.
Non-core competences = activities that are conducted within the company that do not contribute
to sustainable competitive advantage.
Resource dependency theory (RDT) = business success is primarily achieved through deploying a
company’s external and internal resources
- Complements the RBV
Resource based view à focus on management of a firms internal resources and capabilities
Resource dependency theory à depends on external parties
Stakeholders theory à focus on the diverse stakeholder perspectives a firm needs to balance,
weight and respond to
Strategic management process (8 steps)
1. Insourcing/outsourcing
2. Develop commodity (article) strategies
3. Establish and leverage world class supply base management
4. Develop and manage supplier relationships
o Commercial suppliers
, o Preferred suppliers
o Supplier partner
5. Integration of suppliers in product development
6. Supplier integration into the order fulfillment process
7. Supplier development and quality management
8. Strategic cost management
6 enabling processes
- Establish globally integrated and aligned purchasing and supply chain strategy and plans
- Develop organization and teaming strategies
- Deploying globalization
- Develop purchasing and supply chain measurements
- Develop and implement enabling IS/IT systems
- Establish human resource development and training
Strategic products = high-tech, high-volume products, which are often supplier at customers
specification.
- 20% of the products and suppliers will represent about 80% of purchasing turnover
