Summary PSM Chapter 2

Chapter 2 The Evolution Of Purchasing And Supply
Management
 Strategy: an integrated set of choices positioning a firm in an industry to earn superior
financial returns over the long run.
 Logistics: the entire process of material and products moving into, through, and out of the
firm.
 Inbound logistics: the movement of material, components and products received from
suppliers.
 Materials management: the movement of components and materials within the factory or
firm.
 Physical distribution (outbound logistics): the movement of finished goods outward from
the end of the assembly line, and through the shipping department to the end custom




Input Transformation Output
process
Inbound Materials Physical
logistics management distribution

 Purchasing operations: deal with the day-to-day buying activities of the firm.
 Purchasing strategy: the specific actions of the function to achieve its goals.
Only when the activities and strategies of the purchasing function are aligned with the overall
strategies of the firm
can purchasing be a
strategic function.




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