Badm 2160 Introduction to Purchasing Supply Management by Burt, Petcavage and Pinkerton Eighth Edition Chapter 3

BADM 2160 INTRODUCTION TO PURCHASING

Supply Management by

Burt, Petcavage and Pinkerton

Eighth Edition

Chapter 3

The central theme of this chapter is that purchasing must be an integral member of teams that make decisions related to engineering, supply chain management, production, and new-product development.   Companies that are able to capitalize on purchasing’s knowledge and contributions should achieve a sustainable competitive advantage.

Vignette:

Troubles at Eagle Manufacturing Company

1. What might be some of the reasons other departments are not cooperating with Ted Jones’s group?

 Lack of training, lack of process, lack of transparent communication, poor quality.

1. How will Ted’s people benefit from training?  How will training improve their relationships with other departments?

From training ted’s people will be operate as one team. People will work together in an atmosphere of trust and accountability toward a common goal, they will put aside turf issues and politics and focus on the tasks to be done. There will be better solving problems, greater productivity, and more effective use of resources. The other departments will want to work with them because they will see that they have good environment work, good quality work.

1. Would a Supply Chain Management approach improve this situation?

Yes, the supply chain management approach would improve this situation because it will help control, design and monitor activities.

Purchasing is changing like it never has before in its history, (and) so are all of the other areas of the organization.  As businesses cope to compete in the ever-changing landscape of a global market, internal business relationships are becoming critical.

Purchasing/supply management’s Relations with Other Departments

Exhibit 3.1 The Many Internal Interfaces of the Supply Management Function

Purchasing’s mission has been primarily as a support function to other groups and internal customers.  These relationships are critical to the success of the organization; especially the linkage between purchasing and engineering!

What are the benefits/implications of Purchasing’s linkage with the following functions?

1. Manufacturing and Operations

The supply management and manufacturing relationship begins during new product development and intensifies when manufacturing transmits its manufacturing schedule or materials requisitions to material control, which translates those documents into procurement schedule.   _______________

1. Quality

Quality’s role and responsibilities change significantly when the manufacturing functions is outsourced. Quality is involved in qualifying the potential supplier. Then it becomes responsible for monitoring the supplier’s quality system and providing technical assistance if quality problem occur.  

1. Marketing

Marketing’s success in generating sales is in part attributable to the firm’s ability to introduce new products in a timely manner, new products that are based on technology obtained from the firms supply base, and pricing flexibility resulting from reductions in the cost of goods sold. ___________

1. Finance

The finance department is charged with two principal responsibilities: obtaining finance and overseeing their use. __________________________

1. Information Technology

Supply management and IT have an increasing number of interdependencies. In some cases, IT is outsourced. The director of IT and supply management professionals must work together closely to develop the appropriate statement of work and the sourcing and pricing process and to manage the resulting contract and relationship.  _________________________________

1. Logistics

Logistics is concerned with the movement of goods. Logistics is responsible for the both incoming goods and the distribution of goods to the next member of the supply chain and frequently to the end customer itself. In virtual all cases, logistics professionals design and manage the firm’s distribution system, which consists of warehouses, distribution points, and freight carriers.  ______

1. Accounts Payable

Account payable frequently have conflicting interests and drivers in the area of timely payment to suppliers. Account payable commonly reports to the Chief Financial Officer. ________________________________________________