The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004...
-
Upload
annabelle-gilbert -
Category
Documents
-
view
217 -
download
2
Transcript of The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004...
![Page 1: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/1.jpg)
The Challenge of Purchasing and Supply Management
Marketing 3860 – PurchasingJuly 12, 2004Kimball Bullington, Ph.D.Associate Professor of Operations ManagementMiddle Tennessee State University
![Page 2: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/2.jpg)
How do the 4P’s relate to purchasing?
Product Price Promotion Place
![Page 3: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/3.jpg)
From Purchasing to Supply Management
Materials Management-High transportation cost-High inventory costs
Supply Management-High costs-Scarcity: national or
international
Source Management-Unique items-Custom-made items-High technology items
PurchasingManagement-Commodity items-Standard products
![Page 4: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/4.jpg)
The Evolution of the Supply Function
Clerical & technical Focus on policies &
procedures Key challenge:
availability of supply & cost mgt.
Strategic orientation
Global supply chains
Executive level leadership
Key challenge: Technology & the Internet
Early 1900’s Early 2000’s
![Page 5: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/5.jpg)
From Purchasing to Supply Management Organizational Changes
P rod u c tion
E n g in eerin g
S h ip p in g , Tra ffic
P u rch as in g
P rod u c tion &In ven to ry C on tro l
M an u fac tu rin g
O rd erP rocess in g
S h ip p in g , Tra ffic
P u rch as in g
P rod u c tion , &In ven to ry C on tro l
W areh ou s in g
M ate ria lsM an ag em en t
O rd erP rocess in g
A ccou n tin g
Treasu rer
F in an ce
S a les
P rom otion
M arke tR esearch
W areh ou s in g
M arke tin g
P res id en t
![Page 6: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/6.jpg)
Corporate Supply Challenges
Need to control unit costs
Need to reduce the total cost of acquisition
Increasing influence of suppliers on the purchaser’s ability to respond to end-customers needs
![Page 7: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/7.jpg)
Corporate Supply Challenges
Increased reliance on fewer suppliers
Trend towards reliance on suppliers for design & build responsibilities for complete subassemblies and subsystems
![Page 8: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/8.jpg)
Reliability = Pn
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6
Supply Chain Quality (Sigma Level)
Reliab
ilit
y
2005001000
Effect of Supply Base Size & Variation on Supply Chain Reliability
![Page 9: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/9.jpg)
Reliability = Pn
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6
Supply Chain Quality (Sigma Level)
Reliab
ilit
y
200*
500*
1000*
200
500
1000
Effect of Supply Base Size & Variation on Supply Chain Reliability
![Page 10: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/10.jpg)
![Page 11: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/11.jpg)
Terminology - Purchasing
Identify need Locate / select supplier Negotiate price & terms Expedite deliveries
![Page 12: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/12.jpg)
Terminology - Procurement
Purchase Store / warehouse inventory Manage traffic Receive incoming materials Inspect incoming materials Salvage obsolete materials
![Page 13: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/13.jpg)
Terminology - Materiel
Manage materials for military or gov’t operations
![Page 14: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/14.jpg)
Terminology – Materials Mgt.
Integrate related materials functions including: Procurement materials planning materials control (inventory)
![Page 15: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/15.jpg)
Terminology – Integrated Logistics
Strategic supply issues Sourcing Transportation Information technology and
information flow associated with managing supply
![Page 16: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/16.jpg)
Significance of Material Dollars
U.S. manufacturing firms purchased materials totaling
$1,975,362,000 in 1998.
Leenders, Fearon, Flynn, & Johnson 2002
![Page 17: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/17.jpg)
Differences Between Commercial & Consumer Acquisition
Consumer Commercial
# of Suppliers
Many Few
Needs Generic Specialized
Volume Miniscule Significant
Power None Significant
Time Horizon Short Long
![Page 18: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/18.jpg)
Profit-Leverage Effect
Profit improvement is often easier to achieve through purchasing cost reductions than equivalent sales increases. (This is especially true of low margin operations.)
![Page 19: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/19.jpg)
Purchasing as a Profession
Increasing in importance Increasing in pay Strategic assignments Long-range perspective College degrees more common www.ism.ws
![Page 20: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/20.jpg)
Challenges
Business-to-business e-commerce Supply Chain Management Measurement Purchase of nontraditional goods &
services Contribution to corporate strategy Recognition by senior management
![Page 21: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/21.jpg)
Opportunities for Contribution of the Purchasing / Supply Function
Profit-leverage effect
Return-on-assets effect
Information source
Effect on efficiency
![Page 22: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/22.jpg)
Opportunities for Contribution of the Purchasing / Supply Function
Effect on competitive position & customer satisfaction
Effect on image
Training ground
Management strategy & social policy
![Page 23: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/23.jpg)
SupplyContribution
OperationalTrouble
Prevention
StrategicOpportunity
Maximization
Purchasing’s Operational & Strategic Contributions
![Page 24: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/24.jpg)
SupplyContribution
DirectBottom-line
Impact
IndirectEnhancing Performance
Of Others
Purchasing’s Operational & Strategic Contributions
![Page 25: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/25.jpg)
Purchasing’s Operational & Strategic Contributions
SupplyContribution
NegativeOperationally -Strategically -
Directly -Indirectly -
NeutralOperationally +Strategically -
Directly +Indirectly -
PositiveOperationally +Strategically +
Directly +Indirectly +
![Page 26: The Challenge of Purchasing and Supply Management Marketing 3860 – Purchasing July 12, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations.](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649f155503460f94c29f25/html5/thumbnails/26.jpg)
Reverse Marketing
Purchasing is sometimes referred to as “reverse marketing”. What does this mean?