Abstract
The term paper provides a summary of “Purchasing and Supply Management”history, which includes the scenario before 1970’s and scenario after 1970’s. The main purpose of this is to cover the main advantages and disadvantages of Purchasing and Supply Management. The topics, which will be focused for better understanding, are
• Strategic purchasing participation and supplier selection criteria
• Supplier selection criteria and supplier evaluation
• Supplier performance evaluation and multi-dimensional purchasing performance
• Effect of Brand Loyalty on Purchasing Decisions of Consumers
• Ethical business practices in purchasing and suppliers
• Supplier characteristics have a large impact on the performance of the buyer firm
• Integrating suppliers into a well-managed supply chain
• Formal socialization processes
INTRODUCTION HISTORY OF PURCHASING AND SUPPLIER MANAGEMENT
Purchasing is one of the basic processes, which is common to all organizations. It refers to the process of acquiring goods or products, services and equipment from another organization in a legal and ethical manner. Initially purchasing includes focusing on transactional relationships and hence, as time passed the role of the purchaser and the purchasing department has changed significantly and the function has become strategic to organizational competitiveness.
PERIODS STATUS
Late 1890’s
Purchasing rarely was used as a different department except in the railroad organizations.
Supply Chain Management: An International Journal, Volume 7, Number 5, 2002, pp. 271 – 282;
The supply chain management is considered as a management concept from past two decades as the customers are concerned about timely and safe delivery. The competitiveness has been increasing among the companies to deliver the products as quickly as possible to the customers all around the world. This has made the supply chain management as a vital tool for the management. This is also measured as a competitive parameter for the companies.
W.C. Benton, J. (2010). Purchasing and Supply Chain Management (2nd ed.). New York: McGraw-Hill Irwin.
The supply and management of a company have various difficulties in trying to manipulate the logistics of supply and making analysis of the whole performance of the supplying team. These issues apparently result from low surge and have had great inconveniences to stock and management. The reasons for these intensive difficulties are a result of malfunctioning of one group or department and thus disrupting the paths of supply. Prior to lack of frequency in stock-outs, poor customer response and high prices on the products of the supplying enterprise have the greatest impact then due customers. This
The purchasing or procurement department can be likened to a production department in a manufacturing set up. The purchasing would be responsible for acquisition of goods for the inventory to accomplish the goals of the Triumph Trading Company. Its roles include purchase planning, specification development, standards determination, inventory control and price negotiation, disposal and other related functions. Hence, the administrative department would perform management activities that would benefit the entire organization. Some of its subdivision would be human resources unit- to ensure that the company’s employees are competent and supervise their welfare.
Within the content of the evolution of Purchasing & Supply Mgt. From a transaction based (i.e. clerical/mechanical) function to one that is strategic based (i.e. proactive/world class) in the private sector, how has the emergence of a strategic focus affected the propagation & implementation of the 5 Major Developments (as stated in the textbook) in the area of Purchasing and Supply Management? In addition, how has this strategic focus influenced the interaction & collaboration of Purchasing & Supply Mgt, with other departments of the organization (e. g. Finance, Legal, Human Resources, Marketing, Manufacturing, Logistics,
Purchasing-Information gained from planning stage used to purchase raw material for products and packaging from supplier.
Supply chain management has become an important issue in today’s business world, it is used by many companies to improve their competitive advantage (Vickery, Calantone & Droge, 1999). In a supply chain, the customer is the most impart part and seeing that every company seeks to please their customers, supply chain management therefore helps companies in satisfying the needs of the customer which involves the management of various aspects such as manufacturing, suppliers, transportation, information and retailers to deliver value to the customers (Chopra & Meindl, 2007).
In 1980, the concept of forward planning, business planning, or strategic planning was not commonly associated with the supply function. Supply management was most often thought of as a reactive function organized to support manufacturing. Marketing, on the other hand, was more often thought of as the proactive organization focused on the future of the firm. The failure of management to recognize the strategic and futuristic implementation of supply management limited innovative actions when dealing with a firm’s supply world. The 1980 situation demanded new thinking and a new approach to the acquisition of semiconductors. The supply managers involved had little choice, given the circumstances. Supply had no experience with strategic planning. There were no guidelines to follow. The responsible supply managers started with a clean piece of paper, a mission, and a
The role of purchasing has evolved from the traditional need to satisfy operational requirements to a process including supply continuity, stakeholder engagement, supply base management and the development of strategic sourcing strategies.
This article is about supply chain management (SCM). Its importance in the field of operation management. Supply chain management was discussed from the past three decades. This article tells about how supply chain management developed and how it will proceed in the future. The term “supply chain management” first appeared in the practitioner literature in 1982, which said that SCM is a way to manage resources and assets in a better way.
Supply chain management based on two basic core ideas. One is that every single product, which influences an end user, characterizes the accumulative determination of manifold organizations essentially. These organizations mentioned too cooperatively as the supply chain. The second core idea is that the existence of supply chain is long term and many organizations only pay concentrated on what was happening inside their “four fortifications”. Supply chain management is the accomplishments for exhaust the possibilities of customer value and triumph competitive benefit.
In recent times, it is believed that Strategic Purchasing and Supply Management (SPSM) play an important role in the activities of a company. One of the important goals of a company is to achieve a high level of profit. This is why, it is vital for every company to achieve such benefit which are usually achieved through the reduction of costs. In other words, firms should always strive for the best in terms of “value for money” from their suppliers in order to achieve a long-term stable growth in the market. Furthermore, this reduced cost by companies can be used as increased dividends on their shareholders or be reinvested in these companies by spending them on research and development (R&D) which will strengthen companies’
Suppliers play a vital role in an organization's microenvironment. The relationship between suppliers and organizations are built on a solid foundation of value. (Diagram 1.3) The growth and the vision of the organization depend heavily on the values that the suppliers can offer. The extent to which
Purchasing function in the new frontier is the management of external resources which is suppliers to obtain value and innovation from them while reducing costs (Úbeda, Alsua, & Carrasco, 2015). Supply management can be studied as both an instant field of practice and forming academic domain (Storey, Emberson, Godsell, & Harrison, 2006). It was eventually about influencing behavior in particular directions and in particular ways. The fundamental logics, drivers, enablers and barriers asset and exact close attention in supply management. Manufacturers, retailers, suppliers, and wholesalers are the members in supply chain. Supply chain management (SCM) is normally applying in integrated wholesaling and retail businesses (Wisner & Tan, 2000). Purchasing and supply management (PSM) defines as organizations purchase a large quantity and variety of products and services from manufacturing to