Essay on Comm 119

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Purchasing Final Study Notes

Ch 1

Corporate Supply Challenges
- increased outsourcing places great reliance on suppliers to respond to end-customer needs.
- greater dependence on suppliers for design and build responsibilities for complete subassemblies and subsystems.
- increased global competition
- development of new product technologies
- evolving information systems
- trend to single sourcing with fewer key suppliers and strategic supplier relationships

Corporate Supply Opportunities
- identify opportunities to reduce unit costs for products and services
- identify opportunities to increase revenue
- implement supply initiatives to improve customer satisfaction
- reduce total costs of ownership
- improve efficiency and effectiveness of the supply process
- maximize value from suppliers
- work with key supplier to provide product and service innovations

Evolution of Supply Function
Early 1900's: Clerical and tactical, focus on policies and procedures, key challenges: availability of supply and cost management
Early 21st Century: strategic orientation, global supply chains, executive level leadership, key challenges: sustainability, security, globalization, risk and management.

ROA - Return On Assets - The return on assets (ROA) percentage shows how profitable a company's assets are in generating revenue.
ROA can be commuted as: ROA= Net Income/Average Total Assets

Opportunities for Contribution of the Supply Function
- Profit leverage effect
- Return on Assets effect
- information source
- effect on efficiency
- effect on competitive position and customer satisfaction
- effect on organizational risk
- effect on image
- training ground
- Management strategy and social policy

Ch 2

3 levels of strategic planning: Corporate, Unit, and Function

Supply Strategy Interpreted in Organizational Strategy:
Supply objectives-Organizational objectives-Organizational strategy-Supply strategy

6 Major Supply Strategy Areas
1)assurance of supply
2)cost reduction
3)supply chain and support
4)environmental change
5)competitve edge
6)risk management

3 Categories of Supply Risk: Operational, FInancial, and Reputational.

4 Possible Changed Organizational Strategies Involving Purchasing:
1) Materials management
2) Project management
3)Logistics management. OR supply chain management
4) Just In TIme purchasing(production)

Supply Chain Questions:
- Make or buy
- Standard VS. Special
- Now VS later
- Forward buy (advance)
How Much...
- Large VS Small Quantities
- Centralized VS De-Centralized
- Quality of Staff
- Top Management Involvement
- Now VS Later
- Forward buy (advance)
What Price...
- Premium, Standard, Lower
- Cost-based, market-based
- Lease, Make, Buy

Ch 3

9 Goals of Supply
1) improve the organizations competitive position
2) provide an uninterpreted flow of materials, supplies and services required to operate the organization
3) keep the inventory investment and loss at a minimum
4)maintain and improve quality
5) find or develop best in-class suppliers
6) standardize the items and services bought and the processes used to procure them
7) purchase required items and services at lowest total cost of ownership
8) achieve harmonious, productive internal relationships
9) accomplish supply objectives at the lowest possible opportunity costs

Structure Options for Large Organizations: Centralized, Hybrid, and De-Centralized.

Potential Advantages & DisAdvantages of Centralization
Adv: Critical mass, strategic focus, common suppliers, reporting line power, and effective planning and research
DisAdv: Lack of job flexibility, lack of recognition of unique needs, distance from users, lack of business unit focus, and narrow specification and job boredom.

Potential Advantages & Disadvantages of De-Centralization:
Adv: speed of response, broad job specification, hide cost of supply, reporting