Supply Management (Section D) Assignment No.

2
Name :Anam Shoaib
Reg # L1F11MBAE2058
Total Marks: 10
Dated: April 29
th
, 2014

Question: 1
Question:
In your own words, please give brief synopsis of what we have studied before the mid-
term in our topics covered in chapters 1 to 5 of the prescribed text book.
Answer: First chapter is introductory in which we studied the definition of supply
management. Supply management describes the various acts of identifying, acquiring
and managing the products and/or resources needed to run a business or other
organization. In second chapter we studied the steps involved in E-Procurement& procure
to pay cycle and we have to face problems (like Deteriorating response time from
suppliers, Lower service levels Deterioration as the customer of choice, Delivery
delays, Higher pricing because of cost of money, Increased personnel on non value added
activities, Loss of supplier as a critical link in supply chain, Higher costs internally to the
purchasing company if we dont follow E-Procurement& procure to pay process cycle
we also studied purchasing process which consist of these element
Purchasing Objectives( like Supply continuity, Manage the purchasing process efficiently
and effectively, Develop supply base management, Develop aligned goals with internal
functional stake holders, Support organizational goals & objectives, Develop integrated
purchasing strategies that support organizational strategies)
Purchasing Responsibilities(like Evaluate & Select suppliers, Review specifications, Act
as primary contact with the suppliers, Determine the method of awarding purchase
contracts)
E-Procurement(like Forecast & Plan requirement, Need clarification / Requisition,
Supplier identification / Selection, Contract / PO Generation, Receipt of material /
services and documents, Settlement, payment and measure of performance)
Types of Purchases(like Raw materials, Semi finished products & Components, Finished
products, Maintenance, Repair & Operating Items, Production Support Items, Services,
Capital equipment, Transportation and 3
rd
Party purchasing)
)
Purchasing Process Improvements(like Online requisitioning system from user to
purchasing, Procurement cards issued to users, Electronic purchasing commerce through
internet, Longer terms purchase agreements, On line ordering system to suppliers,
Purchasing process redesign, Electronic data interchange Online ordering through E
catalogs, Allowing users to contact suppliers directly)
In 3
rd
chapter we studied purchasing policies. Policies are set of purposes, principles, and
rules of action that guide an organization and procedures are the operating instructions
detailing functional duties or tasks, and a procedure manual is really a how-to manual. the
effective polices purchasing policies are action oriented, Relevant, Concise,
Unambiguous/well understood, Timely and current, Guide problem solving and behavior.
We studied purchasing procedural areas we should have to follow purchasing cycle and
operational procedures, Use purchasing forms properly and Develop legal Contracts). We
studied purchasing policies provide guidance and direction regarding
Defining the role of purchasing (like Origin and scope of purchasing authority,
Objectives of the purchasing function, Corporate purchasing office responsibilities)
Defining the conduct of purchasing personnel (like Ethics policy, Reciprocity policy,
Contacts and visits to suppliers, Former employees representing suppliers, Reporting of
irregular business dealings with suppliers)
Defining social and minority business objectives (like Supporting minority business
suppliers, Environmental issues)
Defining buyer-seller relationships (like Supplier relations, Qualification and supplier
selection, Principles and guidelines for awarding purchase contracts Labor or other
difficulties at suppliers, Other policies dealing with buyer-seller relations)
Defining operational issues (like Hazardous materials, Supplier responsibility for
defective material, purchased item comparisons, Other operating policies)
In 4
th
chapter we studied about integration it is the process of incorporating or bringing
together different groups, functions, or organizations, either formally or informally,
physically or by information technology, to work jointly and often concurrently on a
common business-related assignment or purpose. and the way like Cross-functional or
cross-organizational committees and teams, Information systems such as video
conferencing and webmail, Integrated performance objectives and measures that drive a
common goal, Process-focused organizations that are dedicated to certain processes, Co-
location of suppliers and customers, Buyer or supplier councils that provide input and
guidance to a steering committee through which integration can be achieved by supply
management. The supply management should have internal and external linkages. We
studied collaborative buyer-seller relationships. Collaboration is defined as the process by
which two or more parties adopt a high level of purposeful cooperation to maintain a
trading relationship over time. The relationship is bilateral; both parties have the power to
shape its nature and future direction over time. Mutual commitment to the future and a
balanced power relationship are essential to the process. The advantages of closer buyer-
seller relationships. The benefits sought from the cross-functional team approach. The
potential drawbacks to the cross-functional team approach. Common themes of
successful supplier integration efforts. Supplier integration into customer order
fulfillment. Potential benefits of on-site supplier representatives. In 5
th
chapter we
studied about Organizational designs and structures. Purchasing position within the
organizational structure. Factors affecting purchasing position in the organizational
hierarchy. Report Criteria. Organizing the purchasing function. Specialization within
Purchasing. In this specialized groups are formed that performs Sourcing and negotiating,
Purchasing research, Operational support and order follow-up, Administration and
support. We studied about purchasing department activities which includes buying,
expediting, inventory control, transportation, managing countertrade arrangements, in
sourcing/outsourcing, value analysis purchasing research/materials forecasting, supply
management, other responsibilities. We studied how strategic and operational purchasing
can be separated. We studied placement of purchasing authority helps in identifying
where an organization locates its decision-making authority. It is of three types
Centralized, Decentralized, Hybrid. We studied factors influencing centralized or
decentralized structures. Advantages of centralized purchasing structures. What expertise
we have to developed. Advantages of decentralized purchasing. A hybrid purchasing
structure which is a combination of Centralized and Decentralized structure. Lead
division buying in which group of operating units buy common items, typically because
they produce common products, Regional buying groups in which geographic
concentration exists within a company, Global buying committees in which a key
commodity is purchased by many major business units, Corporate purchasing councils in
which a group of buyers who purchase similar items at various facilities, Corporate
steering committees are quite similar to councils except that they tend to be more advisory
in nature. These committees will meet periodically and discuss strategies on the
companys major purchased commodities. We studied key processes found in an
integrated supply chain which includes customer relationship management, customer
service management, demand management, order fulfillment, manufacturing flow
management, sourcing, product development and commercialization, return channel
processes. How we can use teams as part of the organizational structure. How future
organizations are being created.