1. Supply Processes and Technology
Chapter 4
Supply Processes and Technology
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2. Key Question Addressed in Chapter 4
Which process or processes will be most effective and efficient to support the exchange of money (the buyer’s responsibility) for goods and services (the supplier’s responsibility)?
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3. Reasons to Develop Robust Supply Processes
Large number of items
Large dollar volume involved
Need for an audit trail
Severe consequences of poor performance
Potential contribution to effective organizational operations inherent in the function
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4. Strategy and Goal Alignment
“Where, when, and how can supply personnel contribute to short- and long-term goals and strategies of the organization?”
Vertical alignment:
supply strategy and goals at the functional or business unit level aligned with organizational strategy
Horizontal alignment:
Supply strategy and goals aligned with those of other functional areas
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5. Ensure Supply Process Compliance
Develop organizational structure, culture and information systems that support compliance
Standardize goods, services, and processes across sites
Aggregate requirements and leverage volume
Simplify, streamline and improve processes and deliver consistent results
Formulate annual business plans
Establish objectives for supply
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6. Essential Steps in the Supply Process
Recognition of need
Description of need
Identification and analysis of possible sources of supply
Supplier selection and determination of terms
Preparation and placement of the purchase order
Follow-up and/or expedite the order
Receipt and inspection of goods
Invoice clearing and payment
Maintenance of records and relationships
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7. A Sample Sourcing Process and Flowchart
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8. Internal Information Flows to Purchasing
engineering
planning
production
budgeting
financial control
accounting
legal
receiving
quality control
inventory control
new products
production control
sales
forecasting
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9. External Information Flows to Purchasing
general
market
conditions
product
information
sources of
supply
new product
information
suppliers’ capacity
Purchasing
transportation
availability
suppliers’
production rates
sales and
use taxes,
customs
prices and
discounts
labor conditions
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10. Internal Informational Flows from Purchasing
General
Management
Product
Development
Engineering
Source, product,
price information
Economic
conditions
Product and
price information
Production
Competitive
conditions
Marketing
Purchasing
Product availability,
lead time, price
and quality
Budget
commitments
Contracts
Costs, prices
adjustments
Finance
Orders
placed
Legal
Accounting
Stores
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