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1、Contemporary LogisticsTwelfth EditionChapter 6ProcurementContemporary LogisticsTwelfth Learning Objectives (1 of 2)6.1 To compare procurement, purchasing, and supply management6.2 To review procurement objectives6.3 To review supplier selection and evaluation approaches6.4 To review Kraljics Portfol

2、io MatrixLearning Objectives (1 of 2)6.Learning Objectives (2 of 2)6.5 To establish issues associated with global procurement 6.6 To identify social and environmental aspects of sustainable procurement6.7 To describe the concept of supply chain finance and how it can be used in procurement relations

3、hipsLearning Objectives (2 of 2)6.Procurement (1 of 7)Refers to the raw materials, component parts, and supplies bought from outside organizations to support a companys operationsProcurement costs often range between 60 and 80 percent of an organizations revenuesProcurement (1 of 7)Refers to Procure

4、ment (2 of 7)Currently has a more strategic orientation in many organizationsProcurement manager may have responsibility for:Reducing cycle timesPlaying an integral role in product developmentGenerating additional revenues through collaboration with the marketing department11John Hyatt, “The Rise an

5、d Rise of Procurement,” CFO 28, no. 4 (2012): 5759.Procurement (2 of 7)Currently Procurement (3 of 7)“Procurement” and “purchasing” are sometimes viewed as synonymous termsSupply management is viewed as a relational exchange approach involving a limited number of suppliersProcurement (3 of 7)“Procur

6、emeProcurement (4 of 7)Electronic commerce continues to bring many changes to the procurement discipline includingElectronic procurementProcurement cards (p-cards)Reverse auctionsProcurement (4 of 7)ElectronicProcurement (5 of 7)Procurement cards (p-cards)Similar to Visa and MasterCard, but used for

7、 an organizations buying needs Number of authorized employees is limited Detailed statement is provided each monthCan implement control processes that:Measure usageIdentify procurement trends Limit spending during a procurement cycleBlock unauthorized expendituresProcurement (5 of 7)ProcuremenProcur

8、ement (6 of 7)Benefits of procurement cards (p-cards) Reduction in the number of invoicesFirm will make one payment each month regardless of the number of p-card holdersAllows employees to make purchases in minutes versus daysGenerally allow suppliers to be paid in a more timely fashionProcurement (

9、6 of 7)Benefits oProcurement (7 of 7)Challenges of procurement cards (expansion overseas) Currency differencesAvailability of technologyDifference in card acceptanceCultural issues with the programProcurement (7 of 7)ChallengesProcurement Objectives Supporting organizational goals and objectivesMana

10、ging the purchasing process effectively and efficientlyManaging the supply baseDeveloping strong relationships with other functional groupsSupporting operational requirementsProcurement Objectives SupportSupplier Selection and Evaluation (1 of 3)One of procurements most important responsibilitiesInv

11、olves stating an organizations needs and determining how well various potential suppliers can fulfill these needsSupplier Selection and EvaluatFigure 6.1: Supplier Selection FrameworkFigure 6.1: Supplier SelectionSupplier Selection and Evaluation (2 of 3)Steps to supplier selection and evaluationIde

12、ntify need for supplyPerform situation analysisIdentify and evaluate possible suppliersSelect suppliersSingle-source approachMultiple-source approachEvaluate decisionProcess-based approachPerformance-based approachSupplier Selection and EvaluatSupplier Selection and Evaluation (3 of 3)Evaluate decis

13、ionProcess-based approachIs an assessment of the suppliers service and/or production process (supplier audit)Performance-based approachIs focused on the suppliers actual performance on a variety of criteria including cost and qualityMany companies use supplier scorecards to report performance inform

14、ationSupplier Selection and EvaluatProcurement Portfolio Approach (1 of 4)Within the “situation analysis” step for supplier selection and evaluation, procurement managers must be continually aware of the supply and demand characteristics of the:Raw materialsComponent partsPurchased suppliesProcureme

15、nt Portfolio ApproachProcurement Portfolio Approach (2 of 4)Kraljics Portfolio Matrix2Used to classify corporate purchases in terms of their importance and supply complexity Goal is to minimize supply vulnerability and getting the most out of the firms purchasing power2Peter Kraljic, “Purchasing Mus

16、t Become Supply Management,” Harvard Business Review 61, no. 5 (1983): 109117.Procurement Portfolio ApproachFigure 6.2: Kralijic Portfolio MatrixSource: Peter Kraljic, “Purchasing Must Become Supply Management.” Harvard Business Review 61, no. 5 (1983): 109117.Figure 6.2: Kralijic PortfolioProcureme

17、nt Portfolio Approach (3 of 4)Supplier development (reverse marketing)Refers to aggressive procurement involvement not typically part of supplier selectionCan include:Purchaser initiating contact with supplierPurchaser establishing prices, terms and conditions, and other behaviorsProcurement Portfol

18、io ApproachProcurement Portfolio Approach (4 of 4)Supplier development (reverse marketing)Motivation to adopt supplier development includes:Numerous inefficiencies associated with suppliers initiating marketing efforts toward purchasersPurchaser may be aware of important benefits which are unknown t

19、o the supplierCompel suppliers to meet necessary requirements to achieve competitive advantage in the supply chainProcurement Portfolio ApproachGlobal Procurement (Sourcing) (1 of 3)Refers to buying components and inputs anywhere in the worldDriven by:Factor-input strategy (organization is seeking l

20、ow-cost or high-quality sources of supply)Market access strategy (organization is sourcing in markets where it plans to do significant business)Global Procurement (Sourcing) Global Procurement (Sourcing) (2 of 3)Components of global sourcing development model:Planning SpecificationEvaluationRelation

21、ship managementTransportation and holding costsImplementationMonitoring and improvingGlobal Procurement (Sourcing) Global Procurement (Sourcing) (3 of 3)Challenges in establishing a successful global sourcing strategy include understanding hidden costs as supply bases are expandedExamples of hidden

22、costs:Increased costs of dealing with suppliers outside the domestic marketDuty and tariff changes that occur over supply agreement lifeIncreased inventory-related costs associated with global supply chainsRising levels of logistics cost volatility (e.g., ocean freight rates)Global Procurement (Sour

23、cing) Sustainable Procurement (1 of 7)Refers to the integration of social and environmental considerations into all stages of the purchasing processGoal is to minimize the impact of procurement activities on human health and the environmentSustainable Procurement (1 of Sustainable Procurement (2 of

24、7)Social responsibilitySocially responsible procurement consists of five dimensions:DiversityThe environmentHuman rightsPhilanthropySafetySustainable Procurement (2 of Sustainable Procurement (3 of 7)Social responsibilityEthical considerations“Win-at-all-costs” philosophy can exacerbate unethical be

25、haviorSustainable Procurement (3 of Sustainable Procurement (4 of 7)Social responsibilityAreas of ethical concern in procurement:Gift giving and receivingBribes and kickbacksMisuse of informationImproper methods of knowledge acquisitionLying or misrepresentation of the truthProduct quality (lack of)

26、Misuse of company assetsConflicts of interestSustainable Procurement (4 of Sustainable Procurement (5 of 7)Investment recoveryIdentifies opportunities to recover revenues or reduce costs associated with:Scrap materialsSurplus materialsObsolete materialsWaste materialsOften the responsibility of the

27、procurement managerSustainable Procurement (5 of Sustainable Procurement (6 of 7)Investment recoveryCan provide an organization the opportunity to simultaneously do well and do good in the sense that investment recovery:Increases a sellers revenues (reduces a sellers cost) While addressing selected

28、environmental considerationsSustainable Procurement (6 of Sustainable Procurement (7 of 7)Investment recoveryEven the best-managed organizations generate:Excess (surplus)Stock materials that exceed reasonable requirementsObsoleteMaterials not likely to ever be used againScrapMaterials that are no lo

29、nger serviceable, have been discarded, or are a by-product of the production processWasteMaterials that have been spoiled, broken, or otherwise rendered unfit for further use or reclamation (have no economic value)Sustainable Procurement (7 of Supply Chain Finance (1 of 2)Refers to a set of technology and financed-based processes that strives to optimize cas

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