MNP3703S
UMMARY
STUDYUNI
T1:
Giveanoverv
iewoftheconcept
spurchasi
ngandst
rat
egi
csour
cingast
hepr
eambl
efor
suppl
ierr
elat
ionshi
pmanagement.
Pur
chasingmanagement
Pur
chasingmanagementrefer
stothesyst
ematicpr
ocessofdeci
dingwhat,whenandhowmuchto
pur
chase,theactofpur
chasi
ngitandt
heprocessensur
ingt
hatwhatisrequi
redisr
ecei
vedont
ime
i
nthequant i
tyandqual
i
tyspeci
fi
ed.
Theactiv
iti
esandpr ocesses( aswel lastheorganisati
onalfunction)ofdeci dingwhat ,whenandhow
mucht opurchase; r
espondi ngt orequestsformat er
ialbyuserdepar tment s; sourci
ngmat er
ialand
servi
cesbyident i
fyi
ngandsel ecti
ngsuppl i
ers;negoti
ati
ngter msandav ailabili
tyagreementsand
contr
acti
ngwi thsuppl i
ers;performingtheactofpur chasingther equir
edi temsorser vi
ces;
communi cati
ngor derstatusandact ualorpotenti
alsupplydisrupti
ons; andensur i
ngthatwhatis
requi
redisreceivedont imei nthequant it
yandqual i
tyspecifi
ed.Fur t
her mor e,supplymarketresear
ch,
suppli
ermeasur ementandi mpr ovement ,
andpur chasi
ngsy stemsdev elopmenthav etobemanaged.
Strategicsourcing
Inlit
eraturestrategicsourci
ngisseenf r
om bot habr oadandanar rowperspecti
ve.I
nthebr oader
sense, all
issuesofst rategi
cimpor t
anceinthesuppl yofmateri
alsandser vi
cestoamoder n
organisationarer egardedasstrategi
csourcing.Inthenarrowsensest r
ategicsour
cingcanbe
regardedasast rategicmanagementpr ocesswher ebycommodi ties(materi
alsandservi
ces)and
suppl i
ersareanal ysed,andrel
ationshi
psaref or
medandmanagedaccor dingtobestpract
icesand
appropr i
atestrategiesinsupportoflongter
m or ganisat
ional
goals.
Expl
anat
orynot
eont
het
erm"
str
ategi
csour
cing"
:
Bestpracti
cesandappropr
iatest
rategiesincl
udei
dent
if
yingopportuni
ti
es(
forexampl
ecost
reduct
ions,newtechnol
ogyadvancement sandsuppl
ymar kett
rends)t
oimprovequal
i
ty,
del
i
ver
y,
perfor
manceandcompet it
iveadvantage.
Supplyrel
ationshi
pmanagement
SRM isapr ocessthatrequir
esknowledge,acult
uralchangeandcarefulpr
edetermi
nati
on.I
tisa
processthatmustbel earnedbytheempl oy
eesandmustbel edbytheempl oyer
softhebuy
ing
organisat
ionwherevertheorgani
sati
onmayf i
nditsel
finthepart
icul
arsupplychai
n.
Ov
erv
iewofsuppl
ychai
nmanagement
Supplychainmanagement( SCM)
SCM isamanagementphi losophyaimedatpr oacti
vel
yintegr ati
ngandcoor dinat
inganet work(or
web)ofupst r
eam li
nkages( sourcesofsuppl
y),int
ernalli
nkages( insidetheorganisat
ion,accor
dingt
o
thevaluechainapproach)anddownst ream l
i
nkages( di
stributionandul ti
matecust omers)in
perf
ormi ngspeci
fckeybusi
i nessprocessesandact i
vit
iest hatwillult
imatel
ycreateandopt imi
se
val
uef orthecust
omeri nthef or
m ofproductsandser v
icesspeci ficall
yaimedatsat i
sfyi
ngcustomer
demandsandexpect at
ions.
Expl
anat
orynot
esont
het
erm"
suppl
ychai
n":
• Theupst r
eam anddownst ream l
inkagesar ethedi f
fer
entf l
owsofpr oducts,ser
vices,
fi
nancesandi nformat i
onthatbeginwithsour cingrawmat eri
alsandext endt ot
hedel i
veryof
enditemst othef i
nalconsumerorenduser .Theupst ream linkagesar eonthesuppl i
erside
ofthesuppl ychai n,whereasthedownst ream li
nkagesar et hephy si
caldistr
ibut
ionof
products/servicesandcust omerser vi
cet otheendconsumer .
• Theact i
vi
tiesar eper f
ormedbyal ltheorganisationalf
unct i
onst hatenablethepr oduct
ion,
deli
veryandr ecy cli
ngofmat eri
als,component s,endpr oductsandser vices.
1
,MNP3703S
UMMARY
2
, MNP3703S
UMMARY
I
ll
ust
rat
eandi
nter
pretsuppl
i
erper
cept
ionmodel
Fi
gur
e1.
1:Thesuppl
i
erper
cept
ionmodel
Thesupplierperceptionmodel i
dent
if
ieshowsuppl i
ersseeabuyi
ngorganisati
onbyfocussi
ngontwo
aspects(1)thev al
ueoft hebusi
nessofferedbythebuyingor
gani
sati
oni nter
msofthesuppli
er
tur
noverlevelsand( 2)thelev
elofat
tracti
venessthatt
hebuyi
ngorganisati
on’
sbusi
nesshasf ort
he
suppli
er.
I
ll
ust
rat
eandi
nter
prett
hesuppl
yposi
ti
oni
ngmodel
Fi
gur
e1.
2:Thesuppl
yposi
ti
oni
ngmodel
Thebuy ingor gani sati
onev aluatestheamountt heyspendonpur chasesofpr oduct sandser vi
cesas
i
llustrat
edbyf igure1. 2,
thesuppl ypositi
oni
ngmodel ,al
soknownast hest r
ategicsour ci
ngmat r
ix.I
n
otherwor dsabuy ingorganisati
onwi ll
executeananalysisofthelevel ofri
skandcompl exit
yani tem
orser vi
cehol dsf ortheor ganisationopposedtothevaluespendal l
ocat edtot heitem orser vi
ce.
Accor dingt ot hismodel ,product sorservi
cesarethenclassif
iedasr outine,l
ev er
age, bott
leneckand
criti
cal.Ift hebuy eri sinaposi ti
onofpowert hi
smodel wil
lbethedet erminantoft henat ureofthe
relati
onshi p.
Abuy i
ngor ganisati
onmustensur ethatthereisaclearl
inkbetweent hecategor
yofaspeci fi
c
productorser v
ice,andthepercepti
onoft hebuyingorganisati
onreservedbythedirectsuppl
iersof
thatpart
icularproductorservi
ce(i
ll
ustratedbyfi
gure1.1).Asar esul
t,abuy i
ngorganisati
on’
s
compar i
sonoft hesupplierper
cepti
onmodel andthesuppl yposi
ti
oningmodel wil
lunf ol
dasf ol
lows:
3
, MNP3703S
UMMARY
Fi
gure1.
5:Abuy
ingor
gani
sat
ion’
scompar
isonoft
hesuppl
i
erper
cept
ionmodel
andt
hesuppl
y
posi
ti
oni
ngmodel
Clearl
y,abuy i
ngorganisati
onwant sthesuppl i
ersofthei
rcriti
calproductsorservi
cest oenv i
siona
corebuyer/suppl
ierrel
ationshi
pbet weent hetwoorganisati
ons.Theywoul dal
sov aluethebottleneck
servi
cesandpr oductssupplier’
sincl
inationtowardsdevelopi
ngt hecurrentbuyer
/suppl ier
rel
ati
onship.Notethatitisneverpreferablethatasuppli
erv i
ewst hebuy i
ngorganisati
on’sbusiness
asmar ginalorworthexploit
ing–notev enwhenal owmonet ar
yv al
ueisassociatedwi t
han
agreement .
Compil
eyourownconcisedef
ini
ti
onoft
heconcept
ssuppl
i
er,
buy
er/
suppl
i
err
elat
ionshi
p
andsuppl
i
errel
ati
onshi
pmanagement
Suppl
i
er
???
Buyer/Suppl
ierRel ati
onship
Abuy er/
supplierrelati
onshipcomprisesanyinteract
ionbet
weenabuy ingorganisati
onandasuppl i
er,
eit
herpositi
ve( good)ornegat i
ve(bad).Themostsuccessf ul
rel
ati
onshipsarethosewher ebuyers
andsupplier
sdev eloptrust(
ref
ertosection4.1.2)andanunderst
andingoftheirrespecti
ve
requi
rementsandi nterests(
seestudyunit7),accompaniedbyaconcer nf
orbot hlearni
ngfrom and
provi
dingassistancet oeachot her
.
Suppl i
erRel at
ionshipManagement
Suppl i
errelati
onshi pmanagementi sapr ocessthatrequiresknowl edge,acul turalchangeandcar ef
ul
premedi t
ation.I ti
sapr ocesst hatmustbel earnedbyempl oyeesandmustbel edbyempl oyersofa
buy i
ngor ganisat i
on,wherevert heor gani
sationmightf i
ndi t
selfi
napar ticularsuppl ychai
n.The
start
ingpoi ntf orsuppl
ierrelati
onshi pmanagement( SRM)i sst r
ategicsuppl ymanagement .This
meansl i
nkingcor porat
est rategywi thpurchasing,sourci
ngandsuppl yobj ecti
v esinordertoderiv
e
applicabl
epur chasing,
sour cingandsuppl ystr
ategies.Thepur chasing,sourcingandsuppl y
strat
egieswi l
lthenenablet heest ablishmentofcer t
ainrelati
onshipswi t
hsuppl iersofspeci
fic
productsandser vi
ces;andensur et hebestmannert ostructuretheseagr eement s.
STUDYUNI
T2:
Expl
aint
hedet
ermi
nant
sofi
ndi
vi
dual
behav
iourwi
tht
heai
dofadi
agr
am
Basicall
y,t
hisrepresentsthe(ver
ti
cal
)conti
nuum betweenhumanbei ngandhumandoi ng.Wecan
observethattherear eanumberofbelief
sthataretr
ueforanindi
vi
dual andrepr
esentthesubst
ance
ofaper son.I
nt ur
n, bel
ief
screateanumberofv al
uesthati
nfl
uencetheat t
it
udesthatdir
ecthowwe
thi
nk,feelaboutthingsandmakechoi ces.I
ntheend,thi
sisvi
sibl
easouruni questyl
eofour
behaviour.
4
UMMARY
STUDYUNI
T1:
Giveanoverv
iewoftheconcept
spurchasi
ngandst
rat
egi
csour
cingast
hepr
eambl
efor
suppl
ierr
elat
ionshi
pmanagement.
Pur
chasingmanagement
Pur
chasingmanagementrefer
stothesyst
ematicpr
ocessofdeci
dingwhat,whenandhowmuchto
pur
chase,theactofpur
chasi
ngitandt
heprocessensur
ingt
hatwhatisrequi
redisr
ecei
vedont
ime
i
nthequant i
tyandqual
i
tyspeci
fi
ed.
Theactiv
iti
esandpr ocesses( aswel lastheorganisati
onalfunction)ofdeci dingwhat ,whenandhow
mucht opurchase; r
espondi ngt orequestsformat er
ialbyuserdepar tment s; sourci
ngmat er
ialand
servi
cesbyident i
fyi
ngandsel ecti
ngsuppl i
ers;negoti
ati
ngter msandav ailabili
tyagreementsand
contr
acti
ngwi thsuppl i
ers;performingtheactofpur chasingther equir
edi temsorser vi
ces;
communi cati
ngor derstatusandact ualorpotenti
alsupplydisrupti
ons; andensur i
ngthatwhatis
requi
redisreceivedont imei nthequant it
yandqual i
tyspecifi
ed.Fur t
her mor e,supplymarketresear
ch,
suppli
ermeasur ementandi mpr ovement ,
andpur chasi
ngsy stemsdev elopmenthav etobemanaged.
Strategicsourcing
Inlit
eraturestrategicsourci
ngisseenf r
om bot habr oadandanar rowperspecti
ve.I
nthebr oader
sense, all
issuesofst rategi
cimpor t
anceinthesuppl yofmateri
alsandser vi
cestoamoder n
organisationarer egardedasstrategi
csourcing.Inthenarrowsensest r
ategicsour
cingcanbe
regardedasast rategicmanagementpr ocesswher ebycommodi ties(materi
alsandservi
ces)and
suppl i
ersareanal ysed,andrel
ationshi
psaref or
medandmanagedaccor dingtobestpract
icesand
appropr i
atestrategiesinsupportoflongter
m or ganisat
ional
goals.
Expl
anat
orynot
eont
het
erm"
str
ategi
csour
cing"
:
Bestpracti
cesandappropr
iatest
rategiesincl
udei
dent
if
yingopportuni
ti
es(
forexampl
ecost
reduct
ions,newtechnol
ogyadvancement sandsuppl
ymar kett
rends)t
oimprovequal
i
ty,
del
i
ver
y,
perfor
manceandcompet it
iveadvantage.
Supplyrel
ationshi
pmanagement
SRM isapr ocessthatrequir
esknowledge,acult
uralchangeandcarefulpr
edetermi
nati
on.I
tisa
processthatmustbel earnedbytheempl oy
eesandmustbel edbytheempl oyer
softhebuy
ing
organisat
ionwherevertheorgani
sati
onmayf i
nditsel
finthepart
icul
arsupplychai
n.
Ov
erv
iewofsuppl
ychai
nmanagement
Supplychainmanagement( SCM)
SCM isamanagementphi losophyaimedatpr oacti
vel
yintegr ati
ngandcoor dinat
inganet work(or
web)ofupst r
eam li
nkages( sourcesofsuppl
y),int
ernalli
nkages( insidetheorganisat
ion,accor
dingt
o
thevaluechainapproach)anddownst ream l
i
nkages( di
stributionandul ti
matecust omers)in
perf
ormi ngspeci
fckeybusi
i nessprocessesandact i
vit
iest hatwillult
imatel
ycreateandopt imi
se
val
uef orthecust
omeri nthef or
m ofproductsandser v
icesspeci ficall
yaimedatsat i
sfyi
ngcustomer
demandsandexpect at
ions.
Expl
anat
orynot
esont
het
erm"
suppl
ychai
n":
• Theupst r
eam anddownst ream l
inkagesar ethedi f
fer
entf l
owsofpr oducts,ser
vices,
fi
nancesandi nformat i
onthatbeginwithsour cingrawmat eri
alsandext endt ot
hedel i
veryof
enditemst othef i
nalconsumerorenduser .Theupst ream linkagesar eonthesuppl i
erside
ofthesuppl ychai n,whereasthedownst ream li
nkagesar et hephy si
caldistr
ibut
ionof
products/servicesandcust omerser vi
cet otheendconsumer .
• Theact i
vi
tiesar eper f
ormedbyal ltheorganisationalf
unct i
onst hatenablethepr oduct
ion,
deli
veryandr ecy cli
ngofmat eri
als,component s,endpr oductsandser vices.
1
,MNP3703S
UMMARY
2
, MNP3703S
UMMARY
I
ll
ust
rat
eandi
nter
pretsuppl
i
erper
cept
ionmodel
Fi
gur
e1.
1:Thesuppl
i
erper
cept
ionmodel
Thesupplierperceptionmodel i
dent
if
ieshowsuppl i
ersseeabuyi
ngorganisati
onbyfocussi
ngontwo
aspects(1)thev al
ueoft hebusi
nessofferedbythebuyingor
gani
sati
oni nter
msofthesuppli
er
tur
noverlevelsand( 2)thelev
elofat
tracti
venessthatt
hebuyi
ngorganisati
on’
sbusi
nesshasf ort
he
suppli
er.
I
ll
ust
rat
eandi
nter
prett
hesuppl
yposi
ti
oni
ngmodel
Fi
gur
e1.
2:Thesuppl
yposi
ti
oni
ngmodel
Thebuy ingor gani sati
onev aluatestheamountt heyspendonpur chasesofpr oduct sandser vi
cesas
i
llustrat
edbyf igure1. 2,
thesuppl ypositi
oni
ngmodel ,al
soknownast hest r
ategicsour ci
ngmat r
ix.I
n
otherwor dsabuy ingorganisati
onwi ll
executeananalysisofthelevel ofri
skandcompl exit
yani tem
orser vi
cehol dsf ortheor ganisationopposedtothevaluespendal l
ocat edtot heitem orser vi
ce.
Accor dingt ot hismodel ,product sorservi
cesarethenclassif
iedasr outine,l
ev er
age, bott
leneckand
criti
cal.Ift hebuy eri sinaposi ti
onofpowert hi
smodel wil
lbethedet erminantoft henat ureofthe
relati
onshi p.
Abuy i
ngor ganisati
onmustensur ethatthereisaclearl
inkbetweent hecategor
yofaspeci fi
c
productorser v
ice,andthepercepti
onoft hebuyingorganisati
onreservedbythedirectsuppl
iersof
thatpart
icularproductorservi
ce(i
ll
ustratedbyfi
gure1.1).Asar esul
t,abuy i
ngorganisati
on’
s
compar i
sonoft hesupplierper
cepti
onmodel andthesuppl yposi
ti
oningmodel wil
lunf ol
dasf ol
lows:
3
, MNP3703S
UMMARY
Fi
gure1.
5:Abuy
ingor
gani
sat
ion’
scompar
isonoft
hesuppl
i
erper
cept
ionmodel
andt
hesuppl
y
posi
ti
oni
ngmodel
Clearl
y,abuy i
ngorganisati
onwant sthesuppl i
ersofthei
rcriti
calproductsorservi
cest oenv i
siona
corebuyer/suppl
ierrel
ationshi
pbet weent hetwoorganisati
ons.Theywoul dal
sov aluethebottleneck
servi
cesandpr oductssupplier’
sincl
inationtowardsdevelopi
ngt hecurrentbuyer
/suppl ier
rel
ati
onship.Notethatitisneverpreferablethatasuppli
erv i
ewst hebuy i
ngorganisati
on’sbusiness
asmar ginalorworthexploit
ing–notev enwhenal owmonet ar
yv al
ueisassociatedwi t
han
agreement .
Compil
eyourownconcisedef
ini
ti
onoft
heconcept
ssuppl
i
er,
buy
er/
suppl
i
err
elat
ionshi
p
andsuppl
i
errel
ati
onshi
pmanagement
Suppl
i
er
???
Buyer/Suppl
ierRel ati
onship
Abuy er/
supplierrelati
onshipcomprisesanyinteract
ionbet
weenabuy ingorganisati
onandasuppl i
er,
eit
herpositi
ve( good)ornegat i
ve(bad).Themostsuccessf ul
rel
ati
onshipsarethosewher ebuyers
andsupplier
sdev eloptrust(
ref
ertosection4.1.2)andanunderst
andingoftheirrespecti
ve
requi
rementsandi nterests(
seestudyunit7),accompaniedbyaconcer nf
orbot hlearni
ngfrom and
provi
dingassistancet oeachot her
.
Suppl i
erRel at
ionshipManagement
Suppl i
errelati
onshi pmanagementi sapr ocessthatrequiresknowl edge,acul turalchangeandcar ef
ul
premedi t
ation.I ti
sapr ocesst hatmustbel earnedbyempl oyeesandmustbel edbyempl oyersofa
buy i
ngor ganisat i
on,wherevert heor gani
sationmightf i
ndi t
selfi
napar ticularsuppl ychai
n.The
start
ingpoi ntf orsuppl
ierrelati
onshi pmanagement( SRM)i sst r
ategicsuppl ymanagement .This
meansl i
nkingcor porat
est rategywi thpurchasing,sourci
ngandsuppl yobj ecti
v esinordertoderiv
e
applicabl
epur chasing,
sour cingandsuppl ystr
ategies.Thepur chasing,sourcingandsuppl y
strat
egieswi l
lthenenablet heest ablishmentofcer t
ainrelati
onshipswi t
hsuppl iersofspeci
fic
productsandser vi
ces;andensur et hebestmannert ostructuretheseagr eement s.
STUDYUNI
T2:
Expl
aint
hedet
ermi
nant
sofi
ndi
vi
dual
behav
iourwi
tht
heai
dofadi
agr
am
Basicall
y,t
hisrepresentsthe(ver
ti
cal
)conti
nuum betweenhumanbei ngandhumandoi ng.Wecan
observethattherear eanumberofbelief
sthataretr
ueforanindi
vi
dual andrepr
esentthesubst
ance
ofaper son.I
nt ur
n, bel
ief
screateanumberofv al
uesthati
nfl
uencetheat t
it
udesthatdir
ecthowwe
thi
nk,feelaboutthingsandmakechoi ces.I
ntheend,thi
sisvi
sibl
easouruni questyl
eofour
behaviour.
4
