supply management: the broad set of activities carried out by organizations to analyze sourcing
opportunities / develop sourcing strategies / select suppliers / carry out all the activities
required to produce goods / services
7.1 Why Supply Management is Critical
- supply management (also: sourcing / purchasing): has always been an important, if under-appreciated,
function in many business
- several factors working together (e.g. global sourcing, financial impact and performance impact of
sourcing decisions)
Global Sourcing
- firms do not compete only against global competitors but against their competitors' s.c.
- managers have come to realize that to compete globally, companies need to source globally
- advances in information systems have served as a catalyst for global sourcing efforts
- companies can share anticipated requirements with key suppliers around the clock, allowing suppliers
to plan their activities accordingly
F i n a n c i a l I m p a c t a n d Pe r f o r m a n c e I m p a c t
- nearly 53% of the value of shipment comes from material at an average manufacturer
- cost is not the only considerations
- purchased goods / services can have a major effect on other performance dimensions, including
quality and delivery performance
7.2 The Strategic Sourcing Process
- strategic sourcing process contains of six steps (g Figure 1):
(1) (2) (3) (4) (5) (6)
Screen
Profile Develop Suppliers & Conduct Negotiate &
Asses
internally & the Sourcing Create Supplier Implement
Opportunities
Externally Strategy Selection Selection Agreements
Criteria
Figure 1: The Six Steps of the Strategic Sourcing Process
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82 - Jannis Mertens
opportunities / develop sourcing strategies / select suppliers / carry out all the activities
required to produce goods / services
7.1 Why Supply Management is Critical
- supply management (also: sourcing / purchasing): has always been an important, if under-appreciated,
function in many business
- several factors working together (e.g. global sourcing, financial impact and performance impact of
sourcing decisions)
Global Sourcing
- firms do not compete only against global competitors but against their competitors' s.c.
- managers have come to realize that to compete globally, companies need to source globally
- advances in information systems have served as a catalyst for global sourcing efforts
- companies can share anticipated requirements with key suppliers around the clock, allowing suppliers
to plan their activities accordingly
F i n a n c i a l I m p a c t a n d Pe r f o r m a n c e I m p a c t
- nearly 53% of the value of shipment comes from material at an average manufacturer
- cost is not the only considerations
- purchased goods / services can have a major effect on other performance dimensions, including
quality and delivery performance
7.2 The Strategic Sourcing Process
- strategic sourcing process contains of six steps (g Figure 1):
(1) (2) (3) (4) (5) (6)
Screen
Profile Develop Suppliers & Conduct Negotiate &
Asses
internally & the Sourcing Create Supplier Implement
Opportunities
Externally Strategy Selection Selection Agreements
Criteria
Figure 1: The Six Steps of the Strategic Sourcing Process
- 82
82 - Jannis Mertens
