PURCHASING AND SUPPLY CHAIN MANAGMENT.docx - PURCHASING AND SUPPLY CHAIN MANAGMENT PURCHASING AND SUPPLY CHAIN MANAGEMENT DEFINITIONS AND CLARIFICATION

PURCHASING AND SUPPLY CHAIN MANAGMENT.docx - PURCHASING AND...

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PURCHASING AND SUPPLY CHAIN MANAGMENT PURCHASING AND SUPPLY CHAIN MANAGEMENT DEFINITIONS AND CLARIFICATION PURCHASING Purchasing is the act of buying the goods and services that a company needs to operate and/or manufacture products. Many people are ignorant of what purchasing is all about. “Purchasing” is the term used in industries, commerce, public corporations to denote the act of and the financial responsibility for procuring material, supplies and services. It simply describes the process of buying. However in a broader sense, the term involves determining the needs, selecting the supplier, arriving at a proper price, terms and conditions, issuing the contract or order, and following up to ensure proper delivery. It focus is to purchase or obtain materials in the right quantity, in the right quality, at the right price, at the right time, and from the right supplier and delivering to the right place. SUPPLY CHAIN MANAGEMENT Supply chain management (SCM) is a process used by company’s to ensure that their supply chain is efficient and cost-effective. A supply chain is the collection of steps that a company takes to transform raw components into the final product. Typically, supply chain management is comprised of five stages: plan, develop, make, deliver, and return. The first stage in supply chain management is known as Plan. A plan or strategy must be developed to address how a given good or service will meet the needs of the customers. A significant portion of the strategy should focus on planning a profitable supply chain. Develop is the next stage in supply chain management. It involves building a strong relationship with suppliers of the raw materials needed in making the product the company delivers. This
phase involves not only identifying reliable suppliers but also planning methods for shipping, delivery, and payment. At the third stage, Make, the product is manufactured, tested, packaged, and scheduled for delivery. Then, at the logistics phase, customer orders are received and delivery of the goods is planned. This fourth stage of supply chain management stage is aptly named Deliver. The final stage of supply chain management is called Return. As the name suggests, during this stage, customers may return defective products. The company will also address customer questions in this stage. STRATEGIC SUPPLY CHAIN MANAGEMENT Development and Evolution of Purchasing and Supply functions: Purchasing and procurement is used to denote the function of and the responsibility for procuring materials, supplies, and services. Recently, the term “supply chain management” has increasingly come to describe this process as it pertains to a professional capacity. Employees who serve in this function are known as buyers, purchasing agents, or supply managers. Depending on the size of the organization, buyers may further be ranked as senior buyers or junior buyers.

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