Chapter 4 - CHAPTER 4 STRATEGIC SOURCING ONBP 221...

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CHAPTER 4 – STRATEGIC SOURCING ONBP 221
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OBJECTIVES Define strategic sourcing Identify the most important practices and tools for the implementation of strategic sourcing Explain the strategic sourcing process in detail with the aid of a diagram Define subcontracting and outsourcing Explain why organisations wish to outsource certain activities or part of the production process Explain the relationship between the parties in an outsourcing agreement List the disadvantages of outsourcing Explain the reasons why an organisation will decide to in source rather than outsource Outline the outsourcing decision process
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INTRODUCTION Suppliers and other issues of strategic importance in the supply of materials and services to a modern organisation are regarded as strategic sourcing Defined as: Strategic sourcing is a strategic management process whereby commodities and suppliers are analysed, and relationships are formed and managed according to best practices and appropriate strategies in support of long-term organisational goals.
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4.1 STRATEGIC SOURCING ACTIVITIES AND PRACTICES Table 4.1 Table 4.2
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4.2 THE PROCESS OF STRATEGIC SOURCING Starts with an analysis of the total purchasing spending of the organisation Total spending is divided into different categories Categories (figure 4.1) Routine Leverage Bottleneck Critical
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4.3 OUTSOURCING: TO MAKE OR BUY 4.3.1
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