OM337_Session 5_09082011

OM337_Session 5_09082011 - Procurement and Supplier...

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Click to enter Subtitle information More Subtitle info Procurement and Supplier Management OM 337.3 Session 5 Chapter 5 & 6 8 September, 2011
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§ In the news § Chapters 5 & 6 Today 22
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Chapter Overview § Purchasing’s position within the organizational structure § Factors affecting purchasing’s position § Organizing the purchasing function § Placement of purchasing authority § Organizing for supply chain management § Using teams § Creating the organization of the future 33
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Formal Organization Structure § Shows the assignment of work along with its accompanying authority § Helps define how a firm communicates and integrates decision making § Why is purchasing’s position in the organizational structure important? 44
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To Whom Does Purchasing Report? § Upper-level function reporting to an executive vice president § Mid-level function reporting to an executive one level below an executive vice president § Lower-level function reporting at least two levels below an executive vice president § What are the scenarios when these are the best options? 55
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Organizing the Purchasing Function § Specialization within purchasing § Sourcing and negotiating § Purchasing research § Operational support and order follow-up § Administration and support 66
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Purchasing Department Activities § Buying § Expediting § Inventory control § Transportation § Managing countertrade arrangements § Insourcing-outsourcing § Value analysis § Purchasing research § Material forecasting § Supply management § Other § Other Department Activities § Receiving and warehousing § Managing travel expenses § Production planning and control § Commodity futures trading § Global transportation and materials management § Economic forecasting § Subcontracting 77
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Strategic vs. Operational Sourcing Strategic Sourcing Activities Manage relationships with critical suppliers Develop electronic purchasing systems Implement companywide best practices Negotiate companywide supply contract Manage critical commodities Operational Activities Manage transactions with suppliers Use e-systems to obtain standard or indirect items through catalogs Source items that are unique to the operating unit Generate and forward material releases Provide supplier performance feedback 88
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Placement of Purchasing Authority § Centralized § Decentralized § Hybrid combination § When do these options work best? 99
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Advantages of Centralization § Consolidate purchase volumes § Reduced duplication of purchasing effort § Ability to coordinate plans and strategies § Ability to coordinate and manage companywide purchasing systems § Developing expertise § Managing companywide change 10 10
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Advantages of Decentralization § Speed and responsiveness § Understanding unique operational requirements § Product development support § Ownership 11 11
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Size of Purchasing Staff § Type of company § Nature or complexity of products and services produced § Physical number of items procured
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