15 1 Chapter 15 Supply Chain Management In order to eliminate confusion it is a

15 1 chapter 15 supply chain management in order to

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Chapter 15 - Supply Chain ManagementIn order to eliminate confusion, it is a good idea to let the students know that there are alternative names used in the area of purchasing. Depending on the environment and the relative position of the firm on the supply chain, acquisition of materials is identified by different terms. While the manufacturers of materials, parts, components and finished products generally refer to acquisition of materials from outsidesources as purchasing, distributors and retailers call the same function buying, while others in governmentand military refer to it as procurement.Reading: E-Procurement at IBM1.IBM was able to reduce its procurement costs by sending purchase orders, receiving invoices and paying suppliers by using the World Wide Web as its transaction processing network. Much of the savings came from eliminating intermediaries—IBM was able to eliminate intermediaries because the Internet allowed IBM to work with multiple tiers of suppliers simultaneously.2.The speed and ease of using the Internet allowed IBM to form partnerships with small suppliers even though many of these small suppliers were supplying IBM with a small volume, specialized,one-time-only purchase.3.In addition to cost reduction, IBM’s other main reason for switching to Web-based procurementwas forming strong long-term supplier partnerships. The Internet allows IBM to collaborate withits suppliers over issues related to scheduling, inventories and forecasting.4.The use of an Internet procurement process reduces mistakes that occur during manual recording and processing because manual entry and processing requires typing or writing prices, part numbers, etc. on multiple documents. On the other hand, Web based procurement automatically generates most transaction documents to process all procurement transactions and contains computerized checks to catch entry errors. 5. IBM developed a Web-based portal to provide a single entry point to the company Web site instead of having suppliers connect to the needed areas with separate URLs based on their specific needs. Most large companies like IBM have multiple types of relationships and interfaces with suppliers involving quality, purchasing, engineering and other dimensions of the business. Having a single entry point for suppliers makes the communication process easier and increases the speed of the supply chain. Speedy communication between suppliers and IBM is very important, especially during the product development stage due to the short life cycle of most electronic products.15-2
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Chapter 15 - Supply Chain ManagementReading: Rise of the 3PL:1.The larger companies are more likely to outsource than their smaller counterparts because they are in a better position to afford the outsourcing and they have the staff and the system necessary to dealwith outsourcing. In addition, the economies of scale can become a factor because larger companies will tend to outsource larger volumes, thus resulting in possible savings on per unit cost and procurement. In addition, larger companies may use outsourcing to a larger degree than
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