SUP

PLY M

ANAGEMENT

CADORNA CALAWOD BELA-ONG

SUP•PLYMAN•AGE•MENT

is a complementary discipline that encompasses the alignment of organizations, processes, and systems for strategic sourcing, contract management, supplier management, spend analysis to continuously improve global supply for best-value performance in support of the strategic objectives of the business.

In many organizations, acquisition or buying of services is called contracting, while that of goods is called purchasing or procurement.

SUP•PLYMAN•AGE•MENTFUNC•TIONS

Working with business leaders who have identified a business need or requirement to identify, source, contract, and procure the needed good or service from qualified suppliers Managing supplier performance

Implementing technologies, processes, policies, and procedures to support the purchasing process

Supplier Relationship Managementa process for providing the structure for how relationships with suppliers will be developed and maintained.

Economic theories of supply and demand

SUP•PLYMAN•AGE•MENTPUR•POSE

is to keep costs stable and use resources effectively to increase the profits and efficiency of the business or organization.

The bullwhip effect can be explained as an occurrence detected by the supply chain where orders sent to the manufacturer and supplier create larger variance then the sales to the end customer.

CRIT•I•CAL AS•PECTS

SUP•PLYMAN•AGE•MENT

managing risk, especially the risk of non-availability at the required time of quality goods and services critical for an organization's survival and growth.

Bullwhip Effect - The bullwhip effect can be explained as an occurrence detected by the supply chain where orders sent to the manufacturer and supplier create larger variance then the sales to the end customer. - This variance can interrupt the smoothness of the supply chain process as each link in the supply chain will over or underestimate the product demand resulting in exaggerated fluctuations.

TO BULLWHIP

FAC•TORSCON•TRIB•U•TING

Demand forecasting practices - Min-max inventory management (reorder points to bring inventory up to predicted levels) Lead time - Longer lead times lead to greater variability in estimates of average demand, thus increasing variability and safety stock costs

TO BULLWHIP

FAC•TORSCON•TRIB•U•TING

Batch ordering - Peaks and valleys in orders - Fixed ordering costs - Impact of transportation costs (e.g., fuel costs) - Sales quotas

Price fluctuations - Promotion and discount policies

Lack of centralized information

SET•TING UP ASUP•PLY STRAT•E•GY

In forming a supply strategy, there are three requirements:

1. a general policy on how the organization is to engage with its external activities, accompanied by a suitable strategy for implementing it

2. an internal strategy for the role that the purchasing process (and thus the functions associated with it) should play

3. a set of specific approaches to managing supply relationships

SET•TING UP ASUP•PLY STRAT•E•GY

In order to develop a supply strategy, it is necessary to have:

1. a policy on how the organization should behave in the supply chain

2. a strategy to implement that policy

3. an internal strategy for the positioning of the purchasing and supply process

4. a set of techniques for managing relationships within the supply chain.

SET•TING UP ASUP•PLY STRAT•E•GY

Once policy is set, an overall strategy for supply requirements may be formed. This will include matters such as ‘make or buy’ (or ‘do or buy’), location and alliances. In the first of these, the organization must decide whether or not it wishes to carry out a process itself, or have it done by an outside party.

This may be a simple matter of subcontracting (having something done for you that you could do yourself but choose not to) or outsourcing (setting up an external resource that does something for you in which you choose not to become expert).

This is clearly fundamental to the organization’s success and is not usually left to traditional supply managers.