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Chapter 4 Procurement Supply MGMT
Chapter 4 Procurement Supply MGMT
Procurement and
Supply
Management
Chapter 4 1
Learning Objectives
Understand the role and nature of
procurement and supply management in a
supply chain context.
Explain the different types of inbound
systems.
Discuss the major materials management
activities.
Container firm
Food firm
Retail outlet
Service Purchased
Procurement Price
Other Materials Management
Activities
procurement planning,
purchasing, inventory control,
traffic, receiving, incoming
inspection, and salvage
operations.
Chapter 4 Management of Business Logistics, 7th Ed. 12
Materials Management:
Procurement
Importance
Contributes to the competitive
costs
Chapter 4 18
Materials Management: Importance
of Item and Service Purchased
Chapter 4 23
Materials Management: Managing
the Procurement Process in 4 Steps
Straight rebuy
Modified rebuy
Straight rebuy
The process that occurs when a
consumer makes another purchase
of the identical goods in the
identical amount under the identical
terms from the identical supplier.
Modified rebuy
It is a buying situation in which an
individual or organization purchase
goods that have been purchased
previously but changes either the
supplier or some other elements of
the previous order..
Chapter 4 Management of Business Logistics, 7th Ed. 26
Materials Management: Managing
the Procurement Process in 4 Steps
Reliability
Capability
Financial
Vendor Location
Sources of Price
Commodity markets
Price lists
Price quotations
Negotiation
Commodity markets
A commodity market is a physical or
virtual marketplace for buying, selling
and trading raw or primary products.
Types of Costs
Traditional basic input costs -
Types of Costs
Direct transaction costs - all other
Types of Costs
Supply relational costs - costs of
Chapter 4 47
Materials Management: The Special
Case of Procurement Price
costs
Lot size costs
Production costs
Modal choice
Rush shipments
Inspection
Damage claims
ordered?
Quality implications
GIGO concept
the firm.
Disposal must adhere to
environmental regulations.
information
Electronic check of available
stock
Price negotiation
payment
Reduce paperwork
and spending
Improve communications
Disadvantages
Security of electronic messages
Standard protocols
System reliability
sellers
TO GOD BE THE
GLORY
Chapter 4 69
Chapter 4 Management of Business Logistics, 7th Ed. 70
Electronic Procurement
Business-to business (B2B)
purchases are estimated to be $1.3
to $2.0 trillion by 2003.
Chapter 4 75
Chapter 4 Management of Business Logistics, 7th Ed. 76
Table 4-1
Industry Supply Chain Logistics Emphasis