The performance levers of supply management

Résumé du document

The Institute for Supply Management (ISM) defines Supply Management (SM) as 'The identification, acquisition, access, positioning, and management of resources an organization needs or potentially needs in the attainment of its strategic objectives'. In a more simplified way, supply management can be defined as the ways in which a company gets its goods and raw materials in order to produce its products. Supply management essentially deals with methods and processes of modern corporates or institutional buying or purchasing. This buying or purchasing may be the supplies for internal use, purchasing raw materials for running the manufacturing processes, or it may be the purchasing of goods for inventories to be resold as products in the distribution and retail process. Supply management has always helped organizations in cutting costs by negotiating favorable rates for procuring goods and services. But the need of the hour is sustainability and for that, cutting costs alone will not be enough for companies. Supply managers, in a modern corporate world, are expected to contribute for revenue generation, innovation, collaboration, technology application and strategic management.

Extraits

[...] HA Akkermans, P. B. (2003). The impact of ERP on supply chain management: Exploratory findings from a European Delphi study. European Journal of Operational Research . Hendrick, T. R. (1988). Determining Performance Appraisal Criteria for Buyers. Journal of Purchasing and Materials Management 24(2) , pp 18-26. Kraljic, P. (1983). [...]

[...] It's during crisis that Supply management appeared to be a great lever for the company, because they are looking for cutting costs and saving money and realize the power of supply management. After all, the products and services of the company, their reason to be, come from there! And firms finally understood that supply management has an important role, not only on purchasing, but also on the overall strategy of the organization. Reference List Kolchin and Giunipero Carr and Smeltzer Giunipero and Pearcy & Burt et al (n.d.).Carr, A. K. (2000). A study of purchasing practices in Taiwan. Journal of Operations & Production Management, Vol No pp. 14-27. [...]

[...] Predictive analytics is a important performance lever, but the literature always says that supplier improvement is better. Work with suppliers to help them improve their processes, systems, and capabilities. This will improve quality, reduce deviations, and increase a supplier's capability to meet customer needs. Finally, the best way to achieve supplier performance management is to implement appropriate systems built on best practices that manage data, provide standardized tools and templates, and come with useful, relevant reporting. As previously explained, the supply managers have many sources of information. [...]

[...] The integration of the suppliers and the sharing of information will increase the supply management performance. This performance lever will lead to a better price for the company, a reduction of costs, and will increase the quality of the products and the suppliers' responsiveness. Moreover firms often identify and report that suppliers' performance and capabilities are deficient in areas such as quality, delivery, cost reduction, financial health, adopting new technologies, and handling design changes. Thus, to enhance performance, the company can also help its suppliers to develop themselves in order that the customer's needs are completely fulfilled. [...]

[...] Selected individual firms provide opportunities for deeper cooperation and mutual synergies. The rationalization of a close relationship leads to a reduction of global costs (administrative costs, production costs and costs related to the flow of materials). Another advantage of sourcing is the improvement of technical development. By sharing information, you can also share innovation. Costs of R&D and product development can therefore be positively affected. As we saw, the importance of the strategic levers of supply management is increasing, due to its deep impact on a long-term view. [...]