Discuss the link between procurement, sourcing, suppliers, and production strategies in supply chains

Résumé du document

The mission of supply chain management is to have processes integrated between the functions of the firm. Consequently, procurement, production, distribution, and marketing are members of a network. The vision of the supply chain management is to deliver value to customers. Moreover, the performance objectives are quality, speed, dependability, flexibility, and cost objectives. The objective of the report is to analyse the strategies a company needs to reach the objectives required at the inbound level to remain competitive. At first, to delimit boundaries, definitions of the main concepts are given, then several strategies are deeply analysed to manage to link procurement, sources, suppliers and production strategies. The definition of supply chain management has been evolving these past years partly because of an important transition from the concept of logistics to the one of supply chain management. According to Christopher (2005, p.5), supply chain management is "the management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole" (italics used by Christopher).

Extraits

[...] Trent, R. J., Monczka, R. M Purchasing, and Sourcing Strategy: Trends and Implications, Center for Advanced Purchasing Studies, Arizona State University, Tempe. Witt, C.E Achieving Sigma logistics”, Material Handling Management; vol no p.1. [...]

[...] The fact is that managers must be ready to enhance and integrate procurement automation processes. There is a need for a main centralisation for an optimisation of costs but the strategic business unit level must remain decentralised. Thus, for example, the production will be in the foreign country but the supply chain management will remain in the mother country. This might demand perfect organisation as well as an efficient global logistics information system. A solution might be to establish an international purchasing office in the country or region where low-cost country suppliers and production are located. [...]

[...] They try to produce economies of scale at the production and at the distribution because inventory is a major source of costs. Furthermore, inventory is associated with responsiveness so there will be a need of agile suppliers (Christopher, 2005). The concept of postponement is also appealing because it concerns the delay in configuration, assembly, and distribution of products. Accordingly, the product is not entirely assembled until the reception of a customer order. Also, there is either time postponement when the products are not shipped in anticipation of demand or form postponement when the final goods are not in their final state. [...]

[...] It is a key point for internationalisation because it represents an economy of costs if it is used for non-core activities Strategy Increase amount of spend under management while improving spend compliance (Minahan, 2005) Thanks to these types of spending, companies get product and process innovations, faster time-to-market cycles, improved profitability, and expansion into new markets. Moreover, it develops access to timely and accurate spend data. As a result, it helps to watch inventory status and to develop sourcing strategies. It is very useful for purchasing because managers know and their allocations of resources and the budget they have spent. Another point is that it improves the communication with other stakeholders because it promotes the value of procurement to the enterprise. Thus, it “democratises” the growing consideration of supply chain management. [...]

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