4. • The economic and political environment has
greatly changed.
• The emerging technology resulted in great
manpower reduction.
• Most companies have abandoned fragmented
approaches to supply management.
• Executives and support staff in the supply
management seek to obtain highest quality of
material inputs at the lowest possible cost for
their employees.
5. - Centralized purchasing function involves coordination
with all departments in whole organizational set up.
- Centralized purchasing activities result in lower cost for
the organization.
- The suppliers will give effective and efficient service as
they would like to develop corporate relations.
- Negotiations usually result in quantity discount.
Centralization of the Supply
Management
6. Advantages of Centralized Supply
Management
1. It promotes the effective use of purchasing
professionals.
2. It will generate bigger profit to the company.
3. Effective coordination between the supplier and
the purchasing company.
4. It develops better monitoring of the various
changes that occur overtime.
7. Disadvantages of Centralized Supply
Management
1. Engineering becomes involved heavily in the parts
design and specification.
2. Higher coordination with supplier.
3. The need for local sourcing of materials.
4. Difficulty in financial control when organization is
spread in different profit centre.
9. The business world is a game of
competition.
• The purchasing manager must be consistent
with the organization’s competitive advantage
strategy “High quality standard at the lowest
possible price.”
• The purchasing is one area that is subjective to
too much temptation.
• The economies of scale operate in the low cost of
products.
• Producing more goods without differentiation.
10. The ff. are the determinants of
competitive priorities:
1. The firm’s available resources.
▫ Suppliers will be looking at the company’s
resources in terms of good credit payments and
development of long term relationships.
2. The business environment.
▫ The supply chain is affected by the business
environment.
11. Competitive strategies hinge on two
important issues:
• The company that competes on cost
must drive all cost down in terms of
labor, materials and production
system.
1. The product
cost
• It is providing the customer with more
product selection.
• The company that will compete in
product differentiation must devise
action that drives customer satisfaction.
2. Product
Differentiation
12. Policy guidelines in the Supply Chain
• The policy guidelines in buying material
requirement must reflect on the organization’s
competitive action.
• Purchasers must develop efficient delivery of the
needed materials on the production line.
• Executive decision makers must involve in
choosing the criteria in which material has been
purchase.
13. The ff. guidelines are worth taking
into consideration:
1. When cost is involved in the purchase of the needed inputs,
the buyer must greatly emphasized on the cost of the item.
2. Material costing
3. Delivery lead time.
▫ The supplier must be able to respond in the earliest availability
of the materials required.
4. Reward and Performance
5. Budgetary Constraint
▫ It limits the flow of materials in the production floor.
14. Resource Planning Strategies
• The development of more production technology
and the advent of more modern machine for
production would lead to higher demand for
supplies for the manufacturing organization.
• Competition is the essence of their survival in
the industrial world.
15. Requirements for the Development of
Strategic Resource Planning:
1. Comprehensive understanding of the corporate
strategic plan.
These would require great understanding of the
production process.
2. Exhaustive and careful evaluation of supplier’s
capability and credibility.
▫ Supplier is one of the important stakeholders in the
corporate competitive advantage.
16. 3. Survey analysis of the global and local purchasing
opportunities.
▫ Outsourcing may be the best alternative when the
local suppliers is not able to deliver the needed
material at the right price.
4. Identification of structural and financial
requirements.
▫ The cost involved must be within the corporate to
avoid pirating by the other company.
17. The Dynamic of Evaluation and System
Implementation
• The strategic plans must be able to answer some
specific questions related to the changes in
technology and the changes in market cost
structure.
18. The phases of the strategic resource
planning are:
Resource Implementation and Evaluation
Organization Re-engineering and Development
Resource Date Collection and Analysis
19. Resource Date Collection and Analysis
• This is the diagnostic process of identifying the
prevailing opportunities for increased
profitability.
• The process involve interdepartmental planning
and coordination and open communication
linkages with suppliers.
20. Organization Re-engineering and
Development
• The management will undertake organizations
interventions and find developmental objective
for each operating unit.
• Concerned employees and executives will
undertake training program on Integrated
Supply Management (ISM).
21. Resource Implementation and
Evaluation
• It involves the implementation of the policies and
procedures.
• Employees are given a definite job description as
guide in the performance of their assigned duties
and responsibilities.
• Monitor progress in the implementation program.
• “No stones are left unturned.”
22. • Purchasing and supply management has evolved
into strategic business activity.
• Firms differ in their approach in material
sourcing but it must be guided by the principles
that materials are sources of savings that will
turn into profit.
