Procurement

Capabilities include customer-management, procurement, productitMi, and fulfillment, as shown in Fig. 1.5. With respect to the emerging paradigms, new capabilities must be emphasized fund management and social cost in both healthcare and humanitarian relief rapid fulfillment in humanitarian relief infrastructure performance, and social norms in emerging economies and corporate social responsibility (CSR) in sustainability. 

Restructuring generally involves assessing what the customers want, and then satisfying them by making adjustments in the capabilities of the supply chain. Therefore, at the front end of any transformation would be customer management. 

There could also be a tradeoff within the preference matrix. While most customers who prefer functional products do not care for quick delivery (Fisher 1997), value can be created by breaking this assumption in some cases. Consider home delivery of food, which by all means is a functirmal product. Yet, as we are witnessing, the internet technology has created a significant value for rapid response food delivery, especially in large cities such as New York, Boston, and Chicago. Clearly, the supply chain for food delivery is very different from the supply chain for mail-order goods. 

The procurement capability such as order processing, contract management, and supplier relationship management, must be designed in response to the external and internal drivers. 

Reduction of procurement cost is necessary but not sufficient for competitiveness. One needs to ensure that suppliers are doing their best in terms of innovation in products and processes, quality, on time delivery and, of course, price (refer to Chap. 4 on suppliers). As Toyota has shown, building close relationship with suppliers minimizes uncertainty in most transactions. The idea is to sense and eliminate problems in the supply line, before they happen. The way relationships are structured is a key to setting expectations. Good relationships depend on good communications, and a sense of fairness. As an example, Toyota has found a way to integrate different functions to form a supplier-partnering hierarchy (Liker and 

Performance evaluation in these companies typically centers on cost. Procurement is measured on the purchase cost of material and material overhead rates. Manufacturing has measures such as direct labor productivity and the cost of quality of delivered products. Distribution effectiveness is measured on the percentage of selling price represented by distribution cost. 

In the functional organization, strong department heads sponsor change projects. Cross-talk among departments is minimal. Information systems also center on the needs of the departments. Most improvement initiatives are local. They may or may not improve the supply chain as a whole. In fact, a local optimum may be injurious to the whole, yet department heads take credit for their savings. Where the functional viewpoint prevails, the actual impact of improvement projects on the total supply chain isn t measured. 

the move away from the fxmctional viewpoint begins with efforts to lower the cost of materials. This viewpoint gave rise to the supply in supply chain. In many product-making organizations today, the cost of material is the largest cost component. So, to quote a famous bank robber, management focuses its efforts where the money is. When you talk of the supply chain, these companies think of suppliers and procurement. 

In this paradigm, the procurement executive is the most likely candidate to be chosen as the supply chain executive. 

Lockamy and McCormack (2004) performed an exploratory study to investigate the link of SCOR planning processes to supply chain performance. In this study, they 

Supplier strategic collaboration activities also impact supply chain performance in the Source decision area. These activities include electronic ordering and supplier-managed inventory. In addition, the presence of on-site employees of key suppliers facilitates strategic supplier collaboration activities that enhance overall supply chain performance. 

Ayers (2006) provides a seven steps methodology to allow companies embark on the journey from purchasing to strategic procurement. The steps are  

Harrison (2003) states that there are two extremely different approaches for managing the relationship with suppliers On line procurement (also called eProcurement ) and Strategic Alliances. He claims that the decision on which approach to take should be based on the characteristics of the purchased component and of the marketplace. A summary of the risks and benefits of each of these two approaches is provided in Tables 4.6 and 4.7. 

Ayers (2006) provides a roadmap to implement demand driven supply chain concepts in the manufacturing area, which is illustrated in Fig. 4.19. 

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Definition and Preliminary Design Detailed Design Procurement Construction Commissioning Review... 

An organisation such as the example above includes sub groups for each of the main activities and a support (or services) group to manage information and procurement. Auditing commitments may be fulfilled by an independent in-house team or by external auditors. 

Secondary and Micronutrients in Fertilizers The great majority of farm fertilizers are produced, marketed, and appHed with regard only to the primary plant nutrient content. The natural supply of secondary and micronutrients in the majority of soils is usually sufficient for optimum growth of most principal crops. There are, however, many identified geographical areas and crop—soil combinations for which soil appHcation of secondary and/or micronutrient sources is beneficial or even essential. The fertilizer industry accepts the responsibiHty for providing these secondary and micronutrients, most often as an additive or adjunct to primary nutrient fertilizers. However, the source chemicals used to provide the secondary and micronutrient elements are usually procured from outside the fertilizer industry, for example from mineral processors. The responsibiHties of the fertilizer producer include procurement of an acceptable source material and incorporation in a manner that does not decrease the chemical or physical acceptabiHty of the fertilizer product and provides uniform appHcation of the added elements on the field. 

There are several possible reasons why a scientific study of an art work may be desirable. An obvious one is in cases where the authenticity of an object is doubted on styHstic grounds, but no unanimous opinion exists. The scientist can identify the materials, analy2e the chemical composition, and then investigate whether these correspond to what has been found in comparable objects of unquestioned provenance. If the sources for the materials can be characterized, eg, through trace element composition or stmcture, it may be possible to determine whether the sources involved in the procurement of the materials for comparable objects with known provenance are the same. Comparative examination of the technological processes involved in the manufacture allows for conclusions as to whether the object was made using techniques actually available to the people who supposedly created it. Additionally, dating techniques may lead to the estabUshment of the date of manufacture. 

G. MyUyla, "Whole Blood and Plasma Procurement and the Impact of Plasmapheresis," in Ref 2. 

Material Control. Production forecasting, scheduling, direct and iadirect material procurement, purchasiag, shipping and receiving, storerooms, storage, surplus equipment, and reclamation of materials are iacluded. 

Use of Results. Sales analysis data are used ia many ways by company management. The results are most useful ia production planning, particularly if grade differences appear to be ia the offing, and ia assuting that adequate suppHes are available for sales. Inventory control, raw material procurement, technical service requirements, and trends ia accounts receivable are beneficiaries of good sales analyses. 

Guidelinefor Federal Procurement ofEubricating Oils Containing Re-Refined Oil, 42USC252, U.S. Congress, Washington, D.C., June 30,1988. 

Data Collection and Analysis Pertinent to the PA s Development of Guidelines for Procurement of Highway Construction Products Containing Recovered Materials, EPA Contract 68-01-6014, Draft, Vol. 1, Issues and Technical Summary, Franklin Associates, Ltd., and Valley Forge Laboratory, Inc., July 6, 1981. 

The role of the Technology Manager is far broader (than that of the R D manager who develops technologies primarily from internal sources) he or she must see to it that the corporation has available and uses the technologies it needs from whatever source they may be procured... The difference is both subtle and far... 

Sampling. A sample used for trace or ultratrace analysis should always be representative of the bulk material. The principal considerations are determination of population or the whole from which the sample is to be drawn, procurement of a vaUd gross sample, and reduction of the gross sample to a suitable sample for analysis (15) (see Sampling). 

The ADA maintains a Hst of certified dental materials and devices based upon the certification by the maker that the item complies with ADA specification and that the testing for specification compliance of the item is procured in Association laboratories. The ADA also maintains a Hst of classified dental materials and devices which prove to be acceptable or provisionally acceptable to the Association based upon data submitted by the apphcant and data available in the Hterature. 

Denatured Ethanol. Eor hundreds of years alcohoHc beverages have been taxed all over the world to generate government revenue. When ethanol emerged as a key industrial raw material, the alcohol tax was recognized as a burden to many essential manufacturing industries. To lift this burden, the Tax-Eree Industrial and Denatured Alcohol Act of 1906 was passed in the United States. The U.S. Treasury, Bureau of Alcohol, Tobacco, and Firearms (BATE), now oversees the production, procurement, and use of ethanol in the United States. 

Certified testing and approval for control-valve devices used in hazardous locations is normally procured by the manufacturer of the device. The manufacturer often goes to a third party laboratory for testing and certification. Applicable approval standards are available from CSA, CENELEC, EM, SAA, and UL. 

List carefully from checked flow sheets) Procurement, expediting, and inspection... 

Reduced negative environmental impacts. Through an evaluation of pollution-prevention alternatives, which consider a total systems approach, consideration is given to the negative impact of environmental damage to natural resources and species that occur during raw-material procurement and waste disposal. The performance of pollution-prevention endeavors will therefore result in enhanced environmental protection. 

E-F Prepare preliminary control plan and O-P Procure constmction bids. 

I-H Procure control-device bids. N-R Install control device. 

Procure equipment that can be used in other processes (current or future) without operating close to its design envelope... 

Available equip- Procure equipment that can be used in other ment determines processes (current or future) without operating the process chem- close to its operating envelope, istry selected., Provide equipment with comparable pressure Operating close to rating for the entire system the safe operating envelope of the batch sizes to equipment capabilities equipment and the relief capability. ... 

Seller will procure and maintain insurance in the following amounts, at its own expense, at all times while the Agreement is in effect ... 

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