Procurement and Supplier focus

Procuranent and supplier focus is the third building block of supply chain managemeuL Procurement includes  

Setting specifications, inspection and quality assurance are all included in the 

At IBM, we strive to lead in the invention, development and manufacture of the industry s most advanced information technologies, including computer systems, software, storage systems and microelectronics. 

We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide. 

An example of how IBM works to find solutions for customers is given in the following mini case reported by IBM global services (April 2004). 

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This building block of procurement and supplier focus including outsourcing is covered in more detail in Chapter 6. 

Customer focus and demand Resource and capacity management Procurement and supplier focus Inventory management Operations management Distribution management Systems and procedures Sales and operations planning Performance management... 

The next few sections will focus on a few abstractions of the procurement problem in an attempt to clarify the buyer s and supplier s roles in the relationship. 

Included in this element are requirements for purchasing documents (specifications, drawings, and purchase orders), selection of suppliers, inspection and control of received material and record-keeping. For ESH/PSM, this element would focus on those aspects of the procurement process which support purchasing according to regulatory requirements, safety standards, risk management controls, etc. 

Source The sourcing of raw materials and the management of supplier relationships. In recent years, this organization has become externally focused on CSR for sourcing relationships. This role traditionally reports to the procurement manager. Over 60 percent of procurement organizations report to the chief financial officer. 

In the initial phase of snpply chain maturity, supplier development programs focus on the lowest pnrchase cost. In these early phases, the procurement team operates as an isolated silo and buys with a singular cost focus. 

In most companies 80% of the spend is in the hands of 20% of the suppliers, while 20% of the total spend is in the hands of 80% of the suppliers. Procurement professionals often use this technique of understanding where the high value spend is and differentiating it from the low value spend (which may account for most of the volume activity) in order to focus their limited resources on strategically important suppliers rather than focusing on low value non-strategic suppliers. 

Often, 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. 

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