Purchasing chain impact

How does the supply chain impact a product s score Notice that several of the decisions we discussed in previous chapters have a direct impact on a product and a company s score supplier management, transportation, emissions, waste, recycling, packaging, and so on. As more customers start comparing products and making purchase decisions reflecting their individual preferences, the supply chain will impact the top line revenues, in addition to the costs. 

Additional challenges exist specifically for chemical commodities. Commodities are standard products with a defined quality, where price is the key buying criterion. Commodities are often volatile in sales and purchasing prices as well as volumes increasing crude oil prices lead to higher raw material prices in procurement while dynamic customer markets specifically in Asia lead to a sales price and volume volatility. These dynamics in volumes and values through the value chain directly impact company s profitability as shown in fig. 1. 

The first step most companies and industries take on the path to cradle-to-cradle is to identify and move away from substances that are widely recognized as harmful. A number of companies have developed Restricted Substances Lists based both on regulatory requirements and design ideals to support their designers and purchasers in this commitment. This approach has resounding impacts up and down the supply chain. 

Diapers are a steady-selling item at the retail store. Yet, in the past, Procter and Gamble (P G) faced large demand swings that percolated through the supply chain. These demand swings, termed the bullwhip effect, caused increased order volatility to suppliers and plants. One reason for such volatility was the different price brackets that were offered to retailers every day. Every retailer adjusted orders to attain the lowest cost procurement price for products. In addition, they offered products with volume discounts, discounts for joint purchases, customer backhaul discounts, and so on. The net effect was that the orders, i.e., demand seen by P G, was unpredictable, even if retail demands were reasonably stable. The impact of these demand fluctuations was substantial. Additional plant... 

The availability of smartphones that can run apps, read barcodes using the phones camera, and pull information from the web means that data regarding the suppply chains choices may well impact a consumers purchase decision and thus demand. Goodguide is such a company, whose website contains an index summarizing information regarding over 100,000 products (in July 2012) ([45]). A consumer with a smartphone can install an app, direct the camera to the barcode of a product, and immediately receive a product rating that also provides details regarding all supply chain choices made by the company. 

To achieve this, the key success factor is to convince tens of thousands of small and medium-sized businesses to join the future supply chain so as to reach the critical mass necessary for the reduction by 20 to 40% of the impact of supply chain activities on the environment. Of course, this objective has to be reconciled with the needs of economic growth and the sharing of the gains between the players while supporting purchasing power and regional development. 

In many industries, the provision of spare parts and associated services represents a significant component of supply chain profits. Some studies [23] estimate US sales of spare parts and after-sales services to be 8% of the annual gross domestic product (GDP) or 1 trillion. Others [28] surest, for example, that in 2001, General Motors earned relatively more profits from its 9 billion in after-sales revenues than it did from 150 billion in car sales. Another estimate [124] suggests that the total cost of ownership of a product may far exceed the amount spent on the initial product purchase and may vary between five and twenty times the original product cost. The main conclusion from these studies is that managing spare parts supply chains and related services after a product is sold may have a significant impact on both primary demand as well as on profits. 

The sustainability challenges facing a retailer are not limited to a retailer s operational impacts. As discussed, the majority of these sustainability challenges are associated with their products and their supply chains. But other impacts are associated with the product after it has been purchased by tlie consumer. It is now common to consider the sustainability of a retailer in a much wider context that reflects the life cycle of their products. 

Standardization of product purchases in the supply chain. Standardization of hospital supplies for their impact on (a) purchase volume, (b) ordering and tracking, (c) storage space, (d) resource allocation, and (e) economies of scale through group purchasing power (Vermond 2000). 

Within the field of what we call supply chain management (SCM), there are many "commxmities." These include the purchasing community, the warehouse and transportation community, the manufacturing community, and the technology community, among others. This section will attempt to address all these in terms of the impact on their functions from changes in supply chain management practice. 

Su, Q., Song, Y.-T., Li, Z. and Dang, J.-X. 2008b. The impact of supply chain relationship quality on cooperative strategy. Journal of Purchasing and Supply Management, 14, 263-272. 

If the processes in a supply chain are not coordinated, they impact multiple companies negatively. It may lead to activities being replicated, inconsistent flows, and erroneous decisions. It may take a great deal of effort to manage the cumbersome interactions between companies. For example, HP s supply chain for computer monitor comprised a contract manufacturer (Solectron), who bought the plastic case for the monitor from an injection molder, shown in Fig. 3.7 (Hammer 2001). The molding-material was purchased from a plastics compounder, who acquired the resin (for compounding) from a resin supplier. The supply chain was linear and hierarchical, with the resin supplier upstream, HP downstream, and the rest in-between. 

Understand the impact of quantity discounts on lot size and cycle inventory. Lot-size-based quantity discounts increase the lot size and cycle inventory within the supply chain because they encourage buyers to purchase in larger quantities to take advantage of the decrease in price. 

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