Supply chain processes procurement

When the journey for supply chain excellence started 30 years ago, each industry had a different starting point. They also had a different vision and path for their journey. The discrete and make-to-order manufacturers (aerospace and defense, automotive, and industrial manufacturing) supply chain processes originated in procurement. In contrast, the foundation of process companies supply chain organizations (chemical, consumer products, and pharmaceutical) was in manufacturing. 

It is not unusual for the actual shipment date to be a few days different from the original promised shipment date due to uncertainty in supply chain processes. However, this unreliability might not be acceptable to relationship-based customers. Therefore, Dell offers a special service through Dell Premier accounts at premier.dell.com for business and public sector customers. The service not only provides reports and tools to assist purchasing, asset management, and product support, but also allows customers to hook up their ERP/EDI systems with Dell s to perform real-time computer systems procurement. Through Premier accounts, Dell commits to more responsive and reliable order promising and fulfillment solutions for its relationship-based customers with support from advanced IT systems (see Kraemer and Dedrick 2001). 

A related phenomenon in the area of procurement and supplier relationships has been industry wide consortia where multiple buyers and suppliers within an industry join and conduct business. Better transactional efficiency has been highlighted as the key benefit of these consortia such as Covisint (automotive) and Converge (hi-tech). The dynamics of these entities are not very well understood and pose several important questions. For example, one could expect that having multiple suppliers on the same platform is likely to reduce prices for the buyer, but it is likely to benefit other buyers in the consortium as well. Thus, it is not clear if one should join the consortium in the first place. In fact, one of the reasons for Dell deciding not to join either of the high tech consortia, Converge or e2open, could be that they do not want to open up their supply chain processes to competitors. 

In the second part of this chapter the implications that manufacturing strategies have on supply chain processes are discussed. Here the SCOR model is introduced, which aims to standardize supply chain operations. The SCOR framework is then put into context in terms of both different manufacturing strategies and supply chain strategies. Furthermore, the different manufacturing strategies and the implications that these have on the production of products, the product itself and its procurement are discussed. 

The major supply chain processes were oudined in Chap. 1, and are shown in Table 3.4, as customer management, procurement, production, and fulhllment. 

To meet the needs of the automaker within the campus, the supplier needed to perform a series of changes in its internal supply chain processes. The supplier moved processes (6) to (10) to the campus as they needed to be completed in real time, while processes (1) to (5) remained at their current location. The supplier bore the responsibility for all transportation between its current plant and the new campus. The automaker managed its final assembly line at the campus using a novel system called jumbiki which required short replenishment cycles of procurement from its suppliers. The supplier s facility within the campus, in essence, acted as an extension of Toyota s final assembly line. Thus, when the vehicle body was about to leave the paint shop, Toyota notified the vehicle s final configuration, as well its final sequencing on the assembly line, via EDI to the suppliers. 

Based on the characterization of a supply chain, supply chain management (SCM) can be defined as a process oriented approach to procuring, producing, and delivering end products and services to customers. It includes sub-suppliers, suppliers, internal operations, trade customers, retail customers and end users. It covers the management of materials, information, and fund flows [2],... 

At present, the trend is moving from the analysis of individual production and logistics systems towards the optimization of entire production networks, that is, the optimization of the distribution to different production locations taking account of the procurement and distribution chain as indicated by the remarks on supply chain simulation earlier in this chapter. However, in particular for these applications there are some challenges in the basic work of providing consistent and coherent data describing the processes at different sites which most likely are located in different countries. 

Here, it can bee seen that system modules are not directly matched to process structures defined in the Supply Chain Planning Matrix. Also, the asymmetry between market facing parts of procurement and sales are not intuitive. However, APS extend the perspective on business applications extending the classical tasks of ERP and transactional systems to a management and planning level. With APS implemented in multiple industries and validated specifically in the process industry (Schaub/Zeier 2003) or also for Small and Medium Enterprises (SME) (Friedrich 2000), importance will further grow. 

For all these reasons, ready-made ingredients are a profitable choice for small and medium-sized companies with only limited resources in the areas of logistics, product development or procurement. Ready-made flavour systems are an important part of the supply chain and can contribute to a reduction in processing costs. This is a benefit that broad-based multinational corporations can also appreciate. 

These processes were identified in Figure 1. While the specific processes identified by individutil firms may vary somewhat from those above, supply chain management must consider five fundamental processes selling, customer order fulfillment, manufacturing flow, procurement, and product development. 

Vertical rewards versus horizontal processes. In supply-based organizations, the supply chain is incented based on cost reduction procurement is incented based on the lowest purchased cost distribution/logistics is rewarded for on-time... 

Within the supply chain, the processes of supply are composed of the subprocesses of source (procurement), make (manufacturing), and deliver (logistics). In general, these processes are more mature than demand, and the back end (supplier relationships) of the chain is more connected than the front end (channel relationships). 

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