Purchasing & Supply Chain Management, 7th Edition
By Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero and James L. Patterson
Contents:
Preface xxiv
About the Authors xxxii
Part 1 Introduction 1
Chapter 1 Introduction to Purchasing and Supply Chain Management 2
1-1 Introduction 5
1-2 A New Competitive Environment 6
1-3 Managing the Supply Base 8
1-4 Why Purchasing Is Important 8
1-4a Increasing Value and Savings 8
1-4b Building Relationships and Driving Innovation 8
1-4c Improving Quality and Reputation 9
1-4d Reducing Time to Market 9
1-4e Managing Supplier Risk 10
1-4f Generating Economic Impact 10
1-4g Contributing to Competitive Advantage 10
1-5 Understanding the Language of Purchasing
and Supply Chain Management 11
1-5a Purchasing and Supply Management 11
1-5b Supply Chains and Value Chains 13
1-5c Supply Chains Illustrated 15
1-6 Achieving Purchasing and Supply Chain Benefits 16
1-7 The Supply Chain Umbrella-Functional Activities 18
1-7a Purchasing 18
1-7b Inbound Transportation 18
1-7c Quality Control 18
1-7d Demand and Supply Planning 19
1-7e Receiving, Materials Handling, and Storage 19
1-7f Materials or Inventory Control 19
1-7g Order Processing 19
1-7h Production Planning, Scheduling, and Control 19
1-7i Shipping/Warehousing/Distribution 19
1-7j Outbound Transportation 20
1-7k Customer Service 20
1-8 Four Enablers of Purchasing and Supply Chain
Management 20
1-8a Capable Human Resources 20
1-8b Proper Organizational Design 22
1-8c Real-Time Collaborative Technology Capabilities 23
1-8d Right Measures and Measurement Systems 24
1-9 The Evolution of Purchasing and Supply Chain
Management 24
1-9a Period 1: The Early Years (1850–1900) 24
1-9b Period 2: Growth of Purchasing Fundamentals
(1900–1939) 25
1-9c Period 3: The War Years (1940–1946) 26
1-9d Period 4: The Quiet Years (1947–Mid-1960s) 26
1-9e Period 5: Materials Management Era
(Mid-1960s–Late 1970s) 27
1-9f Period 6: The Global Era (Late 1970s–1999) 27
1-9g Period 7: Integrated Supply Chain Management
and Technology (2000–2025) 28
1-10 Looking Ahead 28
Part 2 Purchasing Operations and Structure 39
Chapter 2 The Purchasing Process 40
2-1 Introduction 42
2-2 Purchasing Objectives 43
2-2a Objective 1: Supply Assurance 43
2-2b Objective 2: Manage the Procure-to-Pay Process
Efficiently and Effectively 44
2-2c Objective 3: Supplier Performance Management 44
2-2d Objective 4: Develop Aligned Goals with
Internal Stakeholders 45
2-2e Objective 5: Develop Integrated Supply Strategies
That Support Business Goals and Objectives 45
2-3 Strategic Supply Management Roles and
Responsibilities 46
2-3a Spend Analysis 48
2-3b Demand Management and Specifications/SOWs 48
2-3c Category Management and Supplier Evaluation
/Selection 49
2-3d Contract Management 50
2-3e Cost Management 50
2-3f Managing the Procure-to-Pay Process 51
2-3g Supplier Relationship Management 51
2-3h Establish a Supply Management Strategy 51
2-4 Improving the Procure-to-Pay Process 52
2-4a Forecast and Plan Requirement 56
2-4b Needs Clarification: Requisitioning 56
2-4c Purchase Requisitions/Statement of Work 57
2-4d Traveling Purchase Requisitions/Bar Codes 59
2-4e Forecasts and Customer Orders 59
2-4f Reorder Point System 59
2-4g Stock Checks 60
2-4h Cross-Functional Sourcing Teams 62
2-4i Description 62
2-4j Supplier Identification and Selection 63
2-4k Bidding or Negotiating? 64
2-4l Request for Quotation 65
2-4m Specifications or Blueprints 65
2-4n Evaluate Suppliers 66
2-5 Approval, Contract, and Purchase Order
Preparation 66
2-5a Purchase Order 66
2-5b Blanket Purchase Order 69
2-5c Material Purchase Release 71
2-5d Receipt and Inspection 71
2-5e Material Packing Slip 72
2-5f Bill of Lading 72
2-5g Receiving Discrepancy Report 73
2-5h Invoice Settlement and Payment 73
2-5i Records Maintenance 73
2-5j Continuously Measure and Manage Supplier
Performance 73
2-5k Reengineering the Procure-to-Pay Process 74
2-6 Types of Purchases 77
2-6a Raw Materials 77
2-6b Semifinished Products and Components 77
2-6c Production Support Items 78
2-6d Services 78
2-6e Capital Equipment 79
2-6f Transportation and Third-Party Purchasing 79
Chapter 3 Purchasing Policy and Procedures 86
3-1 Introduction 88
3-2 Policy Overview 88
3-2a What Are the Advantages and Disadvantages
of Policies? 88
3-2b What Makes for an Effective Policy? 89
3-3 Purchasing Policies—Providing Guidance
and Direction 89
3-3a Policies Defining the Role of Purchasing 89
3-3b Policies Defining the Conduct of Purchasing
Personnel 91
3-3c Policies Defining Social and Minority Business
Objectives 96
3-3d Corporate Social Responsibility 101
3-3e Policies Defining Buyer-Seller Relationships 104
3-3f Other Policies Dealing with Buyer-Seller
Relations 107
3-3g Policies Defining Operational Issues 107
3-4 Purchasing Procedures 109
3-4a Purchasing Procedural Areas 110
Chapter 4 Supply Management Integration for Competitive Advantage 114
4-1 Introduction 117
4-2 Integration: What Is It? 119
4-3 Internal Integration 121
4-3a Supply Management Internal Linkages 121
4-4 External Integration 126
4-4a Supply Management’s External Linkages 126
4-4b Collaborative Buyer–Seller Relationships 127
4-4c Advantages of Closer Buyer–Seller Relationships 128
4-4d Obstacles to Closer Buyer–Seller Relationships 128
4-4e Critical Elements for Supplier Relationship
Management 130
4-5 The Critical Role of Cross-Functional Sourcing Teams 132
4-5a Benefits Sought from the Cross-Functional Team
Approach 132
4-5b Potential Drawbacks to the Cross-Functional
Team Approach 135
4-5c When to Form a Cross-Functional Team 135
4-5d Improving Sourcing Team Effectiveness 136
4-6 Integrating Supply Management, Engineering,
and Suppliers to Develop New Products and Services 140
4-6a Common Themes of Successful Supplier
Integration Efforts 141
4-6b Supplier Integration into Customer Order
Fulfillment 147
4-6c Supplier Suggestion Programs 147
4-6d Buyer–Seller Improvement Teams 148
4-6e On-Site Supplier Representative 148
4-7 Potential Benefits of On-Site Supplier Representatives 150
Chapter 5 Purchasing and Supply Management Organization 158
5-1 Introduction 162
5-2 P/SM Organizational Structure 163
5-3 Location of Authority Centralized or Decentralized 164
5-3a Drivers Influencing the Adoption of Centralized,
Center-Led, or Decentralized Structures 164
5-3b Advantages of Centralized/Center-Led Purchasing
Structures 165
5-3c Advantages of Decentralized Purchasing 167
5-3d Organizational Mechanisms to Enable Center-Led
Organization Design 168
5-4 Purchasing’s Position within the Organizational
Structure 173
5-4a To Whom Does Purchasing/Supply Management
Report? 174
5-4b Factors Affecting Purchasing’s Position in the
Organizational Hierarchy 174
5-5 Scope of the Purchasing/Supply Management
Job Function 176
5-5a Sourcing, Negotiation, and Contract
Management 176
5-5b Market Intelligence and Research 176
5-5c Operational Support and Follow-Up 177
5-5d Administration and Data Management 177
5-6 Purchasing/Supply Management Job Tasks 177
5-6a Buying 177
5-6b Expediting 177
5-6c Inventory Control 178
5-6d Transportation 178
5-6e Insourcing/Outsourcing 178
5-6f Value Analysis 178
5-6g Purchasing Research/Materials Forecasting 178
5-6h Supply Management 179
5-6i Other Responsibilities 179
5-7 Separating Strategic and Operational
Purchasing 179
5-8 Using Teams as Part of the Organizational Structure 180
5-9 Supply Chain Management Structure 181
5-10 Future Trends in Organizational Design 183
Part 3 Strategic Sourcing 193
Chapter 6 Category Strategy Development 194
6-1 Introduction 197
6-2 Aligning Supply Management and Enterprise
Objectives 197
6-2a Integrative Strategy Development 199
6-2b Engaging Stakeholders to Build Category
Strategy Objectives 200
6-3 What Is a Category Strategy? 203
6-3a Difference between Category Strategies
and Strategic Sourcing 204
6-3b Conducting a Spend Analysis 205
6-3c Spend Analysis Spreadsheet 206
6-4 Category Strategy Development 212
6-4a Step 1: Build the Team and the
Project Charter 212
6-4b Step 2: Conduct Market Intelligence
Research on Suppliers 217
6-4c Step 3: Strategy Development Process 223
6-4d Step 4: Process 228
6-4e Step 5: Contract Negotiation 231
6-4f Step 6: Supplier Relationship Management 232
6-5 Types of Supply Management Strategies 233
6-5a Insourcing/Outsourcing 234
6-5b Supply-Base Optimization 234
6-5c Supply Risk Management 234
6-5d Early Supplier Design Involvement 238
6-5e Supplier Development 239
6-5f Total Cost of Ownership 239
6-5g E-Reverse Auctions 239
6-6 Supply Management Transformation
Evolution 241
6-6a Phase 1: Basic Beginnings 241
6-6b Phase 2: Moderate Development 242
6-6c Phase 3: Limited Integration 242
6-6d Phase 4: Fully Integrated Supply Chains 242
6-6e Observations on Supply Management
Strategy Evolution 243
Chapter 7 Supplier Evaluation and Selection 249
7-1 Introduction 252
7-2 The Seven-Stage Supplier Evaluation and
Selection Process 253
7-3 Recognize the Need for Supplier Selection—Stage 1 253
7-4 Identify Key Sourcing Requirements—Stage 2 254
7-5 Identify Potential Supply Sources—Stage 3 255
7-5a Current Suppliers 255
7-5b Sales Representatives 255
7-5c Internet Searches and Social Media 255
7-5d Informational Databases 255
7-5e Organizational Knowledge 256
7-5f Trade Journals 256
7-5g Trade Directories 256
7-5h Trade Shows 257
7-5i Professional Associations and Published
Information 257
7-5j Internal Sources 257
7-5k Supplier-Provided Information 260
7-6 Determine Sourcing Strategy—Stage 4 260
7-6a Consider Sourcing Alternatives 260
7-6b Categorize Suppliers for Multiple or Single
or Sole Sourcing 261
7-6c Evaluate Critical Selection Issues 262
7-7 Limit Suppliers in the Selection Pool—Stage 5 264
7-7a Supplier Risk Management 264
7-7b Evaluation of Supplier Performance 267
7-7c Third-Party Provider Information 267
7-7d Supplier Visits 267
7-8 Conduct a Detailed Review of Supplier Evaluation
Criteria—Stage 6 268
7-8a Management Capability 268
7-8b Employee Capabilities 269
7-8c Cost Structure 269
7-8d Total Quality Performance, Systems, and
Philosophy 270
7-8e Process and Technological Capability 270
7-8f Sustainability and Environmental Compliance 270
7-8g Financial Stability 271
7-8h Scheduling and Control Systems 274
7-8i E-Commerce Capability 275
7-8j Supplier’s Sourcing Strategies, Policies, and
Techniques 275
7-8k Longer-Term Relationship Potential 276
7-9 Select Supplier and Reach Agreement—Step 7 276
7-10 Developing a Quantitative Supplier Evaluation Survey 276
7-10a Step 1: Identify Supplier Evaluation Categories 277
7-10b Step 2: Assign a Weight to Each Evaluation
Category 278
7-10c Step 3: Identify and Weigh Subcategories 278
7-10d Step 4: Define a Scoring System for Categories
and Subcategories 278
7-10e Step 5: Evaluate Supplier Directly 280
7-10f Step 6: Review Evaluation Results and Make
Selection Decision 280
7-10g Step 7: Review and Improve Supplier
Performance Continuously 282
7-11 Reducing Supplier Evaluation and Selection
Cycle Time 282
7-11a Map the Current Supplier Evaluation and Selection
Process 282
7-11b Integrate with Internal Customers 283
7-11c Data Warehouse Software with Supplier
Information 283
7-11d Third-Party Support 283
7-11e Integrating Technology into
Organizational Design 283
7-11f Supplier Categorization 283
7-11g Electronic Tools 284
7-11h Predefined Contract Language and Shorter
Contracts 284
Chapter 8 Supplier Quality Management 290
8-1 Introduction 291
8-2 Overview of Supplier Quality Management 292
8-2a What Is Supplier Quality? 292
8-2b Why Be Concerned with Supplier Quality? 293
8-3 Factors Affecting Supply Management’s Role
in Managing Supplier Quality 294
8-4 Supplier Quality Management Using a Total Quality
Management Perspective 296
8-4a Defining Quality in Terms of Customers and Their
Requirements 297
8-4b Deming’s 14 Points 298
8-4c Pursuing Quality at the Source 301
8-4d Stressing Objective Rather Than Subjective
Measurement and Analysis 302
8-4e Emphasizing Prevention Rather Than Detection of
Defects 303
8-4f Focusing on Process Rather Than Output 303
8-4g Basics of Process Capability 305
8-4h Striving for Zero Defects 306
8-4i Cost of Quality 307
8-4j The Seven Wastes 308
8-4k Establishing Continuous Improvement as a Way
of Life 309
8-4l Making Quality Everyone’s Responsibility 310
8-5 Pursuing Six Sigma Supplier Quality 312
8-6 Using ISO Standards and MBNQA Criteria to Assess
Supplier Quality Systems 314
8-6a ISO 9001 Standards 314
8-6b ISO 14001 Standards 316
8-6c The Malcolm Baldrige National Quality Award 317
8-7 Basic Contents of a Supplier Quality Manual 318
Chapter 9 Supplier Management and Development: Creating a World-Class
Supply Base 326
9-1 Introduction 328
9-2 Supplier Performance Measurement 328
9-2a Supplier Measurement Decisions 328
9-2b Types of Supplier Measurement Techniques 331
9-3 Rationalization and Optimization: Creating a Manageable
Supply Base 336
9-3a Advantages of a Rationalized and Optimized
Supply Base 336
9-3b Possible Risks of Maintaining Fewer Suppliers 338
9-3c Formal Approaches to Supply Base
Rationalization 340
9-3d Summary of Supplier Rationalization
and Optimization 341
9-4 Supplier Development: A Strategy for Improvement 342
9-4a A Process Map for Supplier Development 343
9-5 Overcoming the Barriers to Supplier Development 345
9-5a Buyer-Specific Barriers 346
9-5b Buyer-Supplier Interface Barriers 347
9-5c Supplier-Specific Barriers 348
9-5d Lessons Learned from Supplier Development 349
9-6 Managing Supply Base Risk 350
9-6a Introduction to Supply Chain Risk and Fraud 350
9-6b Categories of Supply Chain Risk 351
9-6c Supply Chain Risk Mitigation 353
9-6d Managing Supply Chain Fraud 356
9-6e Mitigating Supply Chain Fraud 358
9-7 Managing Sustainability in the Supply Base 358
Chapter 10 Worldwide Sourcing 366
10-1 Globalization—Changing Supply Strategy
in a Dynamic World Economy 369
10-2 Changing Global Dynamics Create Challenges 371
10-3 Worldwide Sourcing Timeline 373
10-3a Why Source Worldwide? 375
10-3b Barriers to Worldwide Sourcing 378
10-4 Developing a Worldwide Sourcing Program 381
10-4a Information about Worldwide Sources 381
10-4b Types of Intermediaries and Organization
for Worldwide Sourcing 382
10-4c Organizational Issues—International
Purchasing Offices 383
10-4d Supplier Qualification and Selection Issues 384
10-4e Understanding Cultural Issues 385
10-4f Language and Communication Differences 385
10-4g Legal Systems 389
10-4h Countertrade Requirements 391
10-4i Evaluating Costs Associated with International
Purchasing 394
10-4j Managing Currency Risks 396
10-5 Moving to a Global Sourcing Philosophy 398
10-5a Factors Driving Successful Global Sourcing
Programs 400
10-5b Future Global Sourcing Trends 403
Part 4 Strategic Sourcing Process 409
Chapter 11 Strategic Cost Management 410
11-1 Introduction 412
11-2 A Structured Approach to Cost Reduction 413
11-3 Price Analysis 419
11-3a Market Structure 419
11-3b Economic Conditions 420
11-3c Pricing Strategy of the Seller 421
11-3d Market-Driven Pricing Models 422
11-3e Using the Producer Price Index to Manage
Price 426
11-4 Cost Analysis Techniques 429
11-4a Cost-Based Pricing Models 429
11-4b Product Specifications 430
11-4c Estimating Supplier Costs Using Reverse
Price Analysis: (“Should Cost Analysis”) 431
11-4d Break-Even Analysis 434
11-4e Break-Even Analysis Example 438
11-5 Building a Should-Cost Model 439
11-5a Step 1: Conceptual Design 441
11-5b Step 2: Refine and Derive Elements of the
Cost Model 442
11-5c Step 3: Design and Construction of Cost
Model 442
11-5d Step 4: Identify Data Sources for the Model 444
11-5e Supplier-Provided Data 444
11-6 Total Cost of Ownership (TCO) 445
11-6a Building a Total Cost of Ownership Model 446
11-6b The Importance of Opportunity Costs 447
11-6c Important Factors to Consider When Building
a TCO Model 449
11-6d Example of a TCO Model 449
11-7 Collaborative Approaches to Cost Management 450
11-7a Target Pricing Defined 450
11-7b Cost-Savings Sharing Pricing Defined 451
11-7c Prerequisites for Successful Target and
Cost-Based Pricing 452
11-7d When to Use Collaborative Cost Management
Approaches 452
11-7e An Example of Target Pricing and Cost-Savings
Sharing 453
Chapter 12 Purchasing and Supply Chain Analysis: Tools and
Techniques 461
12-1 Introduction 463
12-2 Project Management 465
12-2a Defining Project Success 466
12-2b Project Phases 466
12-2c Project Planning and Control Techniques 469
12-2d Rules for Constructing a Project Management
Network 471
12-2e Project Management Example: Sourcing
Strategy 472
12-2f Project Management with Time Estimates 473
12-3 Learning-Curve Analysis 477
12-3a Components of the Learning or
Experience Curve 478
12-3b When to Use the Learning Curve 478
12-3c Learning Curve Illustrated 479
12-3d Learning-Curve Problem 480
12-4 Value Analysis/Value Engineering 480
12-4a Who Is Involved in Value Analysis? 482
12-4b Tests for Determining Value in a Product or
Service 483
12-4c The Value Analysis Process 483
12-5 Quantity Discount Analysis 484
12-5a Quantity Discount Analysis Illustrated 485
12-6 Process Mapping 487
12-7 Value Stream Mapping 489
Chapter 13 Negotiation and Conflict Management 497
13-1 Introduction 499
13-2 What Is Negotiation? 500
13-3 The Negotiation Framework in Supply Management 503
13-3a Identify or Anticipate the Sourcing
Requirement 504
13-3b Determine If Negotiation or Competitive Bidding
Is Required 504
13-3c Plan for the Negotiation 506
13-3d Conduct the Negotiation 507
13-3e Execute and Follow-Up on the Agreement 508
13-4 Negotiation Planning 509
13-4a Develop Specific Objectives 509
13-4b Analyze Each Party’s Strengths and
Weaknesses 510
13-4c Gather Relevant Information 510
13-4d Recognize Your Counterpart’s Needs 511
13-4e Identify Facts and Issues 511
13-4f Establish a Position on Each Issue 511
13-4g Develop the Negotiation Strategy and
Accompanying Tactics 513
13-4h Brief Other Stakeholders 513
13-4i Practice the Negotiation 513
13-4j Using Force Field Analysis as a Planning Tool 514
13-5 Power in Negotiation 514
13-5a Sources of Negotiation Power 514
13-6 Concessions 516
13-7 Negotiation Tactics: Trying to Reach Agreement 518
13-8 Win-Win Negotiation 520
13-9 International Negotiation 524
13-10 Selected Countries 526
13-10a Brazil 526
13-10b China 527
13-10c France 527
13-10d Germany 527
13-10e India 527
13-10f Japan 528
13-10g Mexico 528
13-10h Russia 528
13-10i Saudi Arabia 528
13-10j South Korea 529
13-10k Vietnam 529
13-11 The Impact of Electronic Media on Negotiations 529
Chapter 14 Contract Management 535
14-1 Introduction 537
14-2 Elements of a Contract 539
14-3 How to Negotiate and Write a Contract 544
14-4 Types of Contracts 546
14-4a Fixed-Price Contracts 546
14-5 Fixed-Price Contract with Redetermination 548
14-6 Fixed-Price Contract with Incentives 548
14-6a Cost-Based Contracts 548
14-6b Considerations When Selecting Contract Types 555
14-7 Long-Term Contracts in Alliances
and Partnerships 557
14-7a Benefits of Long-Term Contracts 557
14-7b Risks of Long-Term Contracts 559
14-7c Contingency Elements of Long-Term Contracts 560
14-8 Nontraditional Contracting 561
14-8a IT Systems Contracts 561
14-8b Minority- and Women-Owned Business
Enterprise Contracts 563
14-8c Consulting Contracts 564
14-8d Construction Contracts 566
14-8e Other Types of Contracts 568
14-9 Settling Contractual Disputes 569
14-9a Legal Alternatives 570
14-9b Arbitration 571
14-9c Other Forms of Conflict Resolution 572
Chapter 15 Purchasing Law and Ethics 581
15-1 Introduction 585
15-2 Legal Authority and Personal Liability
of the Purchasing Manager 586
15-2a Laws of Agency 586
15-2b Legal Authority 586
15-2c Personal Liability 586
15-3 Contract Law 588
15-3a Essential Elements of a Contract 588
15-3b The Purchase Order—Is It a Contract? 591
15-3c Cancellation of Orders and Breach of Contract 593
15-3d Damages and Remedies 595
15-3e Acceptance and Rejection of Goods 596
15-3f Honest Mistakes 597
15-4 The Uniform Commercial Code 598
15-4a A History of the UCC 598
15-4b Electronic Contracts and Signatures 600
15-4c Warranties 601
15-4d Transportation Terms and Risk of Loss 603
15-4e FOB Point 604
15-4f Sellers’ and Buyers’ Rights 605
15-5 Patents and Intellectual Property 606
15-6 Other Laws Affecting Purchasing 609
15-6a Antitrust and Unfair Trade Practice Laws 609
15-6b Laws Affecting Global Purchasing 610
15-7 Purchasing Ethics 612
15-7a Risks of Unethical Behavior 613
15-7b Types of Unethical Purchasing Behavior 613
15-7c Influence and Ethics 616
15-7d ISM Professional Code of Ethics 617
15-7e Supporting Ethical Behavior 618
15-8 Corporate Social Responsibility 619
15-8a Environment and Sustainability 619
Part 5 Critical Supply Chain Elements 627
Chapter 16 Lean Supply Chain Management 628
16-1 Introduction 631
16-2 Understanding Supply Chain Inventory 632
16-2a Types of Inventory 632
16-2b Inventory-Related Costs 633
16-2c Inventory Investment—Asset or Liability? 635
16-3 The Right Reasons for Investing in Inventory 639
16-3a Avoid Disruptions in Operational Performance 639
16-3b Support Operational Requirements 639
16-3c Support Customer Service Requirements 639
16-3d Hedge against Marketplace Uncertainty 639
16-3e Take Advantage of Order Quantity Discounts 641
16-4 The Wrong Reasons for Investing in Inventory 641
16-4a Poor Quality and Material Yield 642
16-4b Unreliable Supplier Delivery 642
16-4c Extended Order-Cycle Times from Global Sourcing 642
16-4d Inaccurate or Uncertain Demand Forecasts 643
16-4e Specifying Custom Items for Standard
Applications 643
16-4f Extended Material Pipelines 643
16-4g Inefficient Manufacturing Processes 644
16-5 Creating the Lean Supply Chain 647
16-6 Six Sigma 649
16-6a The Lean Perspective on Inventory 651
16-6b Lean Supply 653
16-6c Lean Transportation 654
16-6d Just-in-Time Kanban Systems 655
16-7 Approaches for Managing Inventory Investment 657
16-7a Achieve Perfect Record Integrity 657
16-7b Improve Product Forecasting 658
16-7c Standardize and Simplify Product Design 658
16-7d Leverage Companywide Purchase Volumes 660
16-7e Use Suppliers for On-Site Inventory
Management 660
16-7f Reduce Supplier-Buyer Cycle Times 661
16-8 Delivering the Perfect Customer Order 662
16-8a Material Requirements Planning System 662
16-8b Distribution Resource Planning System 663
16-8c Supply Chain Inventory Planners 663
16-8d Automated Inventory Tracking Systems 663
Chapter 17 Purchasing Services 669
17-1 Introduction 671
17-2 Transportation Management 671
17-2a Historical Deregulation of Transportation and
Supply Management’s Growing Role 673
17-2b A Decision-Making Framework for Developing
a Transportation Strategy 675
17-2c Current Transportation Issues 688
17-2d Performance-Based Logistics 690
17-3 Outsourcing Logistics Requirements to Third-Party
Logistics Providers 691
17-3a Select Providers 691
17-3b Gain Access to Critical and Timely Data 693
17-3c Develop Systems Visibility to Material
Shipments 694
17-3d Develop Closer Relationships with Fewer
Providers 694
17-3e Establish Companywide Contracts 694
17-4 Purchasing Services and Indirect Items 695
17-4a Internal Methods of Managing Indirect Spend 695
17-4b External Methods of Managing Indirect Spend 696
17-4c Enabling Tactics and Strategies 697
17-5 Sourcing Professional Services 699
17-5a Have a Clearly Defined Scope 699
17-5b Move to a Centralized Procurement Structure for
Professional Services 700
17-5c Develop a Centralized Professional Services
Database 701
17-5d Develop Sound Procedures for Evaluation and
Selection of Consultants and Related Professional
Services 702
17-5e Optimize the Supply Base 702
17-5f Develop Standardized Contract Templates 702
17-5g Monitor Results 703
17-5h Develop Policy Compliance 703
17-5i Service Supply Chain Challenges 704
Chapter 18 Supply Chain Information Systems and Electronic
Sourcing 710
18-1 Introduction 714
18-2 Evolution of E-SCM Systems 715
18-3 An Overview of the E-Supply Chain 716
18-3a Supply Chain Information Flows 716
18-4 Drivers of New Supply Chain Systems and
Applications 720
18-4a Internal and External Strategic Integration 721
18-4b Globalization and Communication 721
18-4c Data Information Management 721
18-4d New Business Processes 721
18-4e Replacement of Legacy Systems 721
18-4f Strategic Cost Management 722
18-5 Internal Information Systems—Enterprise Resource
Planning 722
18-5a Implementing ERP Systems 724
18-6 Purchasing Databases and Data Warehouses 727
18-7 Electronic Data Interchange—Pioneering External
Electronic Communication 728
18-7a The Electronic Order Process 728
18-7b EDI and the Internet 729
18-7c Debating the Future of EDI 730
18-8 E-Sourcing Basics 730
18-9 E-Sourcing Models—The External
Information Systems 731
18-10 E-Sourcing Suites—General 731
18-11 E-Sourcing Suites—Supplier Relationship
Management 732
18-11a Spend Analysis 732
18-11b Sourcing 733
18-11c Contract Management and Compliance 738
18-11d Risk Management and Supplier Performance
Measurement 738
18-11e Total Cost Reporting 739
18-12 Social Networking and the Cloud 739
18-12a Social Networking Software in SCM—Improving
Collaboration and Visibility 739
18-12b Professional Networking Software in SCM 742
18-12c Blogs, Tweets, and Cloud Computing 742
18-13 Information Visibility in SCM 744
18-13a Benefits of Information Visibility 744
18-13b Information Visibility in the Cloud 745
18-14 Collaboration and Big Data 746
18-15 Transformational Technologies 747
18-15a Blockchains 747
18-15b 3-D Printing 748
18-15c Artificial Intelligence/Robotics 748
Chapter 19 Performance Measurement and Evaluation 757
19-1 Introduction 760
19-2 Purchasing and Supply Chain Performance Measurement
and Evaluation 760
19-2a Why Measure Performance? 761
19-2b Problems with Purchasing and Supply Chain
Measurement and Evaluation 762
19-3 Purchasing and Supply Chain Performance Measurement
Categories 763
19-3a Price Performance Measures 765
19-3b Cost-Effectiveness Measures 766
19-3c Revenue and EVA Measures 767
19-3d Quality Measures 768
19-3e Time/Delivery/Responsiveness Measures 769
19-3f Technology and Innovation Measures 770
19-3g Environmental Sustainability Measures 771
19-3h Asset and Integrated Supply Chain Management
Measures, Including SCOR 772
19-3i Administration Efficiency/Overhead Cost
Measures 773
19-3j Governmental/Social Measures 774
19-3k Safety Measures 775
19-3l Internal Customer Satisfaction Measures 775
19-3m Supplier, Risk, and Strategic Performance
Measures 775
19-3n Strategic Performance Measures 775
19-4 Developing a Performance Measurement and Evaluation
System 777
19-4a Determine Which Performance Categories
to Measure 778
19-4b Develop Specific Performance Measures 778
19-4c Establish Performance Objectives for Each
Measure 781
19-4d Finalize System Details 781
19-4e Implement and Review System Performance
and Measures 782
19-5 Performance Benchmarking: Comparing against
the Best 782
19-5a Benchmarking Overview 782
19-5b The Benchmarking Process 784
19-5c Balanced Scorecard for Purchasing and Supply 786
19-6 A Summary of Purchasing Measurement
and Evaluation Characteristics 787
19-6a System Characteristics 787
19-6b Human Resource Characteristics 788
Part 6 Future Directions 795
Chapter 20 Purchasing and Supply Strategy Trends 796
20-1 Introduction 798
20-2 Supply Chain Trends 798
20-2a Changing the Global Supply Chain Model 798
20-3 Supply Chains Are Getting Shorter and Local 799
20-4 Different Industries Change Differently 799
20-4a Tariffs and Tariff Wars 799
20-5 Digitization and Changing Nature of Supply Chains 799
20-5a Security and Danger 800
20-5b Conclusions: 2020–2025 800
20-6 Trend Forecasts: Business, Research Organizations,
and Academics 800
20-6a Perspectives 800
20-6b 2020–2025 Trends 803
20-6c Concluding Comments about Perspectives 804
20-7 Critical Future Supply and Supply Chain Strategies 805
20-8 Expanding the Mission, Goals, and
Performance Expectations 805
20-9 Developing Category Strategies Will Become Broader
and More Complex 808
20-9a Strategy Formulation and Selection 808
20-9b Concluding Observations: 2020–2025 811
20-10 Supplier Management across the Extended
Supply Chain 811
20-10a Improving Supplier Relationships 811
20-10b Supply Chain 813
20-10c Concluding Observations: 2020–2025 815
20-11 Designing and Operating Multiple Customer-Focused
Supply Networks 815
20-11a Risk Considerations 816
20-11b Concluding Observations: 2020–2025 816
20-12 Leveraging E-System Technology Enablers Takes
on Additional Focus 817
20-12a Concluding Observations: 2020–2025 818
20-13 Collaborating Internally and Externally Will Grow in
Strategic Importance 818
20-13a Obtaining Innovation 819
20-13b Concluding Observations: 2020–2025 819
20-14 Attracting, Developing, and Retaining Supply Management
Talent Will Become a Key Differentiator for Success 820
20-14a Current and Future Supply Management Skills 821
20-14b Cross-Functional and Cross-Cultural Teaming Skills 821
20-14c “Soft-Side” Skills 821
20-14d Acquisition, Development, and Retention 821
20-14e Concluding Observations: 2020–2025 822
20-15 Managing and Enabling the Future Supply Management
Organization and Measurement Systems 823
20-15a Organization Approaches 823
20-15b Measuring Supply Management Performance 824
20-15c Concluding Observations: 2020–2025 825
20-16 Twelve High-Impact Sourcing and Supply
Chain Strategies for 2020–2025 826
Cases 833
Case 1 Avion Inc. 834
Case 2 The Global Sourcing Wire Harness Decision 837
Case 3 Managing Supplier Quality: Integrated Devices 839
Case 4 Negotiation—Porto 842
Case 5 Purchasing Ethics 843
Case 6 Insourcing/Outsourcing: The FlexCon Piston Decision 846
Case 7 Email Exercise 857
Index 859