The Critical Role of Supply Management, Essay Example

While understanding the critical role of Supply Management in the new competitive environment, define the key objectives and responsibilities of the Supply Management function within an organization.

Answer – There are five primary functions within supply chain management which are responsible for carrying out a variety of goals and objectives. The primary responsibilities of supply chain management are, aligning flows, integrating functions, coordinating processes, designing complex systems, and above all else, managing resources.

First, aligning flows relates to the coordination and control of money, materials and information. Often times this is accomplished by some kind of CRM software which wraps all of these functions into one cohesive software system. This system therefore allows for the seamless management of the three mentioned variables such that money can be more easily monitored and used while the optimal flow and storage of goods occurs.

Second, the CRM plays into integrating functions where supply chain management is tasked with connecting several departments. Those departments are, logistics, purchasing, and operations. This type of connection allows materials and resources to flow from one department to another as well as allows for more efficient procurement and use of such resources.

Third, the coordination of process makes the intake, building, and delivery of goods far easier. Overall, the process is streamlined such that no hick-ups or errors occur in the overall supply chain process.

Finally, the management of resources allows the business to properly function throughout time. Errors in management may lead to the hinderance of supplying goods, which in turn could lead customers away from that organization. However, when resources are managed properly, then they are procured an used in the least expensive and most efficient way possible.

Provide the rationale for a centralized and integrated Purchasing organization, and the role of cross-functional teaming in supporting this type of organization promoting its competitive advantage.

Answer – A centralized purchasing and procurement process/department allows for easier tracking and tasking among different departments. For instance, one centralized system may better manage exactly when, how and why things are purchased. Whereas a decentralized system is likely to have errors, lag time and other complications which can be removed by centralizing instead.

Offer the basis for an organization developing cogent supply management strategies, and the effectiveness of supplier selection, consistent with supplier reduction, supporting these strategies that drive value.

Answer – Any organization which performs assessments of its procurement sources is highly likely to benefit in the long-run. The process for supplier selection allows for the choosing of only suppliers which can benefit and add value to current operations. For instance, if average supply of some good is historically higher in summer as opposed to the winter, then a supplier which can accommodate that change should be made. The selection of one who cannot make that accommodation is likely to slow or hinder the manufacturing output of that process in relation to historical demand trends. Furthermore, supplier reduction is also beneficial in that a simplification of resource allocation can allow for less resources and time spent procuring those goods. Additionally, if a high-quality selection is made such that only cumbersome suppliers are left behind, then overall procurement and manufacturing ability will increase significantly.

Another faucet of this approach is in business relationships with the suppliers. In some cases, the relationship with a supplier may change due to fees, new policies or other matters. In this case, the ability to choose suppliers allows for an organization to self-select a business relationship which best suites it’s needs. For instance, if a supplier offers NET30 terms and another supplier requires advance payment on all orders, it may be more beneficial for the organization to choose the supplier offering NET30 terms. This kind of freedom allows the organization to truly act in its own best interest in order to continue its operations.

Succinctly explain the rationale for an organization developing a Worldwide Sourcing Program, how creating a performance-based supplier base is an integral part of implementing such a Program.

Answer – There are three primary reasons an organization of adequate size should seek out a worldwide sourcing program. The first relates to common economic pricing where sourcing can be cheaper in some regions as opposed to others. Since this cheaper pricing is variable and will change, this allows the resource allocation from the cheapest possible source at any given time. Secondly, the procurement of goods in the face of political matters such as embargos and tariffs allow an organization to effectively mitigate those additional costs by switching to a different region of procurement. Finally, the world wide sourcing structure allows for a wide selection and availability of goods in varying degrees and qualities. Should one source become hindered in its supply ability, then other sources can be used in conjunction or as replacements. Or, if the quality of one supplier seemingly changes, or the quality demands of the organization changes, then the procurement of resources from elsewhere is beneficial to the organization.

Briefly differentiate between legal and ethical aspects of Purchasing/Contracting and identify the legal and administrative aspects affecting the legal authority and liability of the Purchasing and Supply Management manager in the exercise of his/her duties and responsibilities.

Answer – Depending on the country and company, there are many differences between legal and ethical implications of purchasing and contracting. Famously, Apple procures resources from companies which promise to only make goods in environmentally friendly ways. Therefore, Apple has placed its own ethical limit to procurement where there is not a legal one. At the same time, certain legal restrictions like limiting resource procurement from certain countries may hindered procurement operations.

Therefore, the difference laws within whether or not the law or ethical stance simply exists. Laws are to be followed by everyone with the consequence of penalties and fines if not followed. Ethical limits and guidelines are set within a company and are therefore to the discretion of the company.

As a supply chain manager, that person must be aware of procurement laws for their resources. They should also consult their company for ethics and even consider their own ethics such as fair wages, the exploitation of labor and so on.

Such ethics can be discussed during the hiring process and taught continuously throughout the course of the employee’s time with the organization. Therefore, the ethics of procurement are also a matter of managerial and high leadership. Finally, the ethics as seen in the face of he public must also be considered. For organizations who act against common public ethics typically see backlash, epically with the prominence of the modern-day internet. Therefore, organizations must increasingly act in a way that is generally accepted by society so as to now damage its image.