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CAPM ????????
2004.09.08
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• Supply Management Definition
• Key Supply Issues / Trends
• ISM Principles of Social Responsibility
• Procuring e-Procurement
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ISM (????????)
www.ism.ws
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ISM’s definition of supply management
– we have moved beyond purchasing.
The identification, acquisition, access,
positioning, and management of resources the
organization needs or potentially needs in the
attainment of its strategic objectives.
Supply Management Definition
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Identification
Looking for opportunities in the marketplace - new
materials, new technologies, new suppliers, new
products or services.
Acquisition
Creating strategies for seeking and using sources,
developing relationships internally and externally.
Access
Gaining use or potential use of something of value;
accessing resources and assets available in the market
that the organization can use.
Supply Management Definition
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Positioning
Position the organization for marketplace competitive
advantage; enhanced role from narrow supply base
assessment, buying, and supplier management that
now includes leadership and management of suppliers
Management of Resources
Internal and external; financial and human resources.
Supply Management Definition
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Supply management is: future oriented,
senior-management critical, strategic in
relation to the competitive imperatives of the
organization, and a significant contributor to
marketplace intelligence and profitability.
Supply Management Definition
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Components included under the
Supply Management umbrella are:
Supply Management Definition
disposition/investment
distribution
inventory control
logistics
manufacturing
material management
packaging
procurement/purchasing
product/service development
quality
receiving
transportation/traffic shipping
warehousing
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Supply Management Definition
The Range from Buying to Supply
Buying
Procurement
Supply
• Process orders
• Bidding and negotiation
• Expediting / tracing
• Three way matches
• Price, delivery, quality
• Make orders and
system more efficient
• Plan volumes
• Cost manage the flow
• Negotiate systems
• Corral buying power
• Anything on the supply side
of the firm is fair game
• New revenues are as
important as cost savings
• Shape and influence the
supply market and inbound
chain of flows
• The “Chain”: physical
financial
informational
relational
• Analyze and suggest supply
opportunities and options
to the firm
• Supply results = financial
results
• Access for the firm what it
needs but does not have
capital, time, talent, or
technology to develop on
its own
ActivitiesTraditional Value-Add
Strategic Contribution
to the Firm
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General: Companies will need to become
more agile in a changing marketplace adapting
swiftly to optimize cost and service levels will
minimizing waste.
Supply management can play a key role.
Key Supply Issues / Trends
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Technology
will continue to bring radical shifts in many
industries
future innovations will impact product design,
manufacturing, and operational processes
new services procurement technologies will
produce the greatest changes in procurement
technology
Key Supply Issues / Trends
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Purchasing Services
Approximately 33% of a typical organization’s
spend is on services; supply management manages
less than 10%
Significant area of impact for supply manager
Next 5 years services spend is expected to increase
13% on average
Key Supply Issues / Trends
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Purchasing Services (continued)
Formal supplier management programs: travel,
temporary staffing, telecommunications,
information technology, construction/engineering,
printing/copying
70% of CAPS Research services survey
participants reported buying services is more
difficult than purchasing goods and more difficult
to manage
Key Supply Issues / Trends
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Supplier Relationships
Remains a critical function for supply manager
Role is to leverage the supply base to achieve cost
leadership, fuel innovation, and support revenue
growth
Concentrate on products and services that are of
high value and uniqueness
View suppliers as sources for innovation; leverage
capabilities through collaboration
Key Supply Issues / Trends
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Globalization and Outsourcing
Not a new strategy
Recent increase in:
- Number of companies pursuing a global supply
base
- Variety of countries being considered
- Quantity and variety of items being pursued and
acquired
- Trend will continue and grow into the future
Key Supply Issues / Trends
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Globalization and Outsourcing (continued)
Challenges
Operational complexities: right product mix,
supply sources and network of facilities
Supplier relationships and identification
Technology and information systems
Risks to business continuity
Financial and legal issues
Key Supply Issues / Trends
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Globalization and Outsourcing (continued)
Challenges
Intellectual property protection
Changing supply and demand markets because of
demographic issues
Supply managers should work in different
positions around the world to develop into global
thinkers
Key Supply Issues / Trends
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Globalization and Outsourcing (continued)
Outsourcing critical success factor based on
CAPS Research, A.T. Kearney, and
Arizona State University study is the involvement
of supply management
Key Supply Issues / Trends
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ISM Principles of Social Responsibilities
Social Responsibility Initiatives
• ISM introduced at Annual International Conference in Philadelphia,
Pennsylvania in April 2004
• Support companies to date:
• Advanced Micro Devices,
Inc. (AMD)
• Alcoa Inc.
• A.T. Kearney
• DC Chamber of Commerce
• Delphi Corporation
• Highmark Inc.
• Hilton Hotels Corporation
• Howard University School
of Business
• IBM Corporation
• MCI
• Pfizer Inc
• Public Service Enterprise Group,
Incorporated (PSEG)
• Ryder System Inc.
• Sappi Fine Paper North America
• SBC Services
• Science Applications
International Corporation (SAIC)
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Social Responsibility Definition
A framework of measurable corporate policies
and procedures and resulting behavior
designed to benefit the workplace and by
extension, the individual, the organization, and
the community in the following areas:
Social Responsibility
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Community
Provide support and add value to your
communities and those of your supply chain.
Encourage members of your supply chain to
add value in their communities.
Social Responsibility Components
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Diversity
Proactively promote purchasing from, and
the development of, socially diverse
suppliers.
Encourage diversity within your own
organization.
Proactively promote diverse employment
practices throughout the supply chain.
Social Responsibility Components
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Environment
Encourage your own organization and others to be
proactive in examining opportunities to be
environmentally responsible within their supply
chains either “upstream” or “downstream.”
Encourage the environmental responsibility of your
suppliers.
Encourage the development and diffusion of
environmentally friendly practices and products
throughout your organization.
Social Responsibility Components
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Ethics
Be aware of ISM’s Principles and Standards of
Ethical Supply Management Conduct.
Abide by your organization’s code of conduct.
Social Responsibility Components
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Financial Responsibility
Become knowledgeable of, and follow, applicable
financial standards and requirements.
Apply sound financial practices and ensure
transparency in financial dealings.
Social Responsibility Components
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Human Rights
Treat people with dignity and respect.
Support and respect the protection of international
human rights within the organization’s sphere of
influence.
Encourage your organization and its supply chains
to avoid any participation in human or employment
rights abuses.
Social Responsibility Components
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Safety
Promote a safe environment for each employee in
your organization and supply chain.
(Each organization is responsible for defining “safe”
within its organization.)
Support the continuous development and diffusion
of safety practices throughout your organization
and the supply chain.
Social Responsibility Components
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Benefits of an e-Procurement System
Boosting compliance by driving purchases to preferred
suppliers, resulting in increased purchase volume and
additional leverage for unit price decreases
Shorter transaction and fulfillment cycles
Better communication of policies and procedures
A single, dynamic approval process for commodities and
expenses
Greater empowerment of end users (customers), reducing
staffing demands in the supply management and payment
organizations
Procuring e-Procurement
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Benefits of an e-Procurement System (continued)
Consolidation of multiple applications and systems into a
single procurement system
Increased ability to monitor supplier performance (e.g.,
adherence to contracted prices, leadtime, quality, and
payment)
Improved inventory management
Improved analysis, tracking, and control of spending
Procuring e-Procurement
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End-User Requirements
Easy access from anywhere in the organization (including
in-home offices)
Easy searching capabilities for needed suppliers or services
Comparison shopping/payment options (rent, buy, lease)
One-stop requisitioning for multiple items
Controlled approval process
Electronic links to suppliers
Electronic transactions for orders, inquiries, invoicing, and
payments
Ability to monitor supplier performance
Ability to monitor purchasing activity and compliance
Procuring e-Procurement
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Functional Requirements
Ease of use
Multi-catalog/content management engine
Shopping-cart capability
Workflow engine
Online status checks
Financial settlement
Search function
Reporting/query tools
Matching
Data transmission
Procuring e-Procurement
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Technology Requirements
Personalization software
Security/authentication tools
Application Program Interface (APIs) / adapters
EDI / Electronic Funds Transfer (EFT)
Multiple options for communicating with suppliers -
EDI, e-mail, XML, and automated fax
Open Buying on the Internet (OBI)
Procuring e-Procurement
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Evaluating an e-Procurement software supplier
Customization
Code ownership
Scalability
Implementation time
Training
Supplier stability / longevity
Experience
Procuring e-Procurement
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Ideas for Successful Implementation
to look for and obtain senior management support
to look for a system that will be easy to administer –
the goal to create less, not more, work for the supply
management, finance, and information systems departments.
A system should be free professionals to focus on strategic
supplier management rather than tie them down with
operational details.
Procuring e-Procurement
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Steve Lai
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stevelai@capm.org.tw
www.capm.org.tw
Questions and Answers
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THANK YOU VERY MUCH!
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