Purchasing and Supply Chain Management: Strategies and Realities
by Michael Quayle
by Michael Quayle
Table of Contents
Foreword ……………………………………………………………………………… viii
Preface ………………………………………………………………………………….. ix
Chapter I.
Developments in Purchasing and Supply Chain Management
and Logistics ………………………………………………………………………. 1
Procurement, Purchasing, Outsourcing, Supply Management and
Supply Chain Management ………………………………………………… 1
The Sustainable Supply Chain ………………………………………………… 9
Resource-Based View and Competitive Advantage …………………… 10
Business Issues in the 21st Century …………………………………………. 13
Supply Chains into the Future ………………………………………………. 14
Supply Chain Education ………………………………………………………. 16
Professional Competence: Food for Thought ………………………….. 19
Chapter II.
Strategic Purchasing Management …………………………………………… 21
Corporate Planning ……………………………………………………………. 21
Purchasing Planning and Purchasing Strategies ……………………… 27
Corporate and Environmental Factors ………………………………….. 29
Strategic Planning ……………………………………………………………… 29
Market Strategic Flexibility………………………………………………….. 30
Objectives and Responsibilities ……………………………………………… 30
SWOT and Gap Analysis ……………………………………………………… 32
Functions Involved in Corporate Planning ……………………………… 33
Functional Contribution to Corporate Strategy……………………….. 34
Monitoring Performance ……………………………………………………… 35
Purchasing Needs and Corporate Strategies …………………………… 36
Purchasing Strategies …………………………………………………………. 38
Flexible Strategies………………………………………………………………. 41
International Trade: Implications for Purchasing
Management …………………………………………………………………. 44
Ethical Purchasing ……………………………………………………………… 47
Procurement Agencies ………………………………………………………… 48
Food for Thought ……………………………………………………………….. 49
Chapter III.
Purchasing Policy …………………………………………………………………… 50
Policy Issues ………………………………………………………………………. 50
Selecting Overall Policy ………………………………………………………. 53
Structure of Purchasing Organisation ……………………………………. 53
Structure of the Purchasing Function in Simple Organisations …… 54
Division of Work amongst Buying Groups ………………………………. 57
The Position of Purchasing Management in the Organisation ……. 59
Structure of the Purchasing Function in Complex Organisation …. 60
A Multilevel Structure for Purchasing Management …………………. 63
Other Methods of Achieving Coordination ……………………………… 65
The Selection of an Appropriate Structure for Particular
Circumstances ……………………………………………………………….. 66
Multinational Supplies Structures ………………………………………….. 67
Public Sector ……………………………………………………………………… 68
Benchmarking ……………………………………………………………………. 69
Materials Management………………………………………………………… 71
Exemplar Case Study: Procurement Business Strategy ……………… 73
Chapter IV.
Quality Management and Customer Service ……………………………… 89
Defining Quality …………………………………………………………………. 89
Design and Conformance …………………………………………………….. 92
The Costs of Quality……………………………………………………………. 93
Efficient Consumer Response ……………………………………………….. 99
Total Quality Management …………………………………………………. 100
Food for Thought ……………………………………………………………… 103
Chapter V.
Supply Chain Management ……………………………………………………. 104
The Role of Supply Chain Management ………………………………… 104
The Supply Chain Mix ……………………………………………………….. 107
The Scope of the Supply Chain ……………………………………………. 109
The Value Chain and Interlock Strategy ……………………………….. 113
Chapter VI.
Managing the Supply Chain Function ……………………………………… 120
Staffing the Department …………………………………………………….. 121
Operating Manuals……………………………………………………………. 124
Qualities of Supply Chain Personnel…………………………………….. 125
Recruiting Personnel …………………………………………………………. 126
Managing the Department …………………………………………………. 130
Implications for Supply Chain Management ………………………….. 133
Management and Implementation of Change ………………………… 133
Supply Chain and Change ………………………………………………….. 135
Chapter VII.
Operating Environments ……………………………………………………….. 138
Integrated Logistic Support ………………………………………………… 138
ILS Management Structure…………………………………………………. 143
Level of Repair Analysis …………………………………………………….. 148
Logistics Information Systems …………………………………………….. 150
Logistics and Other Organisational Functions ……………………….. 155
Chapter VIII.
Provisioning and Inventory Control ………………………………………… 161
Provisioning…………………………………………………………………….. 161
The Use of Computers ………………………………………………………. 171
The Objectives of an Inventory Control System ……………………… 174
Method of Inventory Control ………………………………………………. 180
Cost of Inventory Investment ……………………………………………… 185
Inventory Control and Accounting Methods ………………………….. 187
Pricing Issues …………………………………………………………………… 189
Price Analysis ………………………………………………………………….. 195
Inventory in the Final Accounts…………………………………………… 196
Identification and Coding of Materials …………………………………. 198
Development of the Coding System ……………………………………… 205
The Stores Vocabulary ………………………………………………………. 210
Inventory Reduction ………………………………………………………….. 217
Review of Other Concepts ………………………………………………….. 221
Materials Requirements Planning ………………………………………… 224
Manufacturing Resource Planning ………………………………………. 226
Chapter IX.
Stores Management …………………………………………………………….. 228
Stores Management Objectives …………………………………………… 228
The Siting of Stores Buildings and Stockyards ……………………….. 230
Construction of the Buildings and Stockyards ……………………….. 231
Stockyards ………………………………………………………………………. 233
Internal Layout ………………………………………………………………… 233
Detailed Planning of Layouts ……………………………………………… 234
Types of Stores …………………………………………………………………. 235
Special Storage Facilities …………………………………………………… 240
Planning Storage Equipment ………………………………………………. 242
Handling Equipment …………………………………………………………. 245
Types of Handling Equipment …………………………………………….. 248
Security …………………………………………………………………………… 255
Safety and Safe Methods of Working ……………………………………. 256
Case Studies …………………………………………………………………….. 260
Chapter X.
Transport ……………………………………………………………………………. 264
Introduction …………………………………………………………………….. 265
Fleet Management ……………………………………………………………. 266
Vehicle Scheduling ……………………………………………………………. 269
Maintenance and Security ………………………………………………….. 273
Facilities for Maintenance ………………………………………………….. 273
Quality Control ………………………………………………………………… 274
Security …………………………………………………………………………… 275
Containers, Unitisation and Palletisation ……………………………… 276
Mechanical Aids to Loading and Off-Loading ……………………….. 280
Loading and Unloading Equipment Available on Vehicles……….. 282
Road Vehicle Design and Road Planning ………………………………. 282
Road Haulage ………………………………………………………………….. 287
Operating Costs of Own Fleet …………………………………………….. 291
Rail Freight ……………………………………………………………………… 295
Air Freight ………………………………………………………………………. 297
Food for Thought ……………………………………………………………… 300
Case Study ………………………………………………………………………. 301
Chapter XI
Physical Distribution …………………………………………………………….. 303
Distribution ……………………………………………………………………… 303
Distribution Planning ………………………………………………………… 304
Logistics and Delivery Planning ………………………………………….. 307
Budgetary Control in Distribution ……………………………………….. 312
Food for Thought ……………………………………………………………… 315
Case Study ………………………………………………………………………. 317
United Parcel Service ……………………………………………………….. 318
Modelling Systems …………………………………………………………….. 318
Radio Frequency Identification……………………………………………. 319
Chapter XII.
E-Business ………………………………………………………………………….. 320
A Definition of Electronic Data Interchange………………………….. 320
Why Use EDI?………………………………………………………………….. 323
Viewpoint ………………………………………………………………………… 340
References and Bibliography…………………………………………………. 342
About the Author………………………………………………………………….. 355
Index ………………………………………………………………………………….. 356
Preface ………………………………………………………………………………….. ix
Chapter I.
Developments in Purchasing and Supply Chain Management
and Logistics ………………………………………………………………………. 1
Procurement, Purchasing, Outsourcing, Supply Management and
Supply Chain Management ………………………………………………… 1
The Sustainable Supply Chain ………………………………………………… 9
Resource-Based View and Competitive Advantage …………………… 10
Business Issues in the 21st Century …………………………………………. 13
Supply Chains into the Future ………………………………………………. 14
Supply Chain Education ………………………………………………………. 16
Professional Competence: Food for Thought ………………………….. 19
Chapter II.
Strategic Purchasing Management …………………………………………… 21
Corporate Planning ……………………………………………………………. 21
Purchasing Planning and Purchasing Strategies ……………………… 27
Corporate and Environmental Factors ………………………………….. 29
Strategic Planning ……………………………………………………………… 29
Market Strategic Flexibility………………………………………………….. 30
Objectives and Responsibilities ……………………………………………… 30
SWOT and Gap Analysis ……………………………………………………… 32
Functions Involved in Corporate Planning ……………………………… 33
Functional Contribution to Corporate Strategy……………………….. 34
Monitoring Performance ……………………………………………………… 35
Purchasing Needs and Corporate Strategies …………………………… 36
Purchasing Strategies …………………………………………………………. 38
Flexible Strategies………………………………………………………………. 41
International Trade: Implications for Purchasing
Management …………………………………………………………………. 44
Ethical Purchasing ……………………………………………………………… 47
Procurement Agencies ………………………………………………………… 48
Food for Thought ……………………………………………………………….. 49
Chapter III.
Purchasing Policy …………………………………………………………………… 50
Policy Issues ………………………………………………………………………. 50
Selecting Overall Policy ………………………………………………………. 53
Structure of Purchasing Organisation ……………………………………. 53
Structure of the Purchasing Function in Simple Organisations …… 54
Division of Work amongst Buying Groups ………………………………. 57
The Position of Purchasing Management in the Organisation ……. 59
Structure of the Purchasing Function in Complex Organisation …. 60
A Multilevel Structure for Purchasing Management …………………. 63
Other Methods of Achieving Coordination ……………………………… 65
The Selection of an Appropriate Structure for Particular
Circumstances ……………………………………………………………….. 66
Multinational Supplies Structures ………………………………………….. 67
Public Sector ……………………………………………………………………… 68
Benchmarking ……………………………………………………………………. 69
Materials Management………………………………………………………… 71
Exemplar Case Study: Procurement Business Strategy ……………… 73
Chapter IV.
Quality Management and Customer Service ……………………………… 89
Defining Quality …………………………………………………………………. 89
Design and Conformance …………………………………………………….. 92
The Costs of Quality……………………………………………………………. 93
Efficient Consumer Response ……………………………………………….. 99
Total Quality Management …………………………………………………. 100
Food for Thought ……………………………………………………………… 103
Chapter V.
Supply Chain Management ……………………………………………………. 104
The Role of Supply Chain Management ………………………………… 104
The Supply Chain Mix ……………………………………………………….. 107
The Scope of the Supply Chain ……………………………………………. 109
The Value Chain and Interlock Strategy ……………………………….. 113
Chapter VI.
Managing the Supply Chain Function ……………………………………… 120
Staffing the Department …………………………………………………….. 121
Operating Manuals……………………………………………………………. 124
Qualities of Supply Chain Personnel…………………………………….. 125
Recruiting Personnel …………………………………………………………. 126
Managing the Department …………………………………………………. 130
Implications for Supply Chain Management ………………………….. 133
Management and Implementation of Change ………………………… 133
Supply Chain and Change ………………………………………………….. 135
Chapter VII.
Operating Environments ……………………………………………………….. 138
Integrated Logistic Support ………………………………………………… 138
ILS Management Structure…………………………………………………. 143
Level of Repair Analysis …………………………………………………….. 148
Logistics Information Systems …………………………………………….. 150
Logistics and Other Organisational Functions ……………………….. 155
Chapter VIII.
Provisioning and Inventory Control ………………………………………… 161
Provisioning…………………………………………………………………….. 161
The Use of Computers ………………………………………………………. 171
The Objectives of an Inventory Control System ……………………… 174
Method of Inventory Control ………………………………………………. 180
Cost of Inventory Investment ……………………………………………… 185
Inventory Control and Accounting Methods ………………………….. 187
Pricing Issues …………………………………………………………………… 189
Price Analysis ………………………………………………………………….. 195
Inventory in the Final Accounts…………………………………………… 196
Identification and Coding of Materials …………………………………. 198
Development of the Coding System ……………………………………… 205
The Stores Vocabulary ………………………………………………………. 210
Inventory Reduction ………………………………………………………….. 217
Review of Other Concepts ………………………………………………….. 221
Materials Requirements Planning ………………………………………… 224
Manufacturing Resource Planning ………………………………………. 226
Chapter IX.
Stores Management …………………………………………………………….. 228
Stores Management Objectives …………………………………………… 228
The Siting of Stores Buildings and Stockyards ……………………….. 230
Construction of the Buildings and Stockyards ……………………….. 231
Stockyards ………………………………………………………………………. 233
Internal Layout ………………………………………………………………… 233
Detailed Planning of Layouts ……………………………………………… 234
Types of Stores …………………………………………………………………. 235
Special Storage Facilities …………………………………………………… 240
Planning Storage Equipment ………………………………………………. 242
Handling Equipment …………………………………………………………. 245
Types of Handling Equipment …………………………………………….. 248
Security …………………………………………………………………………… 255
Safety and Safe Methods of Working ……………………………………. 256
Case Studies …………………………………………………………………….. 260
Chapter X.
Transport ……………………………………………………………………………. 264
Introduction …………………………………………………………………….. 265
Fleet Management ……………………………………………………………. 266
Vehicle Scheduling ……………………………………………………………. 269
Maintenance and Security ………………………………………………….. 273
Facilities for Maintenance ………………………………………………….. 273
Quality Control ………………………………………………………………… 274
Security …………………………………………………………………………… 275
Containers, Unitisation and Palletisation ……………………………… 276
Mechanical Aids to Loading and Off-Loading ……………………….. 280
Loading and Unloading Equipment Available on Vehicles……….. 282
Road Vehicle Design and Road Planning ………………………………. 282
Road Haulage ………………………………………………………………….. 287
Operating Costs of Own Fleet …………………………………………….. 291
Rail Freight ……………………………………………………………………… 295
Air Freight ………………………………………………………………………. 297
Food for Thought ……………………………………………………………… 300
Case Study ………………………………………………………………………. 301
Chapter XI
Physical Distribution …………………………………………………………….. 303
Distribution ……………………………………………………………………… 303
Distribution Planning ………………………………………………………… 304
Logistics and Delivery Planning ………………………………………….. 307
Budgetary Control in Distribution ……………………………………….. 312
Food for Thought ……………………………………………………………… 315
Case Study ………………………………………………………………………. 317
United Parcel Service ……………………………………………………….. 318
Modelling Systems …………………………………………………………….. 318
Radio Frequency Identification……………………………………………. 319
Chapter XII.
E-Business ………………………………………………………………………….. 320
A Definition of Electronic Data Interchange………………………….. 320
Why Use EDI?………………………………………………………………….. 323
Viewpoint ………………………………………………………………………… 340
References and Bibliography…………………………………………………. 342
About the Author………………………………………………………………….. 355
Index ………………………………………………………………………………….. 356