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Chapter 17Supply Function Evaluation and

Trends

Key Questions Addressed in Chapter 17

• What research is needed to develop and operationalize plans and metrics?

• How can the contribution of supply be captured and communicated?

Research Topics and Methods

PurchasingResearch

What is Acquired?- value analysis

- target costing- commodity studies

From Whom?- supply base analysis

How?- supply process analysis

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Topics in Supplier Research

• Analysis of financial capacity and production facilities• Service delivery capabilities• Finding new supply sources• Supplier cost analysis• Relationship classification • Quality assurance of purchased materials/services • Supplier perception survey• Supplier sales strategy• Countertrade

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Major Topics for Supply Operating Reports

1. Market and economic conditions and price performance

2. Inventory investment changes

3. Purchasing/supply operations and effectiveness

4. Operations affecting administration and financial activities

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Cost Metrics

• Cost savings

• Cost reductions

• Cost avoidance

• Process cost savings

Supply Performance Benchmarking

• A process of evaluating a company’s work methods, processes, service levels, or products and services against meaningful standards– Purpose: How are we doing compared to other firms?

• Performance benchmarking– measures what results organizations have achieved

• Process benchmarking– Determines how an organization achieves results

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Supply Management Trends

• Emphasis on total quality management and customer satisfaction• Sustainability– environmental and social• Global versus local sourcing• Risk management• Safety and security• Supply processes and technology• Supply organizations• External and internal collaboration• Metrics and performance measurement• Innovation• Public procurement