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Annual spend: The amount of money an organization spends with
its suppliers annually.
Lean purchasingor
lean supplymanagement:
Refers primarily to a manufacturing context and the
implementation of just-in-time (JIT) tools and techniues to ensure
e!ery step in the supplyprocess adds !alue" that in!entories are
#ept at a minimum le!el" and thatdistances and delays $etween
process steps are #ept as short as possi$le.
Logisticsmanagement:
%ccording to the &ouncil of 'upply &hain anagement
rofessionals"*+ogistics management is that part of supply chain
management that plans"implements" and controls the efficient"
effecti!e forward and re!erse flowand storage of goods" ser!ices"
and related information $etween the pointof origin and the point of
consumption in order to meet customers,reuirements.*
Operational role ofsupply:
The transactional" day-to-day operations traditionally
associated withpurchasing characterized as trouble avoidance.
Profit-leverage effect f supply sa!ings is measured $y the
increase in profit o$tained $y adecrease in purchase spend.
Purchasing, supplymanagement,and
procurement:
%re used interchangea$ly to refer to the integration of related
functions topro!ide effecti!e and efficient materials and ser!ices
to the organization.
Return on assets(ROA):
% profita$ility ratio used to measure how hard the assets of an
organizationare wor#ing. R% is calculated $y di!iding the net
income $y total assets.
Strategic role ofsupply:
/ocuses on new and $etter solutions to organizational and
supplychallenges characterized as opportunistic.
Strategic sourcing: /ocuses on long-term supplier relationships
and commodity plans with theo$jecti!es of identifying opportunities
in areas such as cost reductions" newtechnology ad!ancements and
supply mar#et trends.
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Supply chainmanagement:
*The design and management of seamless" !alue-added processes
acrossorganizational $oundaries to meet the real needs of the end
customer. Thede!elopment and integration of people and
technological resources arecritical to successful supply chain
integration.* (I' definition"www.ism.ws)
alue chain: Tracing the !arious mo!es and transformations of a
product or ser!ice andidentifying the costs added at each
successi!e stage. %lso called supplynetwork or supply web.
Proft Leverage Eect
Increase proft by decreasing purchasing spend or cost
Return on Assets (ROA)
High ROA indicates managerial prowess in generating profts with
lower spending or
cut cost. Cut COGS
http://www.ism.ws/http://www.ism.ws/http://www.ism.ws/
