Global Purchasing and Supply Management Fulfill The Vision

This revised edition addresses a broad range of purchasing management issues in a down-to-earth, yet advanced and detailed approach. An evolutionary work, this edition aims to bridge the gap between the management vision of e-business potential and the ex

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GLOBAL PURCHASING AND SUPPLY MANAGEMENT Fulfill The Vision – Second Edition

Victor H. Pooler Pooler & Associates Syracuse, NY U.S.A.

David J. Pooler QinetiQ Technology Slidell, LA U.S.A.

Samuel D. Farney Supply Chain Advisors Sun City Center, FL U.S.A.

KLUWER ACADEMIC PUBLISHERS NEW YORK, BOSTON, DORDRECHT, LONDON, MOSCOW

eBook ISBN: Print ISBN:

1-4020-7817-X 1-4020-7816-1

©2004 Kluwer Academic Publishers New York, Boston, Dordrecht, London, Moscow Print ©2004 Kluwer Academic Publishers Boston All rights reserved No part of this eBook may be reproduced or transmitted in any form or by any means, electronic, mechanical, recording, or otherwise, without written consent from the Publisher Created in the United States of America Visit Kluwer Online at: and Kluwer's eBookstore at:

http://kluweronline.com http://ebooks.kluweronline.com

Dedication

This book is dedicated to our wives, Anne Pooler, Nancy Pooler and Denise Farney, for their enduring support and patience during our work.

Contents

Dedication

v

Preface

ix

Foreword Acknowledgments

xiii xv

Part I - From Buying to Strategic Contributor

1

1. THE ROLE OF THE PURCHASING AND SUPPLY FUNCTIONS

3

2. EVOLUTION OF PURCHASING AND SUPPLY MANAGEMENT 21 3. STRATEGIC PURCHASING SUPPLY INITIATIVES

43

Part II - Creating The Vision

61

4. THE PURCHASE ORDER PROCESS

63

5. BUYING FROM THE RIGHT SUPPLIER

87

6. CREATING A GLOBAL VISION

113

7. BUILDING RAPPORT WITH SUPPLIERS

141

viii

Global Purchasing and Supply Management

8. QUALITY AS A COST IMPROVEMENT TECHNIQUE

163

9. PURCHASING’S STRATEGIC APPROACH TO INVENTORY MANAGEMENT

181

10. PROACTIVE TECHNOLOGY MANAGEMENT STRATEGY FOR COMPONENT OBSOLESCENCE 205 11. BUYING AT THE “RIGHT” PRICE

221

12. NEGOTIATIONS

247

13. GLOBAL SUPPLY DEMANDS TECHNICAL BUYING COOPERATION

263

14. USING COST REDUCTION TECHNIQUES

285

15. LEGALITIES IN BUYING

309

16. SERVICES AND MRO BUYING

335

17. TRANSPORTATION STRATEGIES TO REDUCE LOGISTICS COSTS 349

Part III- Leading and Managing to Fulfill The Vision

373

18. IMPROVING MANAGEMENT OF THE PURCHASING FUNCTION

375

19. MEASUREMENTS OF PURCHASING PERFORMANCE

397

20. A LOOK INTO THE FUTURE

421

Appendix

431

Index

439

Preface

Achieving the promise of e-business Two divergent approaches exist in purchasing and supply management organizations today, which give at least the perception of conflicting direction: 1. Some organizations, counseled by consultants and e-procurement software suppliers, but without a clear understanding of current actual procurement processes, have implemented expensive systems with the expectations of tremendous savings and spectacular supply chain improvements. The results often haven’t lived up to the claims. 2. Many buyers and purchasing managers, failing to grasp the potential benefits from e-procurement, have resisted change, and not given their full support to system improvements. Those who have delayed have missed the opportunities of vastly improved processes and supplier contributions. Both have valid viewpoints, bu