Total Supply Chain

1 Understanding the Corporate Environment

2 Specifying Requirements & Planning Supply
3 Analysing Supply Market
4 Developing Supply Strategies
5 Appraising & Short-listing Supplier
6 Obtaining & Selecting Offers
7 Negotiating
8 Preparing The Contract
9 Managing the Contract & Supplier Relationships
10 Managing Logistics in the Supply Chain
11 Managing Inventory
12 Measuring & Evaluating Performance

Purchasing & supply involves all of those management processes and operations needed to ensure that an organisation is able to
obtain costeffectively from outside sources all of the products and services that it requires. Collectively, these processes and
operations are called the purchasing & supply function.

Michael Porter’s concept of the value chain1 – both within and amongst related enterprises – has been one of the factors driving
this changing approach to purchasing & supply management.

Describe the concept of supply chain management, and how it has evolved.

How Supply Chain Evolve

Physical flow
Information flow
Financial flow
Identify which are the major decision areas regarding the purchasing & supply function that are influenced by the corporate
environment.

The corporate environment influence

1. Which product to buy
2. Why, for whom it is buying these and their priorities
3. How it can go about buying them, and the constraints within which it must operate.
4. How to interface with other functions in order to do its job.

Dimensions of the corporate environment that Dimensions of the corporate environment that influence the purchasing &
supply function

Which Type of Organisation? The nature or type of an organisation will influence its purpose or goals, as well as the way it
operates. This will affect the quantities and types of goods and services that an organisation purchases, and how these are
purchased.

Corporate Culture, Mission, Goals and Policies - The culture of an organisation, together with the expectations of its main
stakeholders, shapes the organisation’s mission, goals and policies, i.e. what it wants to achieve and the principles that it will
adopt.

Corporate Strategy - The corporate strategy is the way in which the organisation intends to achieve its goals. It involves deciding
which products and services to sell in which markets, and what investments are needed to support this.

The Role and Objectives of the Purchasing & Supply Function - Having decided which products or services it is going to offer, the
organisation must establish which of the required activities it will undertake itself, and which it will purchase as goods and services
from suppliers.

Operating the Purchasing & Supply Function within the Organisation - The organisation must organise itself to carry out its
internal functions as effectively and efficiently as possible. Processes are the means by which activities are linked together to carry
out the work of the organisation.

Unit 2 Which Type of Organisation?

The differences between private, public, and non-profit-making organizations.

Private enterprises are owned and funded by private individuals, or groups of private individuals. In general, their prime goal is to
make profit although, as we will see later, enterprises may have many different goals.

Purchasing & supply in the public sector - Governments provide services where these cannot be adequately provided by private
enterprises, i.e. where they would not be considered attractive commercial propositions either from the perspective of the
general public or from that of the business sector.
How the public sector functions
Organisations in the public sector are funded from a variety of sources. These include:

♦ Taxation (from individuals and corporations) ♦ Public borrowing ♦ Grants (e.g. from the World Bank) ♦ Fees for the services or
products provided by particular public sector bodies.

Purchasing & supply in non-profit organisations - Non-profit (non-governmental) organisations are those which have been set up
for a particular purpose (e.g. charity, humanitarian assistance, social or economic development, education, professional
development, special services and many others), excluding financial gain

The differences between organisations operating in the various broad sectors of the economy, i.e.: the primary sector (agriculture,
fishing and mining), the secondary sector (industry), and the tertiary sector (trading and non-trading related services)?

Primary sector involves the extraction of raw materials. Examples are drilling, mining, quarrying, fishing, forestry and agriculture.

Secondary sector consists of the conversion and processing of raw materials into finished goods (i.e. manufacturing), as well as
construction and electricity and water utilities.

Tertiary sector comprises services such as banking, logistics, consultancy and the purchase of goods for resale (i.e. wholesaling,
retailing, etc.).

Two groups of tertiary Sector

Trading - Importers, wholesalers, retail shops, supermarkets, mail order houses and others do this.
Non-traiding- services not related to trading, such as banking, logistics, repair and maintenance.
 UNIT 3
Corporate Culture, Mission, Goals and Policies

♦ Describe the factors that determine corporate culture within an organization, and the extent to which this culture can be
changed. - Corporate culture is directly influenced by the national culture

Types of corporate culture

Power” culture - is characterized by an “all-powerful” leader who defines the direction of the organization and makes the
important decisions.
Role” culture - relies on sets of rules and procedures to run the organization and make decisions.
Task” culture - deal with specific tasks or projects that may vary in nature and size.
Independency” culture - Here, the individual is largely free to do as he or she pleases, as there is no overriding corporate goal.

♦ Define the impact that corporate culture has on the mission, goals and policies of an organization, and its implications for the
development of new corporate strategies.

♦ Describe the benefit of having a corporate mission and goals, and how these are likely to vary with the nature of the
organization.

♦ Describe the purpose of corporate policy.

Different sources of power in corporate culture.

Power by position: the person’s position in the hierarchy gives “formal” power.
Power by influence: this is gained when others respect an individual or a group, e.g., for leadership qualities or past record.
Power by control of valued resources: this is derived from having a determining influence over how people, expertise, equipment
or funds are made available and used.

The factors that determine an organization’s corporate culture

♦ National culture
♦ Founder / dominant individuals
♦ History
♦ Age
♦ Size
♦ Nature of work
♦ Power and politics.

Vision - focuses on the long term, i.e., on where the organization aspires to be in the future.
Mission - Its mission is thus made up of one or more general statements concerning its overall aim or purpose of existence.
Goals - define the types of products or services that an enterprise focuses on, its goals might give specific targets
Strategy - Corporate strategy is about choosing which products and which priority markets the organization will pursue in order to
achieve the corporate mission and goals.
Policy - define the principles to be complied with in conducting the work of the organization.
Types of Policy
Environmental policy - Environmental issues have become increasingly prominent, and are likely to become even more so in the
future.
Ethics policy - Ethical behavior has to do with morals and integrity.
Employee welfare policy – Some organizations have a very caring attitude to their employees that may be reflected in an
employee welfare policy.
Policy on non-discrimination- An organization may have policies regarding non-discrimination on the grounds of disability, race,
sex, age, rehabilitated offenders and so on.

Unit 4 Corporate Strategy

Define corporate strategy and explain how it is developed. –

Contribute to the process of developing or reviewing the corporate strategy in an enterprise. –
Identify the main implications of corporate strategy for the purchasing & supply function. -

Corporate Strategy Key Dimension

- Which product / services
- Which market
- What conditions to offer
- How to operate cost effectively
- How to enter and developed markets

Market & Business Environment - The strategy-setting The strategy-setting process process
1. Review the market and business environment
•Consumer trends •Market growth potential •Level of competition •Level of market opportunity/risk
2. Analysing an Enterprise’s Competences and its Product/Service Offer
•core competence •competitiveness of its products and services

BENEFITS THAT CUSTOMERS LOOK FOR IN A PRODUCT OR SERVICE AND IN THE CONDITIONS