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  • E-Procurement and the Purchasing Process - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    during new product development 2 Purchase Approval and Supplier Evaluation As shown in the exhibit there may be various steps in the process required depending on the size of the purchase as well as whether the company has purchased form the supplier before Once the user need has been recognized the system will check to see if an approved supplier has already been entered into the database In many cases for a repetitive purchase purchasing may have already negotiated a contract with the supplier with established terms for delivery pricing quality etc and the supplier has already been entered into the accounting system If the purchase requisition requests an item which is a very small dollar amount the system may allow the user to purchase the item with no approval required through a system such as a e procurement system online catalog or purchasing card such as VISA or America Express In cases when the dollar amount exceeds the users permission to generate a purchase order the purchase must then go through an approval process to review the requisition approve it and allow a purchase order to be created If the requisition requests an item for a higher dollar amount with no existing supplier then purchasing may obtain quotes or bids from potential suppliers Purchasing forwards a request for quotation RFQ to suppliers inviting them to submit a bid for a purchase contract When the size of the purchase dictates that a detailed evaluation is required for a new purchase supplier evaluation may be required The potential evaluation of suppliers begins after determining that a purchase need exists or is likely to exist and the development of material specifications occurs For routine or standard product requirements with established or selected suppliers further supplier evaluation and selection is not necessary and the approval process may be generated However potential sources for new items especially those of a complex nature require thorough investigation to be sure that purchasing evaluates only qualified suppliers 3 Bidding Negotiation and Supplier Selection Final supplier selection occurs once purchasing completes the activities required during the supplier evaluation process Selecting suppliers is perhaps one of the most important activities performed by companies Errors made during this part of the purchasing cycle can be damaging and long lasting After bids have been received and or the negotiation has taken place the sourcing team will select a supplier and then move on to authorize the purchase through the purchase approval process 4 Purchase Approval After the supplier is selected or a requisition for a standard item is received purchasing grants an approval to purchase the product or service This is accomplished through an electronic drafting of a purchase order PO sometimes called a purchase agreement after supplier selection is complete Purchasing must take great care when wording a purchase agreement because it is a legally binding document Almost all purchase orders include the standard legal conditions that the order i e the contract is subject to on the reverse side

    Original URL path: https://scm.ncsu.edu/scm-articles/article/e-procurement-and-the-purchasing-process (2016-04-30)
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  • A Quick Primer on BPM: Business Process Management - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    Here the focus is on designing and implementing specific business processes When individual business processes need to be modified to improve their performance Six Sigma or Lean methodologies are used When more substantial changes are needed business process redesign efforts may be undertaken In contrast the enterprise level is not concerned with any individual business process per se but with how the organization s collection of business processes or process architecture works to support the organization s strategy Netflix BPM Example As an example of the enterprise level consider Netflix Netflix s traditional supply chain strategy has centered on three major pieces A Web based ordering system that gently guides subscribers toward available DVD s A network of distribution centers DCs located to provide one day delivery to most customers The US Postal Service through which the DVD s are mailed Each of these pieces contains literally hundreds of processes sub processes and activities Netflix has succeeded because these pieces were carefully designed to work together seamlessly For example Netflix s Web based ordering system provides the DCs with information on what DVD s to pick and where to stage DVD inventory and the DCs pre sort outgoing shipments by zip code to speed up handling by the USPS Today as Netflix redesigns its supply chain to stream content directly to subscribers electronic devices management will have to reconsider how the business processes interface with key first tier suppliers i e content providers and distributors cable companies satellite network providers and electronic device manufacturers A final note on this level Decision makers at the enterprise level must take the lead in prioritizing improvement efforts such as Six Sigma or Lean projects Otherwise an organization can be overrun with well intentioned but unfocused improvement projects that may or may not have a lasting impact The third level of BPM is the implementation level This level explicitly recognizes that carrying out the organization s processes requires investments in the right people and information technologies Activities at this level can include training programs recruitment efforts and targeted IT development efforts Of course decisions are being made simultaneously at all three levels and decisions at one level can directly impact actions at another As Harmon 2007 p xxvi describes one scenario Thus for example an enterprise level BPM group might decide that a company supply chain is operating inefficiently The BPM group initiates a supply chain process redesign effort The supply chain process redesign effort The supply process redesign team undertakes a study of the supply chain considers options and concludes that a number of different changes should be made Once the process level project team s recommendations are approved by senior management IT launches an implementation level project to acquire new ERP software to support some of the changes in the supply chain At the same time Training creates new job descriptions and launches a separate implementation level project to develop a new training course to provide new employees with the skills they

    Original URL path: https://scm.ncsu.edu/scm-articles/article/a-quick-primer-on-bpm-business-process-management (2016-04-30)
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  • What is Supply Chain Management? - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    an end user represents the cumulative effort of multiple organizations These organizations are referred to collectively as the supply chain The second idea is that while supply chains have existed for a long time most organizations have only paid attention to what was happening within their four walls Few businesses understood much less managed the entire chain of activities that ultimately delivered products to the final customer The result was disjointed and often ineffective supply chains Supply chain management then is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective efficient ways possible Supply chain activities cover everything from product development sourcing production and logistics as well as the information systems needed to coordinate these activities The organizations that make up the supply chain are linked together through physical flows and information flows Physical flows involve the transformation movement and storage of goods and materials They are the most visible piece of the supply chain But just as important are information flows Information flows allow the various supply chain partners to coordinate their long term plans and to control the day to day flow of goods and material up and down the supply chain Categories SCM Resources SCM Basics SCM Supply Chain Management Definitions Terms Read the Supply Chain Management Professional Newsletter Read the latest supply chain research articles and news as soon as we post them Privacy Policy Learn More about Supply Chain Management Supply Chain Management Definitions Terms Supply Chain Management Articles Supply Chain Management Procurement Tutorials Related Articles Why Do You Need To Know About Supply Chain Management SCM What Do You Need to Know about Supply Chain Management

    Original URL path: https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management (2016-04-30)
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  • A Brief History of Outsourcing - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    anathema For example some organizations outsource customer service precisely because it is so important Eastman Kodak s decision to outsource the information technology systems that undergird its business was considered revolutionary in 1989 but it was actually the result of rethinking what their business was about They were quickly followed by dozens of major corporations whose managers had determined it was not necessary to own the technology to get access to information they needed The focus today is less on ownership and more on developing strategic partnerships to bring about enhanced results Consequently organizations are likely to select outsourcing more on the basis of who can deliver more effective results for a specific function than on whether the function is core or commodity What is outsourcing Outsourcing can be defined as the strategic use of outside resources to perform activities traditionally handled by internal staff and resources Sometimes known also as facilities management outsourcing is a strategy by which an organization contracts out major functions to specialized and efficient service providers who become valued business partners Companies have always hired contractors for particular types of work or to level off peaks and troughs in their workload and have formed long term relationships with firms whose capabilities complement or supplement their own However the difference between simply supplementing resources by subcontracting and actual outsourcing is that the latter involves substantial restructuring of particular business activities including often the transfer of staff from a host company to a specialist usually smaller company with the required core competencies Why do companies outsource Here are some common reasons Reduce and control operating costs Improve host company focus Gain access to world class capabilities Free internal resources for other purposes A function is time consuming to manage or is out of control Insufficient resources are available internally Share risks with a partner company In earlier periods cost or headcount reduction were the most common reasons to outsource In today s world the drivers are often more strategic and focus on carrying out core value adding activities in house where an organization can best utilize its own core competencies Main factors influencing successful outsourcing The critical areas for a successful outsourcing program as identified are Understanding company goals and objectives A strategic vision and plan Selecting the right vendor Ongoing management of the relationships A properly structured contract Open communication with affected individual groups Senior executive support and involvement Careful attention to personnel issues Short term financial justification Outsourcing process There are four main aspects to a typical outsourcing program Program Initiation Service Implementation Final Agreement Program closure Program Initiation At the start of any outsourcing program there are a variety of ideas and opinions about the purpose and scope of the program what the final result of the program will be and how the program will be carried out The Program Initiation Stage is concerned with taking these ideas and intentions and documenting them to form the basis of a draft contract Service Implementation Service

    Original URL path: https://scm.ncsu.edu/scm-articles/article/a-brief-history-of-outsourcing (2016-04-30)
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  • Role of Procurement within an Organization: Procurement : A Tutorial - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    this flow requires purchasing to Understand business requirements Buy products and services At the right price From the right source At the right specification that meets users needs In the right quantity For delivery at the right time To the right internal customer Internal customers of purchasing include Manufacturing Physical distribution centers Engineering and technical groups Research and development Information technology Transportation and other services OBJECTIVE 2 Manage the Procurement Process and the Supply Base Efficiently and Effectively To manage the procurement process and supply base efficiently and effectively procurement must follow the following key steps Identify opportunities Manage internal operations Achieve objectives Identify opportunities where the procurement team adds true value Evaluation and selection of suppliers All purchases should go through the approved procurement processes Engineering and other functional inputs are part of this process Sales personnel should not be allowed to enter contractual agreements without procurement s involvement Increasing use of sourcing teams Review of specifications or statement of work Review the requirements for the material or service being provided May be able to suggest alternative standardized materials that can save the organization money Periodic review of requisitions can allow greater leveraging of requirements Acting as the primary contact with supplier Determining the method of awarding contracts Managing the supply base Current suppliers are competitive Identification of new potential suppliers and develop relationships Improvement and development of non competitive existing suppliers Manage its internal operations efficiently and effectively including Management of procurement staff Developing and maintenance of policies and processes Introducing and leveraging appropriate technology and systems Defining procurement strategy and structure Developing plans and measures Providing procurement leadership to the organization Providing professional training and growth opportunities for employees Achieve this objective through Leadership of procurement for the organization Sourcing management Ownership and accountability for sourcing processes Communication of purpose process and pay off Collaboration and partnering Teamwork OBJECTIVE 3 Develop Strong Relationships with Other Functional Groups OBJECTIVE 4 Support Organizational Goals and Objectives Develop integrated purchasing strategies that support organizational strategies Effective purchasing strategies involve Monitoring supply markets and trends e g material price increases shortages changes in suppliers and interpreting the impact of these trends on company strategies Identifying the critical materials and services required to support company strategies in key performance areas particularly during new product development Developing supply options and contingency plans that support company plans Supporting the organization s need for a diverse and globally competitive supply base Case Study Read Case Study 1 and consider the following questions What initially appears to be the problem What really is the problem s in this case How easy is it to switch suppliers What could complicate a firm s ability to switch to a new supplier What does it mean to get to the root cause of a problem What is the role of purchasing in helping to coordinate communication between different parts of the organization and the external supply base Did communication fall apart here Why Categories SCM Procurement SCM Topics Procurement

    Original URL path: https://scm.ncsu.edu/scm-articles/article/role-of-procurement-within-an-organization-procurement-a-tutorial (2016-04-30)
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  • The Procurement Process - Creating a Sourcing Plan: Procurement : A Tutorial - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    your company as a customer Long range strategic vision Leadership 4 Information Systems Up to date Training requirements Supplier evaluation criteria 1 Planning and control systems Planning and control systems include those systems that release schedule and control the flow of work in an organization As we shall see in later courses the sophistication of such systems can have a major impact on supply chain performance Among the questions the buying firm should ask Does the supplier have well developed systems for planning material personnel and capacity needs If not why not Does the supplier track key performance measures such as throughput time quality levels and costs Are these measures compared to performance objectives or standards How easy is it for customers to interact with the supplier s planning and control systems This last point is particularly important to organizations interested in effective supply chain management When interaction is high information about the customer s needs flow easily to the supplier and the customer can in turn retrieve important information from the supplier Consider the relationship between Wal Mart and Proctor and Gamble P G When a Wal Mart store sells a particular P G item the information flows directly to P G s planning and control systems P G can then plan production and schedule shipments accordingly Furthermore Wal Mart can easily find out when a P G shipment will arrive at one of its distribution warehouses thereby allowing Wal Mart to consolidate this shipment with others on the way to individual stores 2 Environmental regulation compliance The 1990s brought about a renewed awareness of the impact that industry has on the environment The Clean Air Act of 1990 imposes large fines on producers of ozone depleting substances and foul smelling gases and governments have introduced laws regarding recycling content in industrial materials As a result a supplier s ability to comply with environmental regulations is becoming an important criterion for supply chain alliances This includes but is not limited to the proper disposal of hazardous waste 3 Minimum typical evaluations to consider Price Quality Service Delivery Weighted Point Method Using a Weighted Point evaluation system purchasing can rank suppliers according to some of these criteria In this example Supplier A has a score of 3 5 on quality 4 5 on delivery 2 5 on price and 7 10 on service with a total score of 63 Supplier B scores better than A on quality not as well on delivery but better on price and service Given the associated weights on quality delivery price and service that are important to the purchaser the weighted scoring system suggests that Supplier B is better suited for this purchase and should be awarded the contract Case Study Using the information provided in Case Study 2 as well as the Excel spreadsheet evaluate the following Respond to your manager s request by discussing the critical factors that you should consider when deciding whether to single source or multiple source this critical item

    Original URL path: https://scm.ncsu.edu/scm-articles/article/the-procurement-process-creating-a-sourcing-plan-procurement-a-tutorial (2016-04-30)
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  • Conclusions: Current Trends in Production Labor Sourcing - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    an ability to leverage the expertise and knowledge of workers within your four walls and establish collaborative results with external parties that can support your area of focus Many companies have already depleted other opportunities for cost reduction and value improvement through material cost leveraging headcount reduction and process mapping Most however have forgotten to include low semi skilled labor as an opportunity to drive out waste Production labor outsourcing remains as one of the last but also the most critical opportunities to achieving lean capabilities Without a commitment to focus on value added activities and elimination of waste managers will spend too much time spinning their wheels and will be unable to focus on those things they need to work on to be successful To gain a competitive advantage leadership teams will need to actively engage production labor outsourcing as a competitive weapon in their arsenal Production outsourcing is NOT simply a way to reduce headcount or reduce cost it is a way of improving economic value and total cost when other options have been depleted To initiate this effort leaders should engage with outsourcing providers such as GCA Production Services to initiate a formal study to identify opportunities Companies should begin by assessing potential suppliers for their experience track record and knowledge in lean principles as well as prior experience in cost savings and reduction A careful analysis of these elements and a careful planned approach to deployment with the right mix of positions is necessary to obtain optimum results Production services companies should be evaluated not just on unit price savings but on the management capabilities to take out waste and improve the economic value of the entire manufacturing site Our results show that costs savings of 20 40 are possible over the life of a project

    Original URL path: https://scm.ncsu.edu/scm-articles/article/conclusions-current-trends-in-production-labor-sourcing (2016-04-30)
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  • Driving Logistics Change in the Pharmaceutical Industry - SCM | Supply Chain Resource Cooperative (SCRC) | North Carolina State University
    of a miniature model used in the pharmacy for the exact same purpose Further the ability to drive change is limited as the FDA is reluctant to approve any changes that may affect product quality This position has recently been reverse and the FDA is now allowing companies such as GSK to introduce new and innovative manufacturing that are not only more efficient but which will in effect improve reliability and quality of pharmaceutical products Parallel Trade The recent spate of selling pharmaceuticals from Canada into the US is only the tip of the iceberg Canadian pharmacies were buying drugs at a lower price negotiated by the Canadian government and selling them across the border into the US where pricing is higher This also occurs between borders in Europe between large wholesalers as well as through black market transactions in developing countries The danger here is that pharmaceutical companies lose the ability to know where these drugs are coming from which is one argument for RFID technology Complex Network Design Controlling the supply chain is becoming every more difficult At companies such as GlaxoSmithKline over 40 000 SKU s are distributed worldwide which in some cases includes some very specialist products A wide range of distribution channels exist including those which proceed straight to the doctor retailer wholesaler or other channel Reducing finished goods is also challenged by the size of this network GSK has over 350 factories they don t own producing goods as well as 350 which they do own located in every market in the world creating a complex supply chain with over 10 000 nodes This is very expensive to manage especially when the emphasis on placing drugs in the right place at the right time is so critical Given these challenges deploying supply chain management and logistics strategies has historically been a challenge However the world is changing These margins won t always be around and the cost of healthcare is such that society can t continue to pay Access to medicines in the third world is becoming a critical issue in the popular press and to do it effectively pharmaceutical companies will have to bring their costs down and meet that need efficiently Given these challenges what are logistics leaders in the pharmaceutical business doing to drive change into their organizations 1 Educate the upper levels of management Change begins with educating senior executives about what it is costing them to drive change GSK has established a cash to cash measure in place which took almost two years to put in place For example GSK realized that the cash to cash cycle was 9 18 months with primary manufacturing only take a few weeks This brought about the realization of the huge amount of waste in the system The importance of price management techniques were also brought to the forefront 2 Create a strategic vision To go someplace you have to have a good sense of where you want to go Thus a strategy

    Original URL path: https://scm.ncsu.edu/scm-articles/article/driving-logistics-change-in-the-pharmaceutical-industry (2016-04-30)
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