The overall goal is to achieve a long-term supply stability. The author collected and studied from different sources such as books, journals and Strategic sourcing consists of processes of planning, evaluating. To manage the supply base (select, develop, and maintain sources of supply) 4. . to existing sources, or to meet the organization's emerging or planned future . by buying materials at prices, as the result of research into sources of supply. How can companies achieve supply chain integration if there goal is to provide management with guidelines to future research on supply chain management. The paper is .. forecasting and the sources of data, they plan the information.
The purchasing department can also provide savings by taking advantage of warranties and discounts often forgotten by non-specialists. Purchasing can also help you save by providing better transparency in how your company spends. This will, in turn, allow you to negotiate better contracts and free up your cash flow.
Reduce risk and ensure the security of supply Supply chain management involves sharing and managing risks with suppliers. This can be done by moving the risks to the suppliers who are best able to manage it. Or it can be done through diversification of supply. The purchasing department has to identify what goods and services are crucial to the company and take the appropriate steps to secure their supply chains accordingly.
Often, this comes down to an economic decision, where higher risks can result in lower prices, or vice-versa. Manage relationships Purchasing is not only about sharing risk, it is also about sharing benefits. Passing on risk to a supplier or outsourcing a service often requires more management of the supply chain, not less. The challenge of the purchasing department is to get the supplier interested in working with your business, getting them to invest in the long-term relationship.
The department also has to manage relationships within your company. A noticeable issue is the utilization of auctioning in the sourcing strategy. An optimal procurement strategy is considered for the buyer who first specifies a payment for each possible purchase quantity and then invites the suppliers to bid for this contract.
The auction can be conducted in many formats such as the English auction, the Dutch auction, the first-priced auction, sealed-bid auction, and the Vickrey auction. Chen and Vulcano [ 23 ] study a supply chain where an upstream supplier auctions his inventory or capacity as a bundle, which formulates the problem as a two-stage supply chain comprising a single supplier and two resellers. Huh and Janakiraman [ 24 ] study periodic-review inventory replenishment problems with auctions and other sales channels and show that the optimality of s, S inventory replenishment policies extends well beyond the traditional sales environments studied so far in the inventory literature.
For a supplier that provides critical and customized components, the demand closely depends on, and hence is susceptible to, the variation of the final product demand. In the automotive industry, unstable and uncertain domestic volume of individual models is cited as one of the biggest challenges faced by manufacturers due to increased consumer choices [ 27 ].
The consumer electronics industry is notorious for risk stemming from short product life cycles and high demand uncertainty [ 28 ]. Furthermore, there is typically more uncertainty about the future demand than about the current demand. This demand uncertainty adds another source of future uncertainty, besides possible supplier switching in a short-term relationshipthat influences the decision of initial capacity investment. Marketing is another end in supply chain.
The collaboration with marketing science massively extends the domain of supply chain management. Pricing, promotion, and channel management are the three most important areas in this regard. Pricing and promotion are the central issues in marketing management, let alone under consideration of the supply chain environment. Li and Graves [ 29 ] explore the pricing decisions during intergenerational product transition, by formulating the dynamic pricing problem and deriving the optimal prices for both the old and new products.
The optimal initial inventory for each product is also determined, and a heuristic method is discussed. Li and Zhang [ 30 ] study the preorder strategy that a seller may use to sell a perishable product in an uncertain market with heterogeneous consumers.
Sainathan [ 31 ] considers pricing and ordering decisions faced by a retailer selling a perishable product with a two-period shelf life over an infinite horizon. Sinitsyn [ 32 ] investigates the outcome of a price competition between two firms, each producing two complementary products. It is found that each firm predominantly promotes its complementary products together, which is correlationally supported by data in the shampoo and conditioner and in the cake mix and cake frosting categories.
Some counterintuitive findings suggest that the firms performing the advertising would rather bear the costs entirely if this protects their unit profit margin. In addition, channel management is also an important interface between marketing and supply chain. They identify optimal dual channel strategies that depend on the channel environment described by factors such as the cost of managing a direct channel, retailer inconvenience, and some product characteristics.
Their analyses show that Internet retailers face significant competition from brick-and-mortar retailers when selling mainstream products but are virtually immune from competition when selling niche products.
Chiang [ 37 ] extends the single-period vertical price interaction in a manufacturer-retailer dyad to a multiperiod setting, in which a manufacturer distributes a durable product through an exclusive retailer to an exhaustible population of consumers with heterogeneous reservation prices.
The open-loop, feedback, and myopic equilibria for this dynamic pricing game are explored and compared to the centralized solution.
Green Logistics and Supply Chain Green logistics refers to a logistics form which plans and implements green transport, green storage, green packaging, green circulation processing, green recovery, and other activities via advanced logistics technology.
As an important avenue for realizing the sustainable development strategy, greater attention has been given to green logistics which will play an important role in industrial upgrading, transformation of economic structure, promotion of logistics development level, and other relevant aspects.
Green supply chain is the supply chain management with similar objectives and core implications.
How your purchasing department can improve your business | catchsomeair.us
A typical field in green logistics and supply chain management is reverse logistics, sometimes called closed-loop supply chains, in which there are reverse flows of used products postconsumer back to manufacturers.
There has been substantial research into production planning and inventory management in remanufacturing systems. Simpson [ 38 ] first studies a periodic review inventory system with stochastic and mutually dependent demands and returns and provides the optimality of a three-parameter inventory policy.
Kelle and Silver [ 39 ] consider a different model with independent demand and return processes, where all returned products should be remanufactured. Inderfurth [ 40 ] shows that the optimal policy derived by Simpson [ 38 ] is still optimal in the case of fixed cost when lead times for remanufacturing and manufacturing are identical.
The Procurement Process – Creating a Sourcing Plan: Procurement : A Tutorial
Van der Laan et al. For a comprehensive review, I refer the reader to Fleischmann et al. A typical feature in reverse logistics and closed-loop supply chains is the quality uncertainty of acquired used product, which is usually expressed by a random remanufacturing yield and has been studied in some recent papers.
Inderfurth [ 50 ] shows that the uncertainty in returns and demand can be an obstacle to an environmental-benign recovery strategy within a reverse logistics system. Inderfurth and Langella [ 51 ] develop heuristics for the problem of obtaining parts for remanufacturing by disassembling used products or procuring new ones, under the consideration of random disassembly yields. The main premise is that remanufacturing costs will go down if only the returned products with better quality are remanufactured.
Zikopoulos and Tagaras [ 55 ] investigate the production problem in a reverse supply chain consisting of two collection sites and a refurbishing site and examine how the profitability of reuse activities is affected by uncertainty regarding the quality of returned products.
Operations Management of Logistics and Supply Chain: Issues and Directions
Although the research on remanufacturing systems is vast, there are only a few papers that consider a market-driven acquisition channel for used products. Guide and Jayaraman [ 57 ] and Guide and van Wassenhove [ 58 ] are the first to investigate this field, pointing out the importance of used product acquisition management to deal with the uncertainty in timing, quantity, and quality of the returned products.
Bakal and Akcali [ 60 ] extend the model of Guide et al. Nasiry and Popescu [ 63 ] study the dynamic pricing implications of a new, behaviorally motivated reference price mechanism based on the peak-end memory mode, which suggests that consumers anchor on a reference price that is a weighted average of the lowest and most recent prices.
They find that a range of constant pricing policies is optimal for the corresponding dynamic pricing problem. Nasiry and Popescu [ 64 ] further characterize the effect of anticipated regret on consumer decisions and on firm profits and policies in an advance selling context where buyers have uncertain valuations.
They show that firms may offer high availability of goods despite the presence of conspicuous consumption and scarcity strategies are harder to adopt as demand variability increases. It is found that the loss due to strategic customer behavior can be less with two product variants compared to the single-product benchmark, which indicates that product variety can serve as a lever when dealing with strategic customers.
Cachon and Swinney [ 67 ] consider a retailer that sells a product with uncertain demand over a finite selling season, with three types of consumers: They find that the retailer stocks less, takes smaller price discounts, and earns lower profit if strategic consumers are present than if there are no strategic consumers, and a retailer should generally avoid committing to a price path over the season.
Another stream of research focuses on the risk attitude of the firms in the supply chain. Other recent works employing similar methodology to investigate supply chain problem include H.
Lau [ 69 ] on supply chain model with return policy, Buzacott et al. Insights and Future Directions From the above analysis, we can absorb the following insights and future directions in the area of operations research of logistics and supply chain management.
The traditional research in this regard is related to perishable product, fashion product, and electronic product, which have short life cycle.
6 ways the purchasing department can improve your business
Nowadays, such topics might include city logistics, emergency logistics, and agriculture supply chain. Second, new directions on logistics and supply chain management can be brought about by the development of economy and technology. A typical example is the information technology which leads to the research on e-business and related distribution channel choice.
Nowadays, the common usage of RFID, cloud technique, and big data can be important research directions for future study. Third, the environmental related research will continue to be big issue.
With the steady increase in global population and economic scale, resource crisis, ecological damage, environmental pollution, and other issues have drawn universal concern.
It has been the consensus of the international community to attain socioeconomic sustainable development through a greener economic pattern and lifestyle. Many countries create a new outlook in industrial and technical competition by increasing investment in the green logistics and supply chain field, formulating and implementing various bills, plans, and strategies, and strengthening the implementation of green economic development strategy.
In the future, the range of this topic will not only be just remanufacturing, reverse logistics, and closed-loop supply chain. Low-carbon issues can be an important research direction. Finally, multimethodology is an important direction for future study. Traditionally, major research methodologies in operations management can be classified into several categories, such as theoretical modeling, computation and simulations, surveys, cases, event studies, and behavioral experiments.
In recent years, there is an emerging trend towards combining multiple research methodologies to explore research problems in logistics and supply chain management.
For example, in addressing the issues of supply chain coordination, some papers establish the respective models and verify the findings by real-world cases and some papers conduct behavioral experiments with the goal of exploring the real-world relevance of some theoretical models.