POMG3720 Procurement Management Course Quiz

Housekeeping

• The course, POMG3720 Procurement Management, will be held on Mondays and Wednesdays from 8-10 AM and 12-2 PM in E22.
• Each week will consist of a lecture, problem-solving activities such as case studies or group work, and a Q&A session.

Course Learning Outcomes

• Students will be able to analyze the strategic role of procurement within organizations.
• They will develop and implement procurement policies and procedures.
• Students will evaluate supplier management and global sourcing strategies.
• They will learn to apply sustainability principles to procurement practices.
• Finally, students will enhance their negotiation and management science skills relevant to procurement.

Course Syllabus

• The course covers various topics related to procurement, including Introduction to Purchasing and Supply Chain Management, The Purchasing Process, Procurement Policies, Procedures and Support Tools, and Category Strategy Development.
• There will be an in-class test covering lectures 1-4, worth 20% of the final grade.
• A group project, submitting a procurement project report, is worth 30%.
• The final exam, covering all lectures, constitutes 40% of the final grade.

Chapter Overview

• The text discusses the changing competitive business landscape, emphasizing the increasing importance and role of purchasing in organizations.
• It introduces essential terminology and concepts related to purchasing and supply chain management.
• The text aims to highlight the benefits of efficient purchasing and supply chain management practices.

A New Competitive Environment

• Global competition has intensified, with companies facing sophisticated customer bases demanding greater performance at lower prices.
• Organizations are operating in a dynamic environment with readily available information sources.
• The balance of power between buyers and suppliers has shifted, with greater levels of outsourcing.

Factors Driving SCM

• Customer expectations are constantly changing and becoming more demanding, requiring agile supply chains.
• The text emphasizes the importance of risk identification and mitigation capabilities within an organization’s supply chain to minimize disruptions.
• Competition is increasingly taking place at the supply chain level rather than solely between individual companies.

Why Purchasing Is Important

• Efficient purchasing offers numerous advantages, including increased value and savings, building relationships, fostering innovation, enhancing quality, reducing time-to-market, managing supplier risk, generating economic impact, and contributing to competitive advantage.

Language of Purchasing and SCM

• The text distinguishes between purchasing and supply management, highlighting the broader scope of supply chain management which encompasses the proactive management of two-way flow.
• Supply Chain Management focuses on the coordinated movement of goods, services, information, and funds throughout the chain, from raw materials to end-users.

The Extended Value Chain

• The Extended Value Chain includes primary activities such as inbound logistics, operations, outbound logistics, marketing & sales, and customer service, along with support activities like firm infrastructure, human resource management, technology development, and purchasing.
• This conceptual framework visually represents the flow of materials, services, information, and funds within an organization and its supply chain.

Cereal Value Chain Example

• The example illustrates the flow of materials and information throughout the cereal value chain, from farmers to consumers. It includes the stages of grain production, processing, packaging, distribution, and retail.

Procurement

• The text defines procurement as a process involving a sequential chain of events leading to the acquisition of supplies.
• Information is crucial in the procurement process.
• It also highlights procurement as a function or department within an organization, with specialized knowledge, skills, and resources dedicated exclusively to procurement-related tasks.
• The text traces the evolution of procurement, from ancient times to the modern era, with a focus on the shift from a product-centric approach to a performance-centric approach encompassing relationships, processes, and outcomes.
• Within the evolution timeline, key periods are highlighted: the early years (1850-1900), growth of purchasing fundamentals (1900-1939), the war years (1940-1946), the quiet years (1947-mid-1960s), materials management coming of age (mid-1960s-late 1970s), the global era (late 1970s-1999), and the 21st century era of integrated supply chain management.

The Last Decade in Procurement

• The last decade has seen advancements in procurement processes, including increased use of technology, data analytics, and automation.

Procurement Activities

• Different activities are involved in procurement, including making sourcing decisions, supplier identification and selection, negotiation, contracting, buying, supply market research, rationalizing supply base, developing supplier potentials, supplier relationship management, supplier measurement and improvement, and purchasing systems development.

Strategic Procurement Management

• Strategic procurement management requires a proactive approach to planning and acquiring current and future needs.
• It involves effective management of the supply base, utilization of a process orientation, cross-functional teams, and alignment with the organizational mission.
• It emphasizes the importance of building strong relationships with suppliers and integrating procurement into the company strategy.
• The main pillars of Strategic Procurement include focusing on getting: the "right" quality, in the "right" quantity, at the "right" time, for the "right" price, from the "right" source.

Expectations on Procurement

• Organizations have high expectations from their procurement teams in terms of value creation, efficiency, and strategic alignment.

Current Challenges

• Both internal and external challenges impact the procurement function.
• Internal challenges include a lack of understanding about the value proposition of procurement, a historical focus on cost reduction, limitations with skills and talents, low maturity in managing data, and manual and complex processes.
• External challenges include complex and globalized supply chains, the emergence of new technologies, digital transformation challenges, faster cycle times from businesses, increasing speed of change, and dealing with volatility in supply chains.

A New Decade Ahead

• The text explores new trends and opportunities emerging in procurement in the coming decade, emphasizing the need for collaboration between business units, leveraging technology, and focusing on value creation.

Enablers of Purchasing and SCM

• Five key enablers are highlighted for effective purchasing and supply chain management: human resources, organizational design, information technology, measurement, and the demand planning process. Each element contributes to the overall effectiveness of the procurement process.
• Focusing on these enablers is essential for organizations to maximize their procurement operations.

Purchasing vs. Supply Management

• The text notes that there is a distinction between "purchasing" and "supply management".
• "Purchasing" is often associated with the traditional view of buying goods and services, while "supply management" is a broader and more strategic approach to managing the entire supply chain, including sourcing, supplier management, logistics, and customer relationships.

This quiz assesses your understanding of the Procurement Management course POMG3720. It covers key topics such as procurement policies, supplier management, and negotiation skills. Prepare to demonstrate your grasp of strategic roles and sustainability in procurement practices.