Sourcing and Procurement in Supply Chain Management.

Sourcing and procurement are two important aspects of supply chain management. Sourcing involves identifying and selecting suppliers, while procurement involves ordering and receiving raw materials and components from suppliers.

Aspects of sourcing:

• Supplier selection: This involves identifying and evaluating potential suppliers. Factors to consider include the supplier’s quality, reliability, price, and delivery time.
• Supplier development: This involves working with suppliers to improve their performance. This may involve providing training, providing technical assistance, or helping them to implement new processes.
• Supplier relationship management: This involves building and maintaining strong relationships with suppliers. This can help to improve communication, collaboration, and problem-solving.

Aspects of procurement:

• Demand forecasting: This involves forecasting the demand for raw materials and components. This information can be used to determine how much to order and when to order it.
• Inventory management: This involves managing the inventory of raw materials and components. This includes ensuring that the right amount of inventory is on hand to meet demand, while also minimizing costs.
• Order management: This involves placing orders with suppliers and tracking the delivery of orders.
• Payment management: This involves paying suppliers for the goods and services they provide.

Impact of Sourcing and Procurement

• Supplier selection: If a business selects a supplier that does not meet its quality standards, the finished product may be of poor quality. This can lead to customer dissatisfaction and lost sales.
• Supplier development: If a business does not work with its suppliers to improve their performance, the suppliers may not be able to meet the business’s needs. This can lead to delays, shortages, and higher costs.
• Supplier relationship management: If a business does not have strong relationships with its suppliers, it may be more difficult to resolve problems and improve performance. This can lead to disruptions in the supply chain.
• Demand forecasting: If a business does not accurately forecast demand, it may order too much or too little inventory. This can lead to higher costs and lost sales.
• Inventory management: If a business does not manage its inventory effectively, it may run out of stock or have too much inventory on hand. This can lead to lost sales and higher costs.
• Order management: If a business does not manage its orders effectively, it may experience delays, shortages, and higher costs.
• Payment management: If a business does not pay its suppliers on time, it may damage its relationships with its suppliers. This can make it more difficult to obtain goods and services in the future.

By effectively managing sourcing and procurement, businesses can improve their supply chain management and reduce costs.

Negotiation Quotes

• “Information is a negotiator’s greatest weapon.” ~Victor Kiam
• “During a negotiation, it would be wise not to take anything personally. If you leave personalities out of it, you will be able to see opportunities more objectively.” ~Brian Koslow
• “You do not get what you want. You get what you negotiate.” ~Harvey Mackay
• “You have to persuade yourself that you absolutely don’t care what happens. If you don’t care, you’ve won. I absolutely promise you, in every serious negotiation, the man or woman who doesn’t care is going to win.” ~Felix Dennis
• “One of the best ways to persuade others is by listening to them.” ~Dean Rusk

Supplier Management