Supply Chain Management For Dummies

Chapter 7

Sourcing, Purchasing, and Procurement

IN THIS CHAPTER

Evaluating total costs for purchasing

Creating supplier categories and segments

Managing relationships with your suppliers

Addressing procurement risks

For your company to sell things to your customers, you first need to buy things from other companies. The process of buying things for your company has many names, but the three most common are sourcing, purchasing, and procurement. The companies that sell you goods and services are your suppliers or vendors. Since supply chains flow from raw materials down to a customer, your suppliers are upstream in your supply chain.

Procurement professionals add value to the supply chain by constantly evaluating the marketplace and selecting sourcing strategies that minimize risk and cost for their companies. One of their responsibilities should include calculating the total cost of each option because the upfront savings from any one change is often offset by additional costs down the road.

This chapter discusses the issues that you need to consider as a part of your purchasing process. ...