Chapter 3

Leenders−Johnson−Flynn−Fearon:

Purchasing and Supply

Management, 13th Edition

3. Supply Processes

© The McGraw−Hill

Companies, 2006

Text

Chapter Three

Supply Processes

Chapter Outline

The Supply Management Process

Strategy and Goal Alignment

Ensuring Process Compliance

Steps in the Supply Process

1. Recognition of Need

2. Description of the Need

Types of Requisitions

Flow of the Requisition

Early Supply and Supplier Involvement

3. Identification of Potential Sources

Issuing an RFx

Linking Organizational and Category

Strategy

4. Supplier Selection and Determination

of Terms

5. Preparation and Placement of the

Purchase Order

Format and Routing

6. Follow-Up and Expediting

Costs and Benefits

7. Receipt and Inspection of Goods

Eliminating or Reducing Inspection

58

8. Invoice Clearing and Payment

Aligning Supply and Accounts Payable

Cash Discounts and Late Invoices

Streamlining the Receiving, Invoicing, and

Payment Process

9. Maintenance of Records and

Relationships

Linking Data to Decisions

Managing Supplier Relationships

A Supply Process Flowchart

Rush and Small-Value Orders

Rush or Emergency Orders

Small-Value Orders and Efficiency Tools

Policy and Procedure Manual

Conclusion

Questions for Review and Discussion

References

Cases

3–1 Mike Wesley

3–2 UIL Inc.

3–3 Southeastern University

Leenders−Johnson−Flynn−Fearon:

Purchasing and Supply

Management, 13th Edition

3. Supply Processes

Text

© The McGraw−Hill

Companies, 2006

Chapter 3 Supply Processes 59

Key Questions for the Supply Manager

Should we

• Make greater use of efficiency tools such as procurement cards to simplify and

improve the purchasing process?

• Adopt an invoiceless payment system?

• Consider establishing a supplier-managed inventory program for MRO

requirements?

How can we

• Handle lower-value purchases more efficiently?

• Streamline the process so that supply managers are more involved in the earlier

stages of the process?

• Communicate more effectively with our internal business partners?...