A Strategic Role for Purchasing and Supply

Abstract

Following the review of environmental issues concerning industrial activity, this chapter will introduce the subject area of the study — purchasing and supply chain management in manufacturing companies. Charting the evolution of supply chain management from a largely clerical to a function of increasingly strategic importance, its main contributions to increasing manufacturing efficiency and profitability are discussed. Supply chain management can achieve cost reduction and quality improvements by tapping into supply chain capabilities, and hence can largely influence the success of a manufacturing company. Because of its boundary-spanning role, purchasing and supply also acts as an early warning system to detect changes in the corporate environment.

‘You will not get money out of a job by beating the table with the supplier and saying: I want 30 per cent out of the cost. All you get is two, three, four, five per cent at best. We can remove 70 per cent in cost by working closely with some suppliers, and that is to their benefit as well.’

Supply chain development manager, military electronics company