Supply Chain Management For Dummies, 3rd Edition

Chapter 6

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, it first needs to buy things from other companies. In the SCOR Model discussed in Chapter 4, this process is called source, but it is often called purchasing or procurement. The companies that sell you goods and services are your suppliers or vendors. Because the materials in a supply chain 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 continually 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 up-front savings from any one change is often offset by additional costs down the road.

In this chapter, I discuss the issues you need to consider as part of your ...