Choosing suppliers for your supply chain is often a challenge. Do you put all yo
Choosing suppliers for your supply chain is often a challenge. Do you put all your eggs in one basket or look to fulfill your needs through multiple vendors? Using the information provided over choosing a good supplier, apply the criteria to the purchase of a new car. Discuss your answers to the following questions: Is the quality good, is the vendor reliable, does the vendor have a favorable reputation, is the company easy to work with? Based on your answers, which of the vendor would be your choice? Why?
5.2 Supply Chain Procurement
11.3 Managing the Production Process in a Manufacturing Company
Learning Objective
- Identify the activities undertaken by the operations manager in overseeing the production process in a manufacturing company.
Once the production process is in place, the attention of the operations manager shifts to the daily activities of materials management, which encompass the following activities: purchasing, inventory control, and work scheduling.
Purchasing and Supplier Selection
The process of acquiring the materials and services to be used in production is called purchasing (or procurement). For many products, the costs of materials make up about 50 percent of total manufacturing costs. Not surprisingly, then, materials acquisition gets a good deal of the operations manager’s time and attention.
As a rule, there’s no shortage of vendors willing to supply parts and other materials, but the trick is finding the best suppliers. In selecting a supplier, operations managers must consider such questions as the following:
- Can the vendor supply the needed quantity of materials at a reasonable price?
- Is the quality good?
- Is the vendor reliable (will materials be delivered on time)?
- Does the vendor have a favorable reputation?
- Is the company easy to work with?
Getting the answers to these questions and making the right choices—a process known as supplier selection—is a key responsibility of operations management.
E-Purchasing
Technology is changing the way businesses buy things. Through e-purchasing (or e-procurement), companies use the Internet to interact with suppliers. The process is similar to the one you’d use to find a consumer good—say, a forty-two-inch LCD high-definition TV—over the Internet. You might start by browsing the Web sites of TV manufacturers, such as Sony or Samsung, or electronics retailers, such as Best Buy. To gather comparative prices, you might go to a comparison-shopping Web site, such as Amazon.com, the world’s largest online retailer. You might even consider placing a bid on eBay, an online marketplace where sellers and buyers come together to do business through auctions. Once you’ve decided where to buy your TV, you’d complete your transaction online, even paying for it electronically.
If you were a purchasing manager using the Internet to buy parts and supplies, you’d follow basically the same process. You’d identify potential suppliers by going directly to private Web sites maintained by i