Purchasing and Supply Chain Management (McGraw-Hill/Irwin Series in Operations and Decision Sciences)

Cover Page
Half Title Page
The McGraw-Hill/Irwin Series in Operations and Decision Sciences
Title Page
Copyright Page
Dedication
Brief Contents
Contents
Preface
About the Author
Note to Students
PART ONE INTRODUCTION TO PURCHASING AND SUPPLY CHAIN MANAGEMENT
	Chapter 1 Purchasing and Supply Chain Management
		Introduction
		Purchasing Managers, Buyers, and Purchasing Agents
		The Evolution of the Purchasing and Supply Management Function
		The Supply Management Process
		Purchasing Dollar Responsibility
		Potential for Profit
		Integrated Supply Management (ISM)
		Annual Inventory-Ordering-Transportation Costs
		Organizing for Purchasing
		Centralized versus Decentralized Purchasing
			Advantages of Centralized Purchasing
			Disadvantages of Centralized Purchasing
			Advantages of Decentralized Purchasing
			Disadvantages of Decentralized Purchasing
			Centralized/Decentralized Hybrid Purchasing Systems
		The Future Organization Concept
		Reporting Assignment
		The Supply Management Concept
		Careers in Purchasing
		Professionalism and Purchasing and Supply Management
		The Institute of Supply Management Excellence Award
		Summary
		Discussion Questions
		Suggested Cases
		Reference
	Chapter 2 Purchasing Decisions and Business Strategy
		Introduction
			Purchasing and Competitive Strategy Linkage
		Competitive Strategy
		Competitive Priorities
		Purchasing Criteria
		Supply Chain Strategy
		Supply Chain Relationship Quality
			Supply Chain Relationship Quality Indexing Example
		The Integrated Buying Model
			Cost
			Quality Level
			Lead Time
			Constraints
		The Strategic Sourcing Plan
			Developing a Strategic Sourcing Plan
			Program Objectives by Phase
		Purchasing Strategy Trends
		Summary
		Discussion Questions
		Suggested Cases
		References
		Appendix A: Supply Chain Relationship Quality Study
	Chapter 3 The Legal Aspects of Purchasing
		Introduction
		Authority of the Purchasing Manager
		Execution of Contracts and Purchase Orders by the Purchasing Manager
		Essentials of a Purchase Contract
		The Requirements for a Contract
		Offers
		Invitation to Do Business
		Counteroffers
		The Time Limits of an Offer
		Firm Offers
		Option Contracts
		Bid Bonds
		Promissory Estoppels
		Oral Contracts
		Terms of a Contract
			Quantity
			Quality
			Price and Credit Terms
			Delivery Terms
			Leasing
		The Legal Impact of the Information Age
			Electronic Contracts and Signatures
			Cryptographic Signatures (PKI)
			The Federal Electronic Signatures in Global and National Commerce Act (ESGNCA)
		Purchasing and Ethics
			Ethics and the Law
			Ethics and the Negotiations Process
		Women and Minority Compliance
		Summary
		Discussion Questions
		Suggested Ca
		References
PART TWO MATERIALS MANAGEMENT
	Chapter 4 Materials Management
		Introduction
		Materials Requirements Planning and Capacity Requirements
			Capacity Planning
			Capacity and Inventory
		Throughput Time
		Order Cycle
			Integrated Materials System
			Order Cycle—Activities
			Lead Time
		Customer Satisfaction
			Material Availability
			On-Time Shipment
			On-Time Receipt
			Complete Shipment
			Quality of Receipt
			Flexibility
			Responsiveness to Inquiry
			Customer Satisfaction—The Balance
		Quality
			The Quality Level
			Objective Quality
		Specifying Materials
			Raw Materials
			Purchased Parts
		Maintenance, Repair, and Operating (MRO) Supplies
			Maintenance
			Repair
			Operating Supplies
		Tooling
		Summary
		Discussion Questions
		Suggested Cases
		References
	Chapter 5 Inventory Management
		Introduction
		Independent versus Dependent Demand
		Inventory Management Overview
		ABC Classification of Inventory Items
		Independent Demand
			Costs in an Inventory System
			The Classical EOQ Model with Quantity Discounts
			Demand Uncertainty and Safety Stock
		Quantity Discount Example
		Example of Fixed Order Quantity with Safety Stock
		Dependent-Demand Systems
			The Material Requirements Concept
			The General Lot-Sizing Problem
			Quantity Discounts for the Variable Demand Case
			Illustration of Various Variable-Demand Lot-Sizing Models
		Summary
		Discussion Questions
		Exercises
		Suggested Cases
		References
		Appendix A: Areas under the Normal Curve
	Chapter 6 Just-in-Time (Lean) Purchasing
		Introduction
		Lean Production Systems
			Just-in-Time Production System
			Kanban Production Control System
		Example
		Significance of Purchasing
		JIT Purchasing
		Purchasing Benefits
		Implementation of JIT Purchasing
		Role of Culture
		Critical Analysis of the JIT Concept
		Summary
		Discussion Questions
		Suggested Cases
		References
PART THREE FUNDAMENTALS OF PURCHASING AND SUPPLY CHAIN MANAGEMENT
	Chapter 7 Purchasing Procedures, E-Procurement, and Systems Contracting
		Introduction
		Purchasing Procedures
		Systems Contracting
			What Is Systems Contracting?
		E-Procurement
			Two Broad E-Procurement Purchasing Categories
			Indirect Materials Purchasing
			Direct Materials Purchasing
		Reverse Auctions
			What Are Reverse Auctions?
			Implementing a Reverse Auction
		Electronic Data Interchange (EDI) and Purchasing
			What Is EDI?
			Implementation
			The Implementation Team
			EDI in Practice
			Future Outlook
		Radio Frequency Identification (RFID)
			What Is RFID and How Does It Work?
			Advantages of RFID
			Disadvantages of RFID
			RFID Implementation
			E-Sourcing and Purchasing
		Summary
		Discussion Questions
		Suggested Cases
		References
		Appendix A: Systems Contract Agreement
	Chapter 8 Supplier Selection and Evaluation
		Introduction
		Make versus Buy
		Benefits of Outsourcing
		Sources of Supplier Information
		Strategic Selection
		Supplier Relationship Management
			Four Pure Supply Management Relationships
			Supplier Relationship Management Programs
			Criteria for Supplier Evaluation
			Three Common Supplier Evaluation Systems
			Strategic Supplier Relationship Management
			The Strategic Supplier Performance Review Process
			The SRM Scoring System
			Supplier Development
			Single versus Multiple Sources
			Supplier Reduction
		Industry Examples
			Apparel Industry
			Chemical Industry
			Electronics Industry
			Construction Industry
		Summary
		Discussion Questions
		Suggested Cases
		References
	Chapter 9 Strategic Outsourcing
		Introduction
		Why Do Organizations Outsource Business Processes?
		The Hidden Costs of Outsourcing
			Quality Costs
			Supplier or Vendor Relationship Management 200 Internal Coordination
			Internal Coordination
			Implementation of External Sourcing Model
			Product/Service Design and Development
			Governmental and Political Expenses
			Supply Chain Risk Management
			Miscellaneous Financial Considerations
		Core Competencies
		Outsourcing Trends
		Elements of Strategic Outsourcing
			Strategic Evaluation
			Financial Evaluation
			Supplier Selection and Contract Development
			Transition to External Sourcing Model
			Relationship Management
		Summary
		Discussion Questions
		Suggested Cases
		References
	Chapter 10 Global Sourcing
		Introduction
		Costs of Global Sourcing
		Currency Exchange Rates
		Organizational and Behavioral Issues
		Global Sourcing as a Strategic Sourcing Option
		Global Sourcing
			Protectionism in the United States
			Importance of Negotiations
		Global Provider Opportunism
		U.S. Export Administration Regulations
		Foreign Trade Zones
		The European Union (EU): Overview and What It Means to Purchasing
			Countertrade
		Summary
		Discussion Questions
		Suggested Cases
		References
		Appendix A: Outsourcing Policy Example
	Chapter 11 Supply Partnerships and Supply Chain Power
		Introduction
		Benchmark Supplier Partnerships: Chrysler Corporation
		Importance of Supply Chain Partnership Awareness
		Partnerships: Definition and Overview
		Relationship Intensity
		Traditional Sourcing
		Reduced Supplier Bases
		Supply Chain Partnerships
			Benefits of Supplier Partnerships
			Risks of Supplier Partnerships
			Partnership Implementation and Critical Success Factors
		Power Influences on Supply Chain Relationships
			Power and Dependence
			Power, Commitment, and Trust
			Power, Cooperation, and Compliance
			Power and Conflict
			Power and Satisfaction
			Power, Performance, and Profitability
			Automobile Industry Example of Power Asymmetry
		Summary
		Discussion Questions
		Suggested Cases
		References
		Appendix A: Channel and Supply Chain Power
	Chapter 12 Total Quality Management (TQM) and Purchasing
		Introduction
		Total Quality Management and Supply Chain Management
		TQM Implementation Problems
		Quality Requirements for Suppliers
			Quality Assurance Expectations
			Quality Target Commitment
			Preventive Quality
		Quality Awards
			The Deming Award
			The Malcolm Baldrige National Quality Award
			Continuous Improvement and the Supplier
		ISO 9000
			Quality Function Deployment (QFD)
			Supplier Evaluations
		Engineering and Design
		Summary
		Discussion Questions
		Suggested Cases
		References
		Appendix A: Taguchi Method
		Appendix B: Acceptance Sampling
PART FOUR PRICE/COST ANALYSIS AND NEGOTIATION STRATEGIES
	Chapter 13 Price Determination
		Introduction
		The Purchasing Decision
		Price-Setting Strategy (Economic)
		Price-Making Strategy (Psychological)
		Discounts
			Cash Discounts
			Trade Discounts
			Quantity Discounts
		Price and the Law
		Price
		Costs
		The Learning Curve
			The Model
		Example
		Pricing Strategy
			Standard Price List
			Competitive Bidding
			Negotiations
		Project Pricing
			Markups versus Margins
			Breakeven
		The Price/Cost Analysis Process
		Summary
		Discussion Questions
		Exercises
		Suggested Cases
		References
		Appendix A: The Robinson–Patman Act: General Price Discrimination
		Appendix B: Unit Factors for Progress Functions
		Appendix C: Estrada Systems
	Chapter 14 Bargaining and Negotiations
		Introduction
		Psychological Bargaining Framework
			Payoff System
			Bargaining Strategy
		Economic Bargaining Framework
		An Experiment in Distributive Bargaining
		Planning for a Formal Negotiation
			Planning (Seller’s Perspective)
			Planning (Buyer’s Perspective)
		A Richer Model of the Buyer–Seller Interaction
		Summary
		Discussion Questions
		Suggested Cases
		References
PART FIVE SPECIAL PURCHASING APPLICATIONS
	Chapter 15 Purchasing Transportation Services
		Introduction
		The Impact of the North American Free Trade Agreement (NAFTA) on Domestic Transportation
		Transportation’s Role in Purchasing
			Mode Selection
			Relative Prices for Transportation Goods and Services
			Carrier Selection
			Carrier Evaluation
			Rate Determination
			Third-Party Relationships
			Freight Consolidation
			Documentation/Tracing/Claims
			Terms and Conditions of Transportation Purchasing
		Three Transportation Purchasing Examples
			Ross Laboratories
			Consolidated Stores
			Copeland Inc.
		Summary
		Discussion Questions
		Suggested Cases
		References
	Chapter 16 Equipment Acquisition and Disposal
		Introduction
		The Capital Equipment Acquisition Process
			Department Requisition
			Company Goals and Objectives
			New Project Ideas
			Cash-Flow Analysis
			Economic Evaluation
			Payback
			Average Rate of Return
			Net Present Value
			Internal Rate of Return
			Profitability Index
			Selection
			Financial Plan Analysis
			Equipment Leasing
			Lease versus Borrow and Purchase
			Implementation
			Expenditure Control
			Audits
			Disposal of Capital Equipment
		Purchasing New versus Used Capital Equipment
			New Equipment Purchases
			Used Equipment Purchases
		Summary
		Discussion Questions
		Exercises
		Suggested Cases
		Appendix A: Federal Acquisition Regulation; Electronic and Information Technology
		Appendix B: Lease versus Borrow and Purchase Example
		Appendix C: Present Value Table
	Chapter 17 Health Care Purchasing and Supply Management
		Introduction
		Purchasing, Supplies, and Services
		Supply (Materials) Management Survey
		Health Care Supply Management
			Opportunities in Health Care Supply Management
			Examples of Health Care Savings Opportunities
		Methods of Supply Management
			Fixed Order Quantity System
			Fixed Order Interval
			Stockless Inventory Systems
			The Best Method
			Group Purchasing Organizations
			Antikickback Issues
		Complicating Factors Unique to Health Care for Inventory Control
			Demand Problems
			Safety Stock
		Current Trends
			Primary Supplier
			Automation Technology
		Acquisition of Capital Equipment Process Overview
			Overview of the Process
			Factors and Decision Rules
			Selecting the Right Supplier
		Summary
		Discussion Questions
		Suggested Cases
		References
		Appendix A: Purchasing Health Care Plans
	Chapter 18 Sourcing Professional Services
		Introduction
		Service Sector Characteristics and Strategies
		Outsourcing and The Service Sector
		Managing Complex Global Outsourcing Services
		Professional Services
		Project Management
		Project Planning and Scheduling Processes
			Gantt Chart (or Bar Chart) Method
			Progress Curves
			The Critical Path Method
		Summary
		Discussion Questions
		Suggested Cases
		References
		Appendix A: FHWA Project Example
		Appendix B: Fortune 500 Company Example
	Cases
		Case 1 Advanced Computer Logic
		Case 2 The Allen and Gary Show
		Case 3 AMD Construction Company: Negotiating the Old-Fashioned Way
		Case 4 The ARMS Procurement System at Tustin State University
		Case 5 The Auction Case
		Case 6 Austin Wood Products
		Case 7 Butler Systems
		Case 8 Camp Bowie Technologies, Inc.
		Case 9 The Capital State Arena
		Case 10 Carter Systems Canada, Inc.
		Case 11 Eastern Waves, Inc.
		Case 12 Firebird Electric, U.S.
		Case 13 Great Lakes University
		Case 14 Hoosier Pride Construction, Inc.
		Case 15 Hudson Fabricators, Inc.
		Case 16 KACI Products, Inc.
		Case 17 MARS, Inc. (D)
		Case 18 McGruder Pavers, Inc.
		Case 19 Medical Laser Equipment, Inc. (B)
		Case 20 Microfuse, Inc.
		Case 21 NEP: The Art and Science of Purchasing Coal
		Case 22 Pendleton Construction, Inc.
		Case 23 Point Clear, Inc. (B)
		Case 24 Sage Imaging Center, Inc.
		Case 25 Swisher Systems
		Case 26 The Tank Case
		Case 27 TEMKO Earthmovers
		Case 28 Tom & Jerry (T&J) Construction, Inc.
		Case 29 Trip 7 Screen Printing
		Case 30 Two-Bucks Wine Operation
Purchasing Glossary
Index