| Procurement is the acquisition of goods and / or services, preferably at the best possible cost and / or value, and ensuring those goods are purchased in the right quantity and quality, at the right time, in the right place, and from the right source. The complexity of procurement depends on the organization and the goods and services being bought and can range from mostly automated repeat purchasing of office supplies through a vendor punch-out to the complex procurement of custom manufactured goods which involves sourcing raw materials and components from dozens of global suppliers and insuring they all arrive at the manufacturing plant at the right time for finished good production and distribution.
As per the e-Procurement Primer wiki-paper*, the basic procurement cycle, which follows the sourcing cycle, usually consists of three to nine steps, depending on the complexity of a buy. Whereas a simple procurement will only consist of an order (requisition or purchase order), an invoice (which might also serve as the receipt), and a payment, a complex (or high-dollar) procurement will also require authorization and reconciliation of the invoice, a confirmation of goods receipt, tax submission and/or reclamation, and a post-mortem analysis of the transaction. The procurement process is often supported by e-Procurement software in many modern purchasing and supply management operations. These systems will generally support the necessary process steps required by the organization and come with a number of core capabilities, which will include requisitioning, approval routing, purchase order support, receipts, invoicing, e-payment, taxation, reporting, multi-way reconciliation, and a self-service supplier portal. A well-managed procurement process is important because it streamlines processing, reduces cash, improves cash management, deters maverick buying, reduces fraud, speeds query resolution, enables e-payment, simplifies taxation, reduces inventory cost, and increases spend under management. For more insights into the procurement process and supporting e-Procurement systems, see:
* The e-Sourcing Wiki was created and maintained by Iasta, which was acquired by Selectica in 2014 (which renamed itself Determine in 2015). It was retired by Determine (which did not actively maintain it) before Determine was acquired by Corcentric in 2019 |
Category Archives: Glossary
Negotiation Management
| A negotiation is a dialogue between two or more parties to resolve a disputes or come to an agreement and Negotiation Management is the practice of managing your negotiation strategies, practices, and methodologies while keeping track of how well you doing with respect to identified best-in-class practices and results. In the context of the supply chain, a negotiation usually refers to a formal discussion between a buyer and one or more suppliers with the goal of securing the supply of raw materials, goods, and / or services and negotiation management refers to the process of managing the negotiation with the intent of getting the best possible result.
Negotiation skills are a fundamental building block of negotiation management, and in addition to the ability to ask questions, listen, and construct valid arguments based on market research, the following skills are often requirements of success in any negotiation:
For more information on negotiation management in the supply chain, and strategies for success, please refer to the following posts: |
Market Intelligence
| Market Intelligence can be defined as the information relevant to the company’s markets, gathered and analyzed specifically for the purpose of accurate and confident decision making in determining market opportunity, market penetration strategy, and market development metrics. (Wikipedia) In the context of the supply chain, it’s generally used to refer to the information relevant to the company’s Supply Management practice which includes commodity market information, supplier information, and category management best practices.
Providers of market intelligence solutions will usually focus on metric-driven industry benchmarks, pricing indexes, customer-driven or supplier-driven surveys and case studies, industry production data, and/or current industry best practices. They will also typically address one or more of the following “dimensions” in their analysis:
Consumers of Market Intelligence can obtain the information from a number of sources, including:
For more information on market intelligence in the supply chain, please refer to the following posts:
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Logistics Management
| Logistics Management, as defined in Wikipedia, is generally defined as the management of the flow of goods, information, and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of the end consumers. It often encompasses information visibility and integration, transportation and distribution, inventory management, warehousing, material handling, and packaging.
Believed to have been originated by ancient militaries who needed to supply themselves with arms, ammunitions, and rations as they moved from their base to a forward position, logistics management has evolved beyond the military to include a considerable portion of the modern supply chain function. In today’s supply chain, logistics management is responsible for controlling the efficient forward and reverse flow and storage of goods, services, and information between the point of origin and the point of consumption; overlaps with inventory and warehouse management, global trade management, and supply chain finance; and may involve the use of third party logistics. For additional insights into Logistics Management, see the following posts: |
Knowledge Management
| Knowledge Management can be defined as a range of practices and methodologies, which may or may not be based on technological solutions, that enable the identification, creation, representation, capture, search, sharing, and distribution of knowledge. Like compliance management, knowledge management is another universally nebulous concept where every proponent in business administration, information systems, management, and library and information sciences will give you a similar, but slightly contradictory, definition.
A Knowledge Management effort is generally undertaken by an organization looking to accomplish one or more organizational objectives, which may included efficiency and performance improvements, the establishment of a competitive advantage, intra-organizational information sharing, a continuous improvement initiative, service management, and talent management. Such efforts often overlap with change management efforts, organizational learning, and wide-spread retraining efforts. The focus of the effort might take many forms, including:
Done right, Knowledge Management can benefit every major practice area of the supply chain, including:
For more insights into how Knowledge Management can benefit your supply chain, please see:
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