PURCHASING AND SUPPLY - MIM

1 PURCHASING AND SUPPLY . CHAIN MANAGEMENT. Fourth Edition Robert M. Monczka Arizona State University and CAPS Research Robert B. Hand eld North Carolina State University Larry C. Giunipero Florida State University James L. Patterson Western Illinois University Australia Brazil Japan Korea Mexico Singapore Spain United Kingdom United States PURCHASING and SUPPLY Chain 2009 South-Western, a part of Cengage Learning Management, 4e Robert M. Monczka, Robert B. Handfield, ALL RIGHTS RESERVED. No part of this work covered by the copyright Larry C. Giunipero, James L. Patterson herein may be reproduced, transmitted, stored or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web distribution, VP/Editorial Director: Jack W.

2 Calhoun information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright VP/Editor-in-Chief: Alex von Rosenberg Act, without the prior written permission of the publisher. Sr. Acquisitions Editor: Charles McCormick, Jr. Developmental Editor: Bryn Lathrop For product information and technology assistance, contact us at Marketing Comm. Manager: Libby Shipp Cengage Learning Academic Resource Center, 1-800-423-0563. Marketing Manager: Kristen Hurd For permission to use material from this text or product, submit all requests online at Marketing Coordinator: Gretchen Wildauer Further permissions questions can be emailed to Content Project Manager: Scott Dillon Manager of Technology: John Barans Technology Project Manager: John Rich Prod.

3 Technology Analyst: Adam Grafa Library of Congress Control Number: 2008926725. Sr. Manufacturing Coordinator: Diane Gibbons Student Edition ISBN-13: 978-0-324-38134-4. Student Edition ISBN-10: 0-324-38134-4. Production Service: Newgen Austin Art Director: Stacy Jenkins Shirley South-Western Cengage Learning Cover Designer: Joseph Pagliaro 5191 Natorp Boulevard Mason, OH 45040. USA. Cengage Learning products are represented in Canada by Nelson Education, Ltd. For your course and learning solutions, visit Purchase any of our products at your local college store or at our preferred online store Printed in the United States of America 1 2 3 4 5 6 7 12 11 10 09 08.

4 To Shirley, Kathleen, Thomas, and Elliana ROBERT M. MONCZKA. To Sandi, Simone, and Luc ROBERT B. HANDFIELD. To Tressa, Jan, Matthew, Michael, and Amanda LARRY C. GIUNIPERO. To Diane, Lindsay, Karl, Drew, and Seth JAMES L. PATTERSON. Brief Contents Preface xxiii Part 1 Introduction 1. Chapter 1 Introduction to PURCHASING and SUPPLY Chain Management 2. Part 2 PURCHASING Operations and Structure 35. Chapter 2 The PURCHASING Process 36. Chapter 3 PURCHASING Policy and Procedures 85. Chapter 4 SUPPLY Management Integration for Competitive Advantage 110. Chapter 5 PURCHASING and SUPPLY Chain Organization 153.

5 Part 3 Strategic Sourcing 187. Chapter 6 SUPPLY Management and Commodity Strategy Development 188. Chapter 7 Supplier Evaluation and Selection 233. Chapter 8 Supplier Quality Management 271. Chapter 9 Supplier Management and Development: Creating a World-Class SUPPLY Base 306. Chapter 10 Worldwide Sourcing 343. Part 4 Strategic Sourcing Process 381. Chapter 11 Strategic Cost Management 382. Chapter 12 PURCHASING and SUPPLY Chain Analysis: Tools and Techniques 423. Chapter 13 Negotiation 459. Chapter 14 Contract Management 496. Chapter 15 PURCHASING Law and Ethics 538. Part 5 Critical SUPPLY Chain Elements 583.

6 Chapter 16 Lean SUPPLY Chain Management 584. Chapter 17 PURCHASING Services 621. Chapter 18 SUPPLY Chain Information Systems and Electronic Sourcing 665. Chapter 19 Performance Measurement and Evaluation 705. iv Brief Contents v Part 6 Future Directions 741. Chapter 20 PURCHASING and SUPPLY Strategy Trends 742. Cases 769. Case 1 Avion, Inc. 770. Case 2 The Global Sourcing Wire Harness Decision 773. Case 3 managing Supplier Quality: Integrated Devices 776. Case 4 Negotiation Porto 779. Case 5 PURCHASING Ethics 780. Case 6 Insourcing/Outsourcing: The FlexCon Piston Decision 783. Index 795. v Contents Preface xxiii Part 1 Introduction 1.

7 Chapter 1 Introduction to PURCHASING and SUPPLY Chain Management 2. A New Competitive Environment 5. Why PURCHASING Is Important 6. Understanding the Language of PURCHASING and SUPPLY Chain Management 8. PURCHASING and SUPPLY Management 8. SUPPLY Chains and Value Chains 10. SUPPLY Chains Illustrated 12. Achieving PURCHASING and SUPPLY Chain Bene ts 15. The SUPPLY Chain Umbrella 15. Management Activities 15. Four Enablers of PURCHASING and SUPPLY Chain Management 17. Capable Human Resources 19. Proper Organizational Design 19. Real-Time and Shared Information Technology Capabilities 20. Right Measures and Measurement Systems 21.

8 The Evolution of PURCHASING and SUPPLY Chain Management 21. Period 1: The Early Years (1850 1900) 22. Period 2: Growth of PURCHASING Fundamentals (1900 1939) 22. Period 3: The War Years (1940 1946) 23. Period 4: The Quiet Years (1947 Mid-1960s) 23. Period 5: Materials Management Comes of Age (Mid-1960s Late 1970s) 24. Period 6: The Global Era (Late 1970s 1999) 25. Period 7: Integrated SUPPLY Chain Management (Beyond 2000) 25. Looking Ahead 26. Good Practice Example: Taking an Entrepreneurial Approach to PURCHASING at Babson College 26. vi Contents vii Part 2 PURCHASING Operations and Structure 35.

9 Chapter 2 The PURCHASING Process 36. PURCHASING Objectives 38. Objective 1: SUPPLY Continuity 38. Objective 2: Manage the PURCHASING Process Ef ciently and Effectively 39. Objective 3: Develop SUPPLY Base Management 39. Objective 4: Develop Aligned Goals with Internal Functional Stakeholders 40. Objective 5: Support Organizational Goals and Objectives 40. Objective 6: Develop Integrated PURCHASING Strategies That Support Organizational Strategies 40. PURCHASING Responsibilities 41. Evaluate and Select Suppliers 41. Act as the Primary Contact with Suppliers 42. Determine the Method of Awarding Purchase Contracts 42.

10 E-Procurement and the Procure to Pay Process 42. Forecast and Plan Requirement 44. Needs Clari cation: Requisitioning 46. Supplier Identi cation and Selection 54. Approval, Contract, and Purchase Order Preparation 58. Receipt and Inspection 65. Invoice Settlement and Payment 67. Records Maintenance 68. Continuously Measure and Manage Supplier Performance 68. Re-engineering the Procure to Pay Process 68. Types of Purchases 69. Raw Materials 70. Semi nished Products and Components 70. Finished Products 70. Maintenance, Repair, and Operating Items 70. Production Support Items 71. Services 71. Capital Equipment 71.