ABSTRACT
Describe the role of procurement in the supply chain ◾ Describe the critical success factors needed in the purchasing function ◾ Describe how purchasing is a key participant in integrating the members of ◾ a supply chain Identify how purchasing has changed from a traditional role to a contempo-◾ rary role Identify the key functions of purchasing ◾ Construct a vendor rating system when making an important purchase ◾ Describe diff erences between the make-or-buy decision and the outsourcing ◾ decision Evaluate how off shore outsourcing has aff ected purchasing ◾ Identify how the performance of the purchasing function can be measured ◾ Describe how the purchasing function will change in the future ◾
Introduction Th is chapter deals with the purchasing of goods and services by various customers in the supply chain-manufacturers, wholesalers, and retail companies. Th is is an important function, because purchased materials and services represent over half of the product costs in most manufacturing industries and are even higher for wholesale and retail companies, sometimes exceeding 90%.1 As more manufacturing
companies move to a “core competency” strategy, they will outsource more of their component manufacturing to suppliers and become primarily an assembly operation. In some cases, they have moved even further by outsourcing the entire manufacturing function to concentrate on product and brand development, and marketing that product.
