Based on your experience or readings, discuss the interface between Purchasing a

Question

Based on your experience or readings, discuss the interface between Purchasing and Supply Management and Logistics Management – specifically with respect to selection of a third party logistics provider, analysis of the total cost of ownership, use of e-procurement capability, integration of the transportation (in-coming and out-going) spend, and management of just-in-time inventory control.

How do Purchasing and Supply Management and Logistics Management “fit” within the framework of distribution management – particularly control of in-process and finished goods inventory?

What is the role of Purchasing and Supply Management and Logistics Management professionals in the implementation of a supply chain management strategy?

Explanation / Answer

Q1) Purchasing and Supply Management encompasses the activities and processes involving the purchase of all kinds of materials required to manufacture a product as a manufacturer. The logistics that is involved in purchase and transportation of materials is called Inbound Logistics which takes care of transporting and holding raw material inventory.

Companies which directly procure the products from supplier and sell them to customers are distribution firm's focuses on logistics management and holding on in-process or finished goods. Total cost of ownership includes cost of material/product purchased, procurement administration costs, logistics costs, inventory holding costs etc.

Q2) Supply chain management strategy involves decreasing overall supply chain costs and increasing efficiencies across the partners. The role of Purchasing and Supply Management in the strategy is that it ensures the procurement and inbound logistics costs are minimized and the material supplied is of high quality.

The role of logistics management is to optimise inbound and outbound logistics costs through effective transportation networks and ensuring holding costs get reduced due to timely movement of materials and products. Logistics also involves space management in warehouse and trucks. Timely and damage free goods delivery is the objective of logistics management which reduces the overall costs as a part or the greater supply chain management strategy.

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