The term supply management describes the methods and processes of modern corporate or institutional buying. This may be for the purchasing of supplies for internal use, purchasing raw materials for the consumption during the manufacturing process, or for the purchasing of goods for inventory to be resold as products in the distribution and retail process. The supply management function of an organization is responsible for various aspects of acquiring goods and services for the organization. In many organizations, acquisition or buying of services is called contracting, while that of goods is called purchasing or procurement. Tasks associated with supply management include:
- Analyzing spending
- Strategic sourcing
- Obtaining and evaluating quotes from suppliers
- Negotiating
- Managing supplier performance
- Implementing technologies, processes, policies, and procedures to support the purchasing process (Supplier Relationship Management). There are several companies have the software to implement SRM. [1]
- Economic theories of supply and demand
Supply management is generally regarded as a systematic business process that includes more functions than traditional buying, such as coordinating inbound and internal pre-production logistics and managing inventory. Supply management deals primarily with the oversight and management of materials and services inputs, management of the suppliers who provide those inputs, and support of the process of acquiring those inputs. The performance of supply management departments and supply management professionals is commonly measured in terms of amount of money saved for the organization. However, managing risk is one of the other critical aspects of supply management; especially the risk of non-availability at the required time of quality goods and services critical for an organization's survival and growth.
Groups and certifications
The importance of supply management in global business has prompted the formation of professional organizations to address the need for higher levels of supply management skill and expertise. One of the largest of these is the Institute for Supply Management [2], a United States not-for-profit association that includes more than 40,000 members. It is affiliated with the International Federation of Purchasing and Supply Management [3], a union of local and national purchasing associations with approximately 200,000 members. For companies seeking to fulfill diversity supplier spend commitments, the National Minority Supplier Development Council [4] with 39 affiliated nation-wide councils, was established in 1972 to assist in promoting supplier diversity, and also provides management training and access to viable minority business enterprises. Many certification programs are relevant to the supply management profession. Some are offered through non-profit associations, such as the Certified Purchasing Manager (CPM) and Certified Professional in Supply Management (CPSM) through the Institute for Supply Management. There are also for-profit companies who offer certification programs, such as Next Level Purchasing, Inc. who offers the Senior Professional in Supply Management (SPSM) Certification.
Supply chain management
Supply management is different than supply chain management, though it can be considered a component of supply chain management. Supply chain management, which can be automated, generally refers to:
- The oversight and management of materials and services inputs
- The production process in which those materials and services are used, and
- The provision of outputs that are generated through the use of the acquired materials and services, which is analogous to the fulfillment of customer requirements.
Supply management is a complementary discipline that encompasses the alignment of organizations, processes, and systems for strategic sourcing, contract management, supplier management, spending analysis to continuously improve global supply for best-value performance in support of the strategic objectives of the business.
External links
- Strategic Sourcing | Europe - a blog about sourcing and procurement
- European Leaders in Procurement - a business magazine for European procurement professionals
- Supply Excellence - a blog about supply management strategies
- Efficient Purchasing - a magazine for European sourcing and procurement professionals
