What Are The Disadvantages Of Purchasing And Supply Chain Management

There are many important facets of conducting business. One of these facets that holds significant importance would be that of purchasing and supply chain management. Purchasing and supply chain management consist of multiple aspects. Some of these aspects are things such as project supply planning, services, materials budgeting, and the negotiating of the prices involved. All of these aspects must be taken into consideration regardless of what market the project is taking place in. This will remain true from negotiating a new product line to procuring and establishing a logistical supply chain from one side of the globe to the other.

Purchasing and supply management are not issues that should be entered into arbitrarily. Either one

However, this route is not always the most cost effective. In this case the organization would choose to outsource the required production. Some of the benefits that come along with making this decision is that any and all costs pertaining to the retools of the production line are incurred by the supplier. The supplier is also liable for all personnel and material costs. Another advantage can be based off of the desired length of production run. Some disadvantages are that if the outsourcing takes place outside of the buyer 's country there is a higher probability that production standards will vary with a high frequency than typically expected. For example, a respective division of Mueller Water Products based out of Boston, Massachusetts which deals in the installation of industrial water monitoring and regulatory systems found a need to reduce costs of production. In the past five years this division had made the decision to outsource the production of the housing for the monitoring equipment. This part is made solely out of high grade plastic due to level a pressure that typically occurs on an hourly basis during operation. The division was convinced to change their decision on sourcing due the rise costs of union labor. The contract was given to a production firm out of China, which does not hold to the desired levels of quality in the manufacture of the

Benchmarking is a organized system used to establish an organization 's best practices from which future business ' can learn from and obtain success. These best practices are a collection of a business ' administration, production, sales, and service delivery according to Fitz-enz (1992). Benchmarks are a means for managers to determine if the productivity of their organization is performing at expected levels and if not, where and how it can be improved. When working within supply chain management, benchmarking can be used in several ways. Benchmarking has shown in the past few years that with cooperation between both buyer and supplier the identification and implementation of applicable data can be used to refine or streamline the flow within the supply chain. In turn, being about a reduction in costs. However, this data can only be collect by comprehensive field work done and input gathered from all parties involved. With active involvement and participation of suppliers in the benchmarking initiative, companies should identify value-adding strategies and practices for improving supply chain performance and competitiveness of integrated supply chains (Gunasekaran, 2001, p.