Strategic roles of supply management

Supply management is involved good strategy or tools, good performance or scope, good
organization or team, Good services or serving, good planning or plan, good inventory or stock, good
sourcing or source, buying, good transportation or trip, good warehousing or house, and good
information system to support good information flow as the right chains. In procurement activity,
there will be challenges and opportunities to keep the availability of the stocks, control the uncertain
price, analyze supplier performance and fulfill government regulations. Instead of those challenges,
procurement activity supported by technological development such as software that eases and
integrates all roles involved in procurement activity (VMI, e-proc, and collaborative model).
Supply management in decreasing the cost of goods sold might increase the profit. In determining
suppliers, the company should not only consider the price. Product quality is coming from 50% of
suppliers' quality. Supplier quality better analyzed as to its sources, rather than in the inspection
process. So that, supply management limited to suppliers that suit and have good performance to
ease contract consolidation. In managing the strategy of supply management, procurement should
consider sourcing strategy, performance, risks, supplier development, spend analysis (schedule),
supply intelligence and its system. It also supported by defining the specification of goods/services,
have the win-win solution in negotiation, creates a purchase order and until if contract management
needed. Purchasing or supply management department mainly collecting basic information on price
records, part history records, consumption, and stock record, vendor performance record, and
catalogs. Instead of collecting data, procurement activity should be supported by analyzing and
doing research on market trends, materials, make/buy analysis, supply source, material, and source
alternative and value analysis studies. Some information needed to integrate each party involved in
procurement activity. Suppliers mostly need master data, catalog, sourcing process, e-auction,
contract management, supply intelligence, order status, supplier performance, and procurement
criteria. While, in production, inventory and port status needed to support internal information of
procurement activity. Vehicle data and status and vehicle and performance should be monitored as
to its movement. Information from customers should be considered as information on production,
stock, sales, event information that might be sponsored, capacities, loading, and unloading process
and customer performance as evaluations. Ease the vendor sourcing, items needed might be
classified in groups based on its product type, project, promotion items, and service. Product
grouping should also consider product similarities, geographic location, and entire organization
measurement. The research of procurement activity in many organizations that implies centralized
procurement activities is 28%, mixed between centralized and decentralized are 59%, and the last
organization is decentralized procurement 13%. Centralized procurement activity is centralized
procurement authorization to avoid duplicate activities, ease order consolidation, high buying
power, policy, and procedure standard and have an effective relation to the supplier. The
procurement department should have a manual procedure that consists of organization structure,
job description and forms that used in procurement activity, the basic policy of procurement, work
procedure and contribution performance measurement. Principle system and procedure should
consider department level, responsibility hierarchy of approval authority level, the basic procedure
of supplier selection, buying process flow and operational working instruction. Duties as
procurement department are determining specification and requisition process and authorization,
the selected suppliers that included tender lists, shortlisting and negotiation, contract procedure to
decide supplier, receive goods to check goods arrival suit the order issued and goods to be paid for
and authority table to process an invoice in the payment process. There might fraud inside
procurement activity that can be controlled by analyze risks, doing random audits of different
projects and contracts, financial limits, performances and consider rotations of each group item avid
buyers too close to favorite suppliers.
Vendor management is the activity of doing research, sourcing, obtaining prices and capabilities,
negotiating. Managing relationships and analyze the performance of all vendors. Vendor
management is considered when a company has many vendors that might have several problems
and special conditions that affect their service performance and consideration to new vendors'
references. Some cases in supply management are there was a vendor that might have several types
of services that can not control the maximum service rate to their customer, vendors are not
classified in certain types, the shorter authority table that might affect to increase PO number and
there was no clear integrated monitoring process. In supplier management, data of all suppliers are
collecting to analyze the qualification that might suit items needed provision and evaluating supplier
performances. For those suppliers who have good performances and applied better improvement,
they might be considered to continue being the suppliers. But, some cases of suppliers that might
have bad performance might be excluded. A case study discusses a procurement condition in a
company. In this case, gloves procurement that might be ordered by each of the departments. It
might hasten the product availability, but found that gloves in every department have variances of
types and prices. There were also some of them have a similar type at different prices. So that, to
keep the efficiency, procurement department should analyze and evaluate the procurement process
and might be considered to make it centralized.