Read Chapter 3 below

Then, Write a short summary to describe what are the challenges faced by a supply manager working in a highly centralized and highly decentralized structure.

NOTE: Content must be a minimum of 400 words.

Feel free to use any other sources of information such as online libraries or web searches.

Chapter 3

Supply Organization

Key Questions Addressed in Chapter 3

What are the objectives of supply?

How might supply be organized to achieve these objectives effectively and efficiently?

What are the activities and responsibilities of supply management?

Traditional View of Supply Objectives

Obtain the right materials/services

Meeting quality requirements

In the right quantity

For delivery at the right time and right place

From the right source (a supplier who is reliable and will meet its commitments in a timely fashion)

With the right service (both before and after the sale)

At the right price in the short and long term.

Nine Goals of Supply

Improve the organizations competitive position

Provide an uninterrupted flow of materials, supplies and services required to operate the organization

Keep inventory investment and loss at a minimum

Maintain and improve quality

Find or develop best-in-class suppliers

Standardize, where possible, the items and services bought and the processes used to procure them

Purchase required items and services at lowest total cost of ownership

Achieve harmonious, productive internal relationships

Accomplish supply objectives at the lowest possible operating costs

Typical Supply Organization StructureMedium Sized Company, Single Location

Structure Options for Large Organizations

Centralized: Authority and responsibility for most supply-related functions assigned to a central organization

Hybrid: Authority and responsibility shared between a central supply organization and business units, divisions, or operating plants

May lean toward centralized or decentralized depending on division of decision-making authority

Example: center-led organization in which strategic direction is centralized and execution is decentralized

Decentralized: Authority and responsibility for supply-related functions dispersed throughout the organization

Potential Advantages and Disadvantages of Centralization

Potential Advantages and Disadvantages of Decentralization

Advantages and Disadvantages of Hybrid, Centralized, and Decentralized Structures

Four Areas of Specialization in Supply

Sourcing and commodity management

Materials management

Administration

Supply research

The chief purchasing officer (CPO) can have many difference title

V.P. of Supply

V.P. of Purchasing

V.P. of Strategic Sourcing

V.P. Supply Chain Management

Director, Global Procurement

General Manager, Supply

CPO Trends

Increasing education levels

CPOs tend to report higher in the organization than they did in the 1980s and 1990s

CPOs are increasingly hired from outside the organization rather than promoted from within

CPOs are increasingly hired from functional areas other than supply

When a new CPO replaces a current CPO, the current CPO is promoted or leaves the company for a similar position in another firm

CPO reporting lines change every 2.5 years on average (the typical CPO will have at least two different bosses during tenure in the role)

The CPO role is still new in many organizations

Most Common CPO Reporting Lines

CEO

Executive Vice President

Vice President of Finance/CFO

Group Vice President

Senior Vice President

Factors that Influence Reporting Level

The amount of purchased material and services as a percentage of total costs or total income

The nature of the products or services acquired

The extent to which supply and suppliers can provide competitive advantage

Categories of Supplys Roles and Responsibilities

What is acquired

Supply chain activities

Type of involvement in what is acquired and supply chain activities

no involvement, documentary, professional and meaningful involvement

Involvement in corporate activities

Examples of Supply Chain Activities

Purchasing/buying

Purchasing research

Inventory control

Transportation

Investment recovery/disposal

Forecasting and planning

Outsourcing and subcontracting

Nonproduction/nontraditional purchases

Supply chain management

Supply Teams

Cross-functional teams

sourcing, new product development/service development, commodity management

Teams with suppliers

Teams with customers

Teams with suppliers and customers

Supplier councils - key suppliers

Purchasing councils - purchasing personnel only

Commodity management teams

Consortia

Key Success Factors for Teams

Supportive organizational culture, structure, and systems

A common compelling purpose, measurable goals, and feedback for individuals and the team

Organized for customer satisfaction rather than individual functional success

All functional areas involved in up-front planning, shared leadership roles, and role flexibility

The right people (right qualifications), in the right place (on a team that needs their skills), at the right time (when those skills are needed)

A common, agreed-upon work approach and investment in a high level of communication

Dedication to performance and implementation with decisions delegated to the appropriate level

Integration of all relevant functional areas and various teams throughout the project life cycle

Team Leader Responsibilities

Work with team to establish and commit to performance goals

Secure individual member involvement and commitment

Manage internal team conflict

Help maintain team focus and direction

Secure required organizational resources

Prevent team domination by a member or function

Deal with internal and external obstacles confronting the team

Coordinate multiple tasks and manage assignment status

Clarify and help define each team members role

Provide performance feedback to members

Purchasing Consortia

A form of collaborative purchasing

Used by public and private-sector organizations

Goal:

To deliver a wider range of services at a lower total costs through price reductions through higher volume of spend, administrative efficiencies, product and service standardization, improved supplier management capabilities, specialization of staff, and better customer service

Keys for Successful Consortia

Reduce total costs for the consortium members

lower prices, higher quality and better services

Eliminate and avoid real and perceived violations of anti-trust regulations

Install sufficient safeguards to avoid real and perceived threats concerning disclosure of confidential and proprietary information

Mutual and equitable sharing of risks, costs and benefits to all stakeholders, including buying firms/members, suppliers and customers

Maintaining a high degree of trust and professionalism

Maintaining a strong similarity among consortium members and compatibility of needs, capabilities, philosophies and corporate cultures