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The Strategy of Supply

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The Strategy of Supply
Sheila K. Blohm
INF 336 Project Procurement Management
Brian Kraus
July 22, 2013

The Strategy of Supply
Purchasing and supply management substantially impacts the performance and results of every enterprise and organization that conducts business today. The most efficient and effective purchasing and supply management process allows an organization to achieve enhanced revenues, lower costs, rapid and more informed decision-making, and provides for higher quality products and services. The following discussion of the acquisition process explains how a supply professional understands strategic requirements, describes the differences between needs identification and commercial equivalents, explains the value of early supplier involvement, and examines the advantages and disadvantages of performance specification.
Supply management focuses on the entire acquisition process, and a supply professional must understand an organization’s strategic requirements to provide value and best buy opportunities for an organization. Part of the acquisition process includes “need identification.” An organization’s needs are what is required by either internal or external purchasers of the organization. Need criteria can be strategic in nature such as the financial implications or impact of the requirement and the amount of risk reduction the acquisition provides (Johnson, Leenders, & Flynn, 2011). For example, purchasing from a known supplier at a higher price versus purchasing from an unknown supplier whose reputation has yet to be proven may provide a cost savings but opens the company up to added risk. Other strategic attributes may allow for revenue enhancement, access to new technology or markets, or competitive benefits (Foster, Wallin, & Ogden, 2011). Need criteria also can be comprised of traditional value components such as

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