TABLE OF CONTENTS This chapter introduces a number of key concepts relating to purchasing and supply chain relationships, and structures.
After studying the chapter you should be able to:
know the different types of purchasing decision and their characteristics;
understand the key processes in the purchase decision;
demonstrate understanding of the different types of buyer-supplier relationships and their relative merits;
analyse and evaluate the key issues in purchasing and supply management decisions.
Relationships and structures within the supply chain are determined by a number of factors: industry structure, characteristics, competitive rivalries, numbers of suppliers and buyers, nature of products and services, industry and organizational cultures. Relationships exist between organizations (inter-organizational), between specific groups of people inside the organizations in business relationships, e.g. buyers and sellers, and inside the organizations themselves (intra-organizational). One way to begin to understand the types of relationships and structures is to examine purchasing and procurement decisions. The chapter begins by defining purchasing and procurement and recognizing different types of purchasing before examining the purchasing decision and different types of supplier relationships moving from adversarial through to partnerships and strategic alliances. Different supply chain strategies require the organization to have different types of relationships and different organizational structures to deal with those relationships. The relative merits of different types of relationships are discussed.
Purchasing and procurement are often treated as meaning the same thing. However, strictly speaking procurement is wider than purchasing and involves acquisition of goods and services in any way...
