PurchTips - Edition # 115


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What Is Supply Chain Management, Anyway?

By Charles Dominick, SPSM, SPSM2, SPSM3

The following article will provide you with some quick supply chain management tips. To master supply chain management techniques, consider earning your SPSM Certification. Learn more by clicking here.

Is Supply Chain Management More Than Purchasing?

I get asked this question a lot: "What is the difference between purchasing and supply chain management?"

Though many different and conflicting definitions of supply chain management abound, in my definition, purchasing is a subset of supply chain management. Purchasing deals primarily with managing all aspects related to the inputs to an organization (i.e., purchased goods, materials, and services), while supply chain management deals with inputs, conversion, and outputs.

A supply chain consists of three types of entities: customers, a producer, and the producer's suppliers. The extended supply chain includes customers customers and suppliers? suppliers. Supply chain management oversees and optimizes the processes of acquiring inputs from suppliers (purchasing), converting those inputs into a finished product (production), and delivering those products or outputs - to customers (fulfillment).

Under this definition, supply chain managers decide where to locate manufacturing and distribution facilities, how to route goods and materials among those facilities, and from which parts of the world to source the inputs. Supply chain management unites disparate functions that historically reported to different executive positions with different, and sometimes conflicting, priorities.

So what does this mean for individuals who have a purchasing-related title?

One myth is that purchasing will become less important. To the contrary, analyzing spend for cost savings opportunities, negotiating, and selecting reliable sources of supply will always be critical. These functions fuel profit and provide competitive advantage for the organization.

However, the purchasing professional can expect to see his or her role expand to include the management of functions that were separate in the past. These functions include inventory management, internal logistics, warehousing, and other functions that are more related to the input or pre-production side of the supply chain. Today, due to this expanded role, purchasing is often referred to as purchasing and supply management.

Free Procurement Training & Certification Starter Kit

This Starter Kit gives procurement professionals like you a clear idea on what it will take to become certified. You'll get an excellent feel for what you will need to learn and how long it will take.

Click here to learn more

Included in your free Starter Kit:

  • Access to two lessons from courses that are part of the Senior Professional in Supply Management® Program
  • A Certification & Training Planning Template
  • Case studies
  • A free Basic Membership in the NLPA

Together, these materials will help you decide how well the SPSM® Certification can help you achieve your career goals.

So, what are you waiting for? Begin your pursuit of a more rewarding procurement career – get your Procurement Training & Certification Starter Kit now by signing up for a free NLPA Basic Membership!

If you are already a member of the NLPA, click here to login and visit the "Starter Kit" tab to access these resources.