Supply management refers to the process and methods of buying commodities in an organization. Such a job is quite tasking because it involves numerous operations. Due to the numerous activities carried out, supply management is carried by professionals who assist each other to ensure that everything runs smoothly. Some of the job titles that are important in supply management include; the supply chain manager, the purchasing manager, and the logistics manager (Christopher, 2016). Such managers carry out different roles in a company to ensure that supplies are made in a timely and effective manner.
Job Titles within Supply Management and their Functions
Supply Chain Manager
The supply chain manager is responsible of updating and reviewing supply chain practices as dictated by laws, regulations, standards, and policies (Christopher, 2016). The manager ensures that the company is not fined for going against the law thus reducing the chances of making loses. The supply chain manager selects the transportation routes, develops standard cost lists, and assesses the equipment used to handle materials and employees loading and unloading commodities (Christopher, 2016). Additionally, he/she negotiates terms and prices with vendors and suppliers, monitor the performance of suppliers, and monitor quotas and forecasts to identify changes.
Purchasing Manager
The purchasing manager processes invoices and payments, checks on the level of stock, forecasts demand levels for services and products, maintains and builds a good relationship with suppliers, conducts research on supplies, and develops a strategy of making purchases (Christopher, 2016). Other functions include keeping contract files, forecasting price trends, attending trade conferences and meetings, supervising and training other staff members, and making sure that suppliers understand the business’ objectives (Christopher, 2016).
Logistics Manager
The logistics manager organizes the distribution and storage of commodities. In addition, he/she ensures that products are delivered to clients at the right location. He/she also ensures that there are no delays in the supply chain and that good are supplied at a good cost (Christopher, 2016). The manager is also involved in monitoring goods, arehousing, transportation, and stock control. The manager is supposed to understand the supply chain to ensure that activities are coordinated effectively (Christopher, 2016). The logistics manager also liaises with consumers, raw material suppliers, retailers, and manufacturers.
Strategic Business Partnership
Go Pro and Red bull formed a conglomerate partnership business. Go Pro is a content production, product innovation, distribution and cross-promotion company. In the agreement that both companies entered into, Go Pro gave Red Bull equity, while Go Pro provided Red Bull with high quality imaging technology for covering all Red Bull’s events and media productions. As a result, Go Pro accesses approximately 1800 Red Bull events in hundreds of countries. The events covered are covered in Go Pro and Red Bull digital distribution network (GoPro, 2016). Both companies share the same vision of ensuring that people live a bigger life.
Both companies benefit from the partnership because they are able to acquire new customers. For Instance, once Go Pro goes to a certain country to cover Red Bull’s events, they will have access to new customers. The same case applies to Red Bull Company,which also acquires customers from Go Pro’s media platform. Increased number of customers means that there is subsequent increase in revenue. Both companies are able to increase their income. In the process, both companies are able to extend their geographic reach.
Additionally, both companies benefit from reduced advertising expenses. Once either company shares the events of its partner, they are able to reach a wider range of consumers. Red bull also benefits from reduced cost of production. Most of Red Bull’s events may cost them millions of dollars but with the partnership, they are able to cut down the production cost. This also applies to sharing resources, which is part of the inputs.
Role of Supply Management
The supply management department of any organization is responsible for acquisition of goods and services. How the department is run determines the future of the company because it is the main determinant of how much profits are earned in a company. Managers in this department work with various business leaders to identify those with the best terms and conditions. They are in a position to identify other business that they can trade with to get quality products at a relatively low cost thus increasing the profits earned (Christopher, 2016). If a company is to remain in business, it should trade with other business that offers the best to reduce the production cost and to increase profits.
The department is also in charge of managing the performance of suppliers. In such a case, the suppliers will always ensure that they offer quality services because they are under supervision. Supply management ensures that there is consistent flow of products thus reducing unnecessary shortages that may interfere with production and delivery of products to customers. Supply managers take different responsibilities to ensure that the products supplied are not changed (Christopher, 2016). This is done in form of ensuring that labels are checked and that they enter into contract with certified business partners.
Christopher (2016) notes that supply management implements processes, technologies, procedures, and policies that help to support purchasing. They are able to identify emerging trends in the supply management. Once new technology is identified, the management team can decide to invest in the equipment. Such investments may improve supplies operations by increasing efficiency and the speed of operations thus enabling the company to serve their clients within a short time. In the long run, the company gets their consumer’s trust and loyalty due to their outstanding services.
Items to Consider when Determining the Total Cost of Ownership
According to Martens, Walterbusch, and Teuteberg (2012), total cost of ownership refers to a financial estimate that helps both owners and buyers to determine indirect and direct costs of a system or a product. Some of the items that would be considered in determining the total cost of production include: internal rate of return, rapid economic justification, return on investment, economic value added, and return on IT (information technology) (Martens et al., 2012).
Return on investment (ROI) refers to the benefit the investor enjoys after making investments in a certain resource (Martens et al., 2012). This is of positive value to an organization. A business that has a high ROI shows that the investment cost can be compared favorably with investment gains. ROI is used by managers to determine the value of an investment. It is a way of determining profits made from an investment.
Internal Rate of Return (IRR) is used to determine the rate of return in a company. Such calculations do not consider external factors. IRR is used to compare the profits made from different investments and in capital budgeting (Martens et al., 2012). This is a positive value if investments yield profits. IRR is usually used to calculate the feasibility of projects. Economic Value Added (EVA) is the estimate of the profits made by a company (Martens et al., 2012). This is also a positive value because it includes the profits without including the equity cost.
Return on information technology refers to the relationship between the money spent on information technology and what is earned back (Martens et al., 2012). A positive value indicates that a company is benefiting from m investments made in information technology =. Once profits are realized, the company may want to invest more to increase profitability.
Characteristics that I Share with Professional Negotiators
I am a social person who likes working with other people. Therefore, I know how to interact with different types of personalities in a good way. Forming good relationships with people that I work with help to improve understanding. Being social helps me to become comfortable in a new environment within a short time. This means that I will be able to meet new people and find ways of interacting with them freely.
I love taking note of small details. This quality enables me to avoid errors as much as possible because I believe that they may lead to bigger ones. Taking note of details helps to ensure that quality is not compromised (quality of products and services). I will also be in a position to detect small changes in the supply chain, which may lead to future changes. Identification of such changes in a timely manner helps to find sustainable solutions.
Being polite enables me to communicate with other people in a respectful way. In the process, people end up respecting me too because of the way I treat them and the way I talk to them. This quality also helps me to find common terms with other people and make agreements. It is also easy for a polite person to manage others because people learn to respect him/her. Being polite also helps me to take time to listen to others and to take my time before judging them.
Choosing a New Supplier
Use of directories is a good way of choosing the right supplier. This is because it enables suppliers to advertise their services. By taking a look at the directory, you can get contact information about a certain supplier. The method is fair because you are able to take as much contact as possible. After that, you can contact the suppliers to understand their products and services. This helps a supply manager to make a well-informed decision.
Use of directories is appropriate because you are able to detect the right people dealing with particular products. The wide range of suppliers also gives room for making comparison. The fact that the contacts are given online, it is easy to trace them easily in case something goes wrong. The method is also consistent because contacts are always available. In case a business is in urgent need of suppliers, they can be identified within a short time without wasting time, which could possibly lead to losses.
Special Considerations When Seeking International Sources of Materials
The first step in choosing international sources of materials is to evaluate the in-market supplier. With the identification of a promising market opportunity, an intensive approach to supplier evaluation and product sourcing reduces the risk of working with suppliers who are unreliable (Covin & Miller, 2014). Evaluating suppliers involves investment of effort and time. The time and effort spent in evaluating suppliers is worth it when the business starts running smoothly and starts to benefit from long-term relationships with other businesses (Covin & Miller, 2014). This type of strategy is useful to those individuals seeking to advance their skills and knowledge, those who are new to importing and exporting business, and those seeking to gain expertise in the supply field.
One must ensure that the prices set for foreign imports are fair. Negotiating the price is important when finding a way of coming into common terms with the suppliers. Some of the important questions that may be kept in mind include the amount of products being purchased, the discounts offered, and logistics costs (Covin & Miller, 2014). One should also understand whether the price of commodities includes custom duties, packaging, cargo insurance, or transportation.
The other important consideration is how the imports are classified. Classification of imports determines the associated tariff due and import-valuation procedures (Covin & Miller, 2014). The importer is in a position to verify whether the potential foreign supplier is reliable or not. The supplier is also able to investigate the credit worthiness and reliability of importers (Covin & Miller, 2014). Through such facts, both parties can instill mutual confidence.
Types of Fixed-Price Contracts
Firm fixed-price contracts are those that are not subject to adjustment. This type of contract takes into consideration the risks associated with products and takes responsibility of resulting losses, profits, and other types of costs (Meng & Gallagher, 2012). It allows the contractor to take full control of costs to avoid burdening other contracting parties. The officer who contracts uses a firm-fixed-price and an award-fee incentive as well as delivery or performance incentives. Fixed-price contracts give a firm price in appropriate cases (Meng & Gallagher, 2012). The purchaser of the commodities is able to enjoy fair prices while the supplier is also able to continue having a good relationship with purchasers due to good terms of business. The supplier is also able to make realistic price estimates of products and services thus ensuring that there is healthy competition in the business environment.
Fixed-price incentive contracts specifies a price ceiling, a target profit, and profit adjustment formula. Price ceiling refers to the maximum price that can be paid to the contractor (Meng & Gallagher, 2012). When a contractor is done with performance, both the purchaser and the supplier negotiate the price of the product. Both the purchaser and the supplier are able to come into common terms thus ensuring that there is fairness in business.
Fixed price contracts with economic price adjustments give room for downward and upward revision of the initial price. This contract establishes a framework for measuring price fluctuations (Meng & Gallagher, 2012). In such a case, price adjustments are made according to the suppliers control ability. The prices set for commodities also reflect the true value of fluctuations of prices in the market. This type of contract is beneficial to the suppliers because they are able to set prices that ensure that they still get enough profits after setting fair prices. Purchasers on the other hand are able to enjoy reasonable prices of services and products.
References
Christopher, M. (2016). Logistics & supply chain management. London: Pearson UK.
Covin, J. G., & Miller, D. (2014). International entrepreneurial orientation: Conceptual considerations, research themes, measurement issues, and future research directions. Entrepreneurship Theory and Practice, 38(1), 11-44.
GoPro. (2016, May 23). GoPro and Red Bull form exclusive global partnership. Retrieved from https://gopro.com/news/gopro-and-red-bull-form-exclusive-global-partnership
Martens, B., Walterbusch, M., & Teuteberg, F. (2012, January). Costing of cloud computing services: A total cost of ownership approach. In System Science (HICSS), 2012 45th Hawaii International Conference on (pp. 1563-1572). IEEE.
Meng, X., & Gallagher, B. (2012). The impact of incentive mechanisms on project performance. International Journal of Project Management, 30(3), 352-362.
