Additional Information
Book Details
Abstract
This market-leading text continues its claim to be the most comprehensive textbook on procurement and supply chain management currently available. It is also of value to professionals and those specialists in other fields who need an understanding of the role and influence of this vital area of business performance.
The subject matter has been brought to life using extensive real-life examples and a truly international focus on procurement and supply chain. This new fully revised edition covers new developments in the procurement and supply chain field, and offers increased coverage of project procurement and risk management, global sourcing and contract management, alongside a brand new chapter on Legal and Contractual Management.
What’s new?
- The entire content has been updated to reflect such changes as contract risk, EU Procurement Regulations, category management, procurement strategies and world-class procurement. Extensive research has been carried out on an international scale to reflect material changes in the procurement profession.
- New teaching resources, including an Instructors Manual and comprehensive PowerPoint slides available from www.pearsoned.co.uk/farrington
Procurement & Supply Chain Management offers great value to those aspiring to be leaders in the profession and who are engaged in professional studies for the Chartered Institute of Procurement and Supply examinations at both the Foundation and Professional stages.
It is also a valuable source of practical and reference information for practising professionals.
Dr Brian Farrington is the Managing Director of his specialist company, Brian Farrington Limited. They provide training and consultancy support to the public and private sectors of business. They work on major projects and high-value, high-profile and high-risk procurements. He has extensive experience in the USA, Canada, Southern Africa, Hong Kong and Europe. He has resolved major disputes and negotiated complex contracts, including outsourcing key business services.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Title page | iii | ||
| Copyright page | iv | ||
| Contents | vii | ||
| Preface | xv | ||
| Acknowledgements | xvii | ||
| Publisher’s acknowledgements | xviii | ||
| Plan of the book | xx | ||
| Part 1 Introduction, strategy, logistics, supply chain, policies and procedures | 1 | ||
| Chapter 1 The scope and influence of procurement | 3 | ||
| Learning outcomes | 3 | ||
| Key ideas | 3 | ||
| Introduction | 4 | ||
| 1.1 How to define procurement | 4 | ||
| 1.2 Strategic roles of procurement | 5 | ||
| 1.3 Procurement as organisational buying | 7 | ||
| 1.4 The evolution of purchasing through to procurement | 9 | ||
| 1.5 Procurement and change | 15 | ||
| 1.6 World-class procurement | 16 | ||
| 1.7 The status of procurement and supply management (PSM) | 18 | ||
| 1.8 Reflections on procurement positioning in business | 25 | ||
| Discussion questions | 25 | ||
| References | 26 | ||
| Chapter 2 Strategic procurement | 28 | ||
| Learning outcomes | 28 | ||
| Key ideas | 28 | ||
| Introduction | 29 | ||
| 2.1 Strategic thinking | 30 | ||
| 2.2 What is strategy? | 31 | ||
| 2.3 Strategy development | 32 | ||
| 2.4 Levels of organisational strategy | 36 | ||
| 2.5 Corporate strategy | 37 | ||
| 2.6 Growth strategies | 37 | ||
| 2.7 Business-level strategy | 40 | ||
| 2.8 Strategic management | 43 | ||
| 2.9 Strategic analysis | 43 | ||
| 2.10 Important environmental factors | 45 | ||
| 2.11 Internal scrutiny | 49 | ||
| 2.12 Strategy formulation | 50 | ||
| 2.13 The evaluation of alternative strategies | 54 | ||
| 2.14 Strategy implementation | 65 | ||
| 2.15 Post-implementation evaluation, control and review vii | 69 | ||
| 2.16 Strategic procurement and supply chain process models | 71 | ||
| Discussion questions | 75 | ||
| References | 76 | ||
| Chapter 3 Logistics and supply chains | 78 | ||
| Learning outcomes | 78 | ||
| Key ideas | 78 | ||
| Introduction | 79 | ||
| 3.1 What is logistics? | 79 | ||
| 3.2 Materials, logistics and distribution management | 80 | ||
| 3.3 Reverse logistics | 85 | ||
| 3.4 Supply chains | 86 | ||
| 3.5 Supply chain management (SCM) | 89 | ||
| 3.6 Supply chain vulnerability | 94 | ||
| 3.7 SCM and logistics | 95 | ||
| 3.8 Value chains | 95 | ||
| 3.9 Value chain analysis | 100 | ||
| 3.10 Supply chain optimisation | 103 | ||
| 3.11 Supply chains and procurement | 106 | ||
| Discussion questions | 109 | ||
| References | 110 | ||
| Chapter 4 Organisational and supply chain structures | 112 | ||
| Learning outcomes | 112 | ||
| Key ideas | 112 | ||
| Introduction | 113 | ||
| 4.1 Organisational structures | 113 | ||
| 4.2 New type organisations | 121 | ||
| 4.3 Networks | 122 | ||
| 4.4 Factors in configurations | 129 | ||
| 4.5 Lean organisations | 132 | ||
| 4.6 Agile organisations and production | 135 | ||
| 4.7 Supply and value chain mapping | 139 | ||
| 4.8 Types of change | 143 | ||
| 4.9 Centralised procurement | 146 | ||
| 4.10 Decentralised procurement | 148 | ||
| 4.11 Cross-functional procurement | 148 | ||
| Discussion questions | 151 | ||
| References | 152 | ||
| Chapter 5 Procurement policies, procedures and support tools | 155 | ||
| Learning outcomes | 155 | ||
| Key ideas | 155 | ||
| Introduction | 155 | ||
| 5.1 Exemplar Procurement Policy – The Crossrail Project | 156 | ||
| 5.2 Procurement procedures | 159 | ||
| 5.3 Analysing a procurement process | 161 | ||
| 5.4 E-commerce, e-business, e-SCM and e-procurement | 161 | ||
| 5.5 The evolution of e-procurement models Contents | 165 | ||
| 5.6 Electronic data interchange (EDI) | 165 | ||
| 5.7 E-hubs, exchanges, portals and marketplaces | 171 | ||
| 5.8 E-catalogues | 173 | ||
| 5.9 E-auctions | 176 | ||
| 5.10 Reverse auctions | 177 | ||
| 5.11 E-payment | 182 | ||
| 5.12 Low-value purchases | 183 | ||
| 5.13 Procurement manuals | 185 | ||
| 5.14 Supplier manuals | 187 | ||
| Discussion questions | 188 | ||
| References | 189 | ||
| Part 2 Supplier relationships, legal & contractual management, quality management, sourcing, supplier selection, price management and long-term cost in use | 191 | ||
| Chapter 6 Supplier relationships and partnering | 193 | ||
| Learning outcomes | 193 | ||
| Key ideas | 193 | ||
| Introduction | 193 | ||
| 6.1 Relationship procurement and procurement relationships | 194 | ||
| 6.2 The contrast between transactional and relationship procurement, taking account of contractual requirements | 194 | ||
| 6.3 Collaborative business relationships | 194 | ||
| 6.4 Relationship formation | 197 | ||
| 6.5 Models of supplier relationships | 199 | ||
| 6.6 Practical considerations of supplier relationship management | 205 | ||
| 6.7 The termination of relationships | 208 | ||
| 6.8 Relationship breakdown on an IT project | 211 | ||
| 6.9 Further aspects of relationships | 213 | ||
| Discussion questions | 213 | ||
| References | 214 | ||
| Chapter 7 Legal and contractual management | 216 | ||
| Learning outcomes | 216 | ||
| Key ideas | 216 | ||
| 7.1 The procurement specialist and Contract Law | 216 | ||
| 7.2 Offer and acceptance | 217 | ||
| 7.3 Acceptance | 219 | ||
| 7.4 Contracts for the Sale of Goods | 221 | ||
| 7.5 Contract for the Supply of Services | 222 | ||
| 7.6 Consideration | 223 | ||
| 7.7 Capacity to Contract | 224 | ||
| 7.8 Drafting the detail of contract clauses | 226 | ||
| 7.9 Misrepresentation | 227 | ||
| 7.10 The Right to terminate a contract | 228 | ||
| 7.11 HOT TOPICS | 230 | ||
| 7.12 Standard Forms of Contract | 237 | ||
| Discussion questions | 239 | ||
| References | 239 | ||
| Chapter 8 Quality management, service and product innovation | 241 | ||
| Learning outcomes | 241 | ||
| Key ideas | 241 | ||
| 8.1 What is quality? | 242 | ||
| 8.2 Quality systems | 244 | ||
| 8.3 The importance of TQM | 244 | ||
| 8.4 Specifications | 249 | ||
| 8.5 Alternatives to individual specifications | 254 | ||
| 8.6 Standardisation | 257 | ||
| 8.7 Variety reduction | 262 | ||
| 8.8 Quality assurance and quality control | 262 | ||
| 8.9 Tests for quality control and reliability | 263 | ||
| 8.10 The cost of quality | 275 | ||
| 8.11 Value management, engineering and analysis | 276 | ||
| Discussion questions | 287 | ||
| References | 288 | ||
| Chapter 9 Matching supply with demand | 290 | ||
| Learning outcomes | 290 | ||
| Key ideas | 290 | ||
| 9.1 Inventory, logistics and supply chain management | 291 | ||
| 9.2 Reasons for keeping inventory | 291 | ||
| 9.3 Inventory classifications | 292 | ||
| 9.4 Scope and aims of inventory management | 292 | ||
| 9.5 Some tools of inventory management | 294 | ||
| 9.6 The economics of inventory | 298 | ||
| 9.7 Inventory performance measures | 299 | ||
| 9.8 Safety stocks and service levels | 300 | ||
| 9.9 The right quantity | 303 | ||
| 9.10 The nature of demand | 304 | ||
| 9.11 Forecasting demand | 304 | ||
| 9.12 ‘Push’ and ‘pull’ inventories | 310 | ||
| 9.13 Independent demand | 311 | ||
| 9.14 Dependent demand | 315 | ||
| 9.15 Just-in-time (JIT) | 315 | ||
| 9.16 Materials and requirements planning (MRP) | 322 | ||
| 9.17 Manufacturing resource planning (MRP II) | 326 | ||
| 9.18 Enterprise resource planning (ERP) | 327 | ||
| 9.19 Supply chain management systems | 330 | ||
| 9.20 Distribution requirements planning (DRP) | 330 | ||
| 9.21 Vendor-managed inventory (VMI) | 332 | ||
| 9.22 Procurement and inventory | 335 | ||
| Discussion questions | 335 | ||
| References | 337 | ||
| Chapter 10 Sourcing, supplier selection and performance management | 338 | ||
| Learning outcomes | 338 | ||
| Key ideas | 338 | ||
| 10.1 What is sourcing? | 339 | ||
| 10.2 The strategic sourcing process | 339 | ||
| 10.3 Sourcing information | 341 | ||
| 10.4 Analysis of market conditions | 342 | ||
| 10.5 Directives | 344 | ||
| 10.6 E-sourcing | 345 | ||
| 10.7 Locating suppliers | 346 | ||
| 10.8 Supplier assessment | 347 | ||
| 10.9 Supplier approval | 355 | ||
| 10.10 Evaluating supplier performance | 356 | ||
| 10.11 Policy issues in sourcing | 359 | ||
| 10.12 The supplier base | 360 | ||
| 10.13 Outsourcing | 361 | ||
| 10.14 Outsourcing manufacturing | 362 | ||
| 10.15 Outsourcing services | 367 | ||
| 10.16 Drivers of outsourcing | 369 | ||
| 10.17 Types of outsourcing | 369 | ||
| 10.18 Benefits of outsourcing | 370 | ||
| 10.19 Problems of outsourcing | 370 | ||
| 10.20 Handling an outsourcing project | 371 | ||
| 10.21 Sub-contracting | 373 | ||
| 10.22 Partnering | 375 | ||
| 10.23 Intellectual property rights and secrecy | 385 | ||
| 10.24 Procurement support for in-house marketing | 386 | ||
| 10.25 Intra-company trading | 387 | ||
| 10.26 Local suppliers | 388 | ||
| 10.27 Procurement consortia | 388 | ||
| 10.28 Sustainability | 389 | ||
| 10.29 Sourcing decisions | 390 | ||
| 10.30 Factors in deciding where to buy | 392 | ||
| Discussion questions | 394 | ||
| References | 396 | ||
| Chapter 11 Purchase price management and long-term cost-in-use | 398 | ||
| Learning outcomes | 398 | ||
| Key ideas | 398 | ||
| 11.1 What is price? | 399 | ||
| 11.2 Strategic pricing – an introduction | 399 | ||
| 11.3 The buyer’s role in managing purchase prices | 400 | ||
| 11.4 Supplier pricing decisions | 411 | ||
| 11.5 The supplier’s choice of pricing strategy | 411 | ||
| 11.6 Price and cost analysis | 413 | ||
| 11.7 Competition legislation | 417 | ||
| 11.8 Collusive tendering | 419 | ||
| 11.9 Price variation formulae | 420 | ||
| Discussion questions | 422 | ||
| References | 424 | ||
| Part 3 Project management and risk management, global sourcing, negotiation skills, contract management, category procurement, world-class procurement to enhance business performance | 425 | ||
| Chapter 12 Project procurement and risk management | 427 | ||
| Learning outcomes | 427 | ||
| Key ideas | 427 | ||
| 12.1 Introduction | 428 | ||
| 12.2 The project lifecycle | 428 | ||
| 12.3 PID and the project procurement strategy | 433 | ||
| 12.4 Design and build | 435 | ||
| 12.5 Role of procurement | 436 | ||
| 12.6 PRINCE2 ® | 436 | ||
| 12.7 Project management issues | 438 | ||
| 12.8 Project risk management | 439 | ||
| 12.9 Project procurement risk management | 440 | ||
| 12.10 Project procurement management | 447 | ||
| Discussion questions | 455 | ||
| References | 455 | ||
| Chapter 13 Global sourcing | 457 | ||
| Learning outcomes | 457 | ||
| Key ideas | 457 | ||
| 13.1 Terminology | 458 | ||
| 13.2 Motives for buying offshore | 458 | ||
| 13.3 Sources of information for offshore suppliers | 459 | ||
| 13.4 Overcoming challenges when sourcing off-shore | 460 | ||
| 13.5 Incoterms ® | 467 | ||
| 13.6 Shipping terms | 468 | ||
| 13.7 Customs and Excise | 472 | ||
| 13.8 Transport systems, costs and considerations | 473 | ||
| 13.9 Freight agents | 475 | ||
| 13.10 Methods of payment | 477 | ||
| 13.11 Countertrade | 479 | ||
| 13.12 The true cost of offshore buying | 482 | ||
| 13.13 Buying capital equipment offshore | 482 | ||
| 13.14 Factors in successful offshore procurement | 484 | ||
| Discussion questions | 485 | ||
| References | 485 | ||
| Chapter 14 Negotiation skills, practice and business benefits | 487 | ||
| Learning outcomes | 487 | ||
| Key ideas | 487 | ||
| Introduction | 488 | ||
| 14.1 Approaches to negotiation | 491 | ||
| 14.2 The content of negotiation | 492 | ||
| 14.3 Factors in negotiation | 495 | ||
| 14.4 The negotiation process | 499 | ||
| 14.5 Pre-negotiation | 500 | ||
| 14.6 The actual negotiation | 506 | ||
| 14.7 Post-negotiation actions | 511 | ||
| 14.8 What is effective negotiation? | 512 | ||
| 14.9 Negotiation and relationships | 512 | ||
| 14.10 Negotiation ethics | 514 | ||
| Discussion questions | 518 | ||
| References | 519 | ||
| Chapter 15 Contract management | 521 | ||
| Learning outcomes | 521 | ||
| Key ideas | 521 | ||
| Introduction | 522 | ||
| 15.1 The pre-contract award activities impact on contract management | 522 | ||
| 15.2 The contract manager’s role, skills and knowledge | 523 | ||
| 15.3 Contract management plans | 527 | ||
| 15.4 The contract management of specifications/standards | 531 | ||
| 15.5 Managing contract performance | 534 | ||
| 15.6 Social services contract monitoring audit | 536 | ||
| 15.7 Contract management checklist | 540 | ||
| 15.8 Contract provisions | 541 | ||
| 15.9 Contract clauses and what they mean | 542 | ||
| Discussion questions | 543 | ||
| References | 544 | ||
| Chapter 16 Category and commodity procurement | 545 | ||
| Learning outcomes | 545 | ||
| Key ideas | 545 | ||
| Introduction | 546 | ||
| 16.1 Defining categories | 546 | ||
| 16.2 Illustrations of category management issues | 547 | ||
| 16.3 The talent challenge | 549 | ||
| 16.4 Category management risk profiling | 549 | ||
| 16.5 Category management – corporate travel | 550 | ||
| 16.6 Category management – ICT | 554 | ||
| 16.7 Capital investment procurement | 556 | ||
| 16.8 Production materials | 567 | ||
| 16.9 Raw materials | 568 | ||
| 16.10 Futures dealing | 569 | ||
| 16.11 Methods of commodity dealing | 573 | ||
| 16.12 Procurement of non-domestic gas and electricity | 577 | ||
| 16.13 Energy regulation | 577 | ||
| 16.14 Energy supply chains in the UK | 577 | ||
| 16.15 Markets | 578 | ||
| 16.16 Pricing | 579 | ||
| 16.17 Procuring energy contracts | 580 | ||
| 16.18 Energy consultants and management | 582 | ||
| 16.19 Component parts and assemblies | 582 | ||
| 16.20 Procurement and consumables | 583 | ||
| 16.21 Construction supplies and bills of quantities | 584 | ||
| 16.22 Procurement of services | 587 | ||
| Discussion questions | 592 | ||
| References | 593 | ||
| Chapter 17 World-class procurement to enhance business performance | 594 | ||
| Learning outcomes | 594 | ||
| Key ideas | 594 | ||
| 17.1 Innovation and supplier continuous improvement | 595 | ||
| 17.2 Innovation | 596 | ||
| 17.3 Environmentally sensitive design | 597 | ||
| 17.4 Procurement involvement in product development | 599 | ||
| 17.5 Supplier development | 599 | ||
| 17.6 Procurement research | 603 | ||
| 17.7 Procurement performance evaluation | 606 | ||
| 17.8 Accounting approaches | 610 | ||
| 17.9 The procurement management audit approach | 611 | ||
| 17.10 Benchmarking and ratios | 616 | ||
| 17.11 Integrated benchmarking | 617 | ||
| 17.12 Procurement ethics | 619 | ||
| 17.13 Ethical issues relating to suppliers | 621 | ||
| 17.14 Ethical codes of conduct | 623 | ||
| 17.15 Procurement and fraud | 627 | ||
| 17.16 Environmental aspects of procurement | 631 | ||
| Discussion questions | 642 | ||
| References | 644 | ||
| Appendix 1: Code of professional ethics – Chartered Institute of Procurement and Supply (CIPS) (Approved by the CIPS Council, 11 March 2009) | 646 | ||
| Appendix 2: Principles and standards of ethical supply management conduct (ISM) (Adopted May 2008) | 648 | ||
| Definitions, acronyms and foreign words and phrases | 649 | ||
| Index of names and organisations and some publications mentioned in the text | 655 | ||
| Subject Index | 660 |