A. Buy Sourcing is the process of identifying a company that provides a needed good or service, these decisions normally are based on supplier cost and capability by comparison to producing the product in house. These decisions include supplier selection, certification, agreements, and partnerships, including vendor-managed inventory (VMI). Total acquisition costs must be considered.
1. Establish external supply
2. Purchase/procure goods and services
a. The purchasing process begins with any of the following signals: purchase requisition, material requirements planning (MRP) output, Kanban signals, and/or buffer.
b. Order processing includes defining terms and conditions, purchase order release, monitoring supplier performance, authorizing supplier to ship, receipt of goods, invoice approval and purchase order closeout.
3. Respond to supply disruptions/changes
a. Supply chain conflicts and risks exist among trading partners and must be identified, analyzed, and addressed. Some examples include disruption of supply, synchronizing supply with demand, minimizing inventory investment, maximizing customer service, and managing total cost.
b. An important part of execution and control is focusing on quality assurance by measuring quality, monitoring process variation, and improving process control.
4. Measure supplier performance