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AbstractIndustrialMarketingManagement32(2003)365–374StrategiccostmanagementacrossboundariesoffirmsAnnaDubois*DepartmentofIndustrialMarketing,ChalmersUniversityofTechnology,GothenburgS-41296,SwedenInrecentyears,increasingattentionhasbeenplacedonhowpurchasingstrategiesmaycontributetotheefficiencyoffirms.Inthispaper,acasestudyillustrateshowonefirmimplementedasupplierbasereductiontoenableahighinvolvementstrategyinrelationtoappointedkeysuppliers.Theeffectsofthischangeinpurchasingstrategywereextensivecostrationalisations.Themainchangeinthisprocesswasaredefinitionoftheunitofanalysisfromindividualtransactionstobuyer–supplierrelationships.However,thecostsintherelationshiparedrivennotonlybyinternalfactorsonthetwosidesoftherelationshipbutalsobyhowthefocalrelationshiprelatestootherrelationships.Therefore,thewaysinwhichthecostsareaffectedbyotherparties,suchasthesupplier’ssupplier,thesupplier’sothercustomers,thecustomer’sothersuppliers,andthecustomer’scustomers,needtobeincludedintheanalysis.D2003ElsevierScienceInc.Allrightsreserved.Keywords:Purchasing;MRO;Totalcost1.IntroductionThesupplysideofcompanieshasbecomeincreasinglyimportantoverthelastfewdecades.Onereasonisthatthecostsofpurchasedgoodsandservicesrepresentthemajorityoftotalcostsformostcompanies.Thishighshareisattributabletotheambitionofcompaniestoconcentratemoreoftheireffortsonalimitedpartofthetotalactivitystructureofthebusinessnetworksinwhichtheyareinvolved.Byoutsourcingactivitiestosuppliers,firmsareabletospecialisetheirownoperations.Itisnotonlytheincreasingfinancialimpactthatmakesthesupplysidesignificant.Anothermoreimportantreasonisthechangingnatureofthecontentofbuyer–supplierexchange.Overtime,outsourcingofmanufacturingactiv-itieshasbeenfollowedbyoutsourcingofdesignanddevelopmentwork.Toanincreasingextent,suppliersarecontributingtothetechnicaldevelopmentofacompany.Thischangehasbeenaccentuatedbecauseofincreasesinthenumberofdifferenttechnologiesacompanynowneedsinordertobeabletooperateandbecauseofthehighercostofdevelopingeachsubsequentgenerationoftechnology.Com-paniestodayaredependentonknowledgedevelopedandsuppliedbyotherfirms.*Tel.:+46-31-772-1196;fax:+46-31-772-3783.E-mailaddress:anndub@mot.chalmers.se(A.Dubois).Athirdreasonforwhichthesupplysidehascomemoreintofocusistheenhancedsignificanceofinterfaceswithotherfirms(Araujo,Dubois,&Gadde,1999).Interfaceswithsuppliersarecrucialnotonlywhenitcomestotechnicaldevelopment,butmanagementconceptsandtechniquessuchasjust-in-time(JIT),totalqualitymanagement(TQM),and‘‘zero-defectprinciple’’alsohavesubstantialimpactsonthewayfirmsoperate.Applyingthesetechniquesrequirestheactiveinvolvementofsuppliersandaffectsthecostsandbenefitsofbothbuyerandsupplier.Theenhancedsignificanceofthesupplysidehasmadepurchasingastrategicfunction.Thecontributionsfrompurchasingtothestrategicdevelopmentofacompanymaybesummarisedintwostrategicroles:rationalisationanddevelopment(Axelsson&Ha˚kansson,1984).Thedevel-opmentroleconcernsthepurchasingfunction’scontributiontothetechnicaldevelopmentofthefirmthroughorganisingandmanagingrelationshipswithsuppliers.Asregardstherationalisationrole,GaddeandHa˚kansson(2001)distin-guishthreemaintypesofroles.Thefirstisrelatedtodiscoveringwhatneedstobepurchased.Thesecondisrelatedtorationalisationoflogisticsactivitiesandthethirdtorationalisationofadministrativeroutines.Toenablethepurchasingfunctiontocontributetotheseroles,purchasingstrategiesareneeded.AccordingtoGaddeandHa˚kansson(2001),threestrategicissuesneedtobeconsidered:(1)makeorbuydecisions,(2)supplybasestructure,and(3)natureofcustomer–supplierrelationships.0019-8501/03/$–seefrontmatterD2003ElsevierScienceInc.Allrightsreserved.doi:10.1016/S0019-8501(03)00010-5366A.Dubois/IndustrialMarketingManagement32(2003)365–374Inthispaper,weconcentrateontherationalisationroleandhowitaffectsandisaffectedbythesupplybasestructureandthenatureofbuyer–supplierrelationships.Theaimofthepaperisthustodiscusshowthepurchasingstrategymaycontributetotherationalisationroleofpur-chasing.Inparticular,itfocusesonhowchangestowardshigherlevelsofinvolvementinbuyer–supplierrelation-ships,inparalleltoeffortstoreducethenumberofsuppliers,mayimpactonthesuppliers’abilitytocontributetocostrationalisations.Thefirstpartofthepaperfocusesonpurchasingstrategiesandhowtheyareassumedtocontributetotheefficiencyofthefirm.Thereafter,costrationalisationthroughsupplierrelationshipsisdiscussedandMaintenanceRepairandOperations(MRO)suppliesareintroducedasaparticularlycomplicatedpurchasingareawheretherearetypicallylargerationalisationpotentials.AcasedealingwithMROpur-chasingispresentedinSection3andanalysedinSection4.Thereafter,theconcludingdiscussionfocusesonhowandwhystrategiesfocusedonhighinvolvementwithfewsupplierscanandshouldbesuccessfullypursued.Finally,somemanagerialimplicationsareaddressedfocusingonthe‘‘totalcostconcept’’andtheproblemsandpotentialsofitsapplication.2.PurchasingstrategiesTherearedifferentdimensionsinwhichpurchasingstrategiesaredescribed.Therearealsodifferentsuggestionsaswhentoapplydifferentstrategies,i.e.,howtod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