Review of Related Studies Essay

A lot has been written about what supply management is, and how it relates not only to similar terms and to concept like purchasing, procuring, and sourcing, but also to concepts like management, logistics, and supply chain management. Most authors differentiate purchasing, procurement, sourcing, and supply management as follows: they start by stating that purchasing includes operational activities that are carried out more or less exclusively by one department, namely the purchasing department. The sequence of activities here usually starts with the need identification and ends with the tracking of purchasing activities.

Procurement is then defined as being broader in scope and including some activities of strategic relevance. According to Dobler/Burt (1996), procurement includes not only purchasing but also tasks that are strategic in nature. The same logic is then applied to supply management as figure 1 shows. See on page 38 for the figure. Monczka/Trent/Handfield(1998) use the terms purchasing and procurement interchangeable throughout their book. In their view, purchasing and procurement are functional activities that “most often refer to day-to-day management of material flows and information”.

They also define sourcing “a cross functional process that involves member of the firm other than those who work in the purchasing department, the sourcing management team may include members from engineering, quality, design, manufacturing, marketing, accounting, strategic planning, and other department” Kaufmann (1995) describe sourcing; “an integrative management approach to designing all supplier relations in the sense of a total relationship management” Arnold (1997) uses the term supply management as an umbrella term for the concept of procurement, materials management, and logistics.

According to him, the latter includes inbound logistics, and internal logistics, as well as outbound logistics. Tempelmeier (1995) defines purchasing as contract-centered (as opposed to logistical activities implying the physical movement of goods). He defines procurement as all activities aiming at supplying the company with needed inputs. Corsten (1995) the process of purchasing denotes the act of acquiring the property right of the procurement goods.

He defines procurement in a similar way as Tempelmeier. Sourcing is the process of planning and handling outside sources. He defines supply management as procurement with a strategic focus that acts proactively and contributes significantly to company performance. Koppelmann (1995) uses the term Procurement Marketing for nearly exactly the same set of activities as Dobler/Burt do for supply management. There is also some discussion about the types of purchases that fall under each of the definitions.

International authors like Dobler/Burt (1996), Monczka/Trent/Handfield (1998), and van Weele (1995) restrict the scope of purchasing, procurement, sourcing or supply management to materials, services, and capital equipment. They do not include the supply of the company with financial resources or personnel. German authors like Arnold (1997), Fieten (1986), Pieper/Pfohl (1993), Tempelmeier (1995) argue differently: They say that from a theoretical standpoint all inputs have to be considered. Some of them like Arnold and Pieper/Pfohl however, pragmatically restrict the scope of purchasing, procurement, or supply management to materials.

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