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 1 Supply Chain Management Notes ( Pvt Ci rculation Only) Compiled by Santhosh.S, Associate Professor, SCMS Cochin  Unit I  –  Part 2 Introduction to Supply Chain Management (SCM): Concept of SCM  – Components  – Features  – Strategic issues in SCM, The Supply Chain Revolution-Customer focus in SCM , Demand planning, Purchase Planning  – Make or Buy decision  – indigenous and global sourcing, Development and Management of suppliers  – Legal aspect of Buying  – Cost management- Negotiating for purchasing and sub contracting  – Purchase insurance  – Evaluation of Purchase perform ance. INDIGENOUS AND GLOBAL SOURCING Domestic Purchase, International Purchase, Global Sourcing GLOBAL SOURCING Def 1 : Is the process of identifying, developing and utilizing the best source of supply for a firm regardless of its location. Def 2 : Global sourcing involves proactively integrating and coordinating  common items and materials  Processes. Design, Technologies and  Suppliers Across world wide  Purchasing  Engineering and  Operating Locations. Difference between Domestic Purchase and International purchase Characteristic that differentiates International purchase from domestic purchase are 1. Increased Scope of purchases  –  The variety and assortment of items available for  purchase is many times more than indigenous purchase 2. Increase Purchasing Risks –  Risks associated with buying from world wide is many time more due to political, legal and geographic differences of the sourcing locations 3. Decrease in Purchase Price  –  International purchase very often has low cost advantages which domestic purchase may not be able to offer. 4.  Need for systematic supplier selection  –  Cultural differences, attitude towards quality, misunderstanding, language barriers etc between the buying and selling firms can cause a lot of performance issues and costly mistakes. Hence supplier selection becomes much more critical in case of international purchase than indigenous purchases.

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Page 1: Introduction to Supply Chain 2

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