Procurement vs. Acquisitions vs. Supply Chain Mngmtn?

I was hoping some SDopers might have a handle on these terms to help me get a feel for the similarities and differences in such positions. Obviously, all terms are concerned with purchasing items and/or getting supplies to the end-user…but what are the finer points one should know regarding differences in these roles?

  • Jinx

I worked in Procurement in a Fortune 500 company for a number of years. IME, Acquisitions is used almost exclusively for those departments in charge of purchasing other corporations – usually the department is called Mergers & Acquisitions, or something similar.

Procurement has become a more trendy term than Purchasing because it encompasses both goods and services. Most “purchasing” departments focus primarily on what we called “kickables” – anything you could actually see and kick. Good procurement departments will also focus on things like Total Cost of Ownership – not just the purchase price, but upkeep, disposal, etc.

Supply Chain Management is most often associated with manufacturing, where you may work not just with your own suppliers, but with their suppliers and so on up the chain, to ensure that you have good value, sufficient supply and reliable timing every step of the way. If you are a supplier to other corporations, your Supply Chain Management people may also work with companies “downstream” as part of their efforts to ensure good value.

mrklutz has a pretty good explanation above. I’ll add that supply chain management takes over after purchasing/procurement to get the products to the right factory or distribution center. Where one leaves off and the next takes over will depend on company, department, or even product being purchased.

Supply chain management also covers supply of finished manufactured goods.

Supply chain management has always been around, but it may have been in procurement/purchasing departments and shipping departments before. It gets as much attention as it does today because having reliable ingredient and product flows becomes critical if you are trying to reduce inventories.

Based on the above, would it be correct to say that Procurement handles the “incoming” (raw materials, equipment, and services) whereas Supply Chain Management handles the “outgoing” making sure the finished products gets out to the customers in a timely fashion. Sound about right? - Jinx

Just about right.

I work in the Purchasing Dept. of one of the largest wineries in the US.

In our world, Supply Chain Management is exactly that - the management of a finished good item (in our case, a case of wine) from a concept on paper, to a box going out our door to a customer. It involves Marketing, Master Planner, Purchasing, Inventory, Production, Sales, Distribution, Transportation, etc. etc.

And a good ERP system. :wink:

Thanks for the confirmation of my little summary posted above, Psycat90. But, what is an “ERP system”?

Engineers are trained to solve problems, but rarely a thought is given to polish them up to better mesh with managers. So, alas, all the glitzy buzz words of the business world can slide passed unnoticed by the worker bees. I think it all boils down to the fact that engineers and managers talk two different languages…unless an engineer has had adequate exposure to the world of management. (Unfortaunately, it may be a heart-breaking and eye-opening experience seeing how you are just a little cog in a big machine.)

On the other hand, managers too often strap engineers into unrealistic committments…so, they could use more exposure in the engineering world.

Fascinating, :dubious:

  • Jinx

ERP = Enterprise Resource Planning which is a term that seems to have been created to encompass the entire process. There are several ERP softwares out there, including stuff from SAP, JD Edwards, Peoplesoft and now Microsoft. It’s an attempt to manage the entire Enterprise, from planning through procurement, manufacturing and then outbound logistics and warehousing.

As to Supply Chain Management, this term will mean slightly different things to different companies, depending on what they define as their Supply Chain and how the internal turf is divided. It should really include forecast and at least some of the manufacturing processes as well as the “outgoing” stuff mentioned before. The idea is that you have everything you need, when you need it, so that your Supply is equal to (forecasted or actual) Demand.

What ERP adds to that is mainly Accounting and Financials, possibly some forecasting, depending on the previous definitions. Quality and Maintenance might be others that are usually not thought of as pure supply chain but are equally important. In complex systems HR can even be mixed into the bag, so that you know that you have enough staff (and that they are adequately trained), optimizing them like any other component in your production process.

Oliver Wight would be one group that consults with major manufacturers and helps them define their Supply Chain and how best to manage it (defines what are their current best practices). I’m sure that there are others out there like that.