Period 7: Integrated Supply Chain Management (The Twenty- First Century)

Purchasing and supply chain management today reflects a growing emphasis concerning the importance of suppliers. Supplier relationships are shifting from an adversarial approach to a more cooperative approach with selected suppliers. The activities that the twenty-first century purchasing organization must put in place are quite different from those of just a few years ago. Supplier development, supplier design involvement, the use of full-service suppliers, total cost supplier selection, long-term supplier relationships, strategic cost management, enterprise-wide systems (enterprise resource planning, or ERP) and integrated Internet linkages and shared databases are now seen as ways to create new value within the supply chain. However, newer concepts continue to emerge, including enabling innovation in the supply base and managing risks of a global supply chain. Purchasing behavior is shifting dramatically to support the performance requirements of the new era.

It is possible to reach three conclusions about twenty-first century purchasing. First, the reshaping of purchasing’s role in the emerging global economy is under way, in response to the challenges presented by worldwide competition and rapidly changing technology and customer expectations. Second, the overall importance of the purchasing function is increasing, particularly for firms that compete in industries characterized by worldwide competition and rapid change. Third, purchasing must continue to become more integrated with customer requirements, as well as with operations, logistics, human resources, finance, accounting, marketing, and information systems. This evolution will take time to occur fully, but the integration is inevitable.

The history and evolution of purchasing and supply chain management provides an appreciation for the growth, development, and increased stature of the profession over the last 150 years. Each historical period has contributed something unique to the development of purchasing, including the events that have shaped today’s emphasis on integrated supply chain management.