| Language |
| Differences in culture, language, dialects or terminology may result in miscommunication and cause problems. While both parties may think that they understand what the other party has said, a true agreement may be missing. A simple word like “plant,” for instance, can be a source of confusion – in the Far East, the word “plant” is interpreted to mean only a living organism, not a physical facility. Source: Dobler, D.W., & Burt, D.N. (1996). Purchasing and Supply Management. (6th ed.). New York: McGraw Hill. top |
| Lead Times/Cycle Times |
| 1) A span of time required to perform a process (or series of operations). 2) In a logistics context, the time between recognition of the need for an order and the receipt of goods. Individual components of lead time can include order preparation time, queue time, processing time, move or transportation time, and receiving and inspection time. Source: http://www.apics.org/ (10th ed.) top |
| Lean Manufacturing |
| A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with the customers. Lean producers employ teams of multiskilled workers at all levels of the organization and use highly flexible, increasingly automated machines to produce volumes of products in potentially enormous variety. It contains a set of principles and practices to reduce cost through the relentless removal of waste and through the simplification of all manufacturing and support processes Source: http://www.apics.org/ (10th ed.) top |
| Legal Issues |
| Purchasing law has been primarily developed from laws regarding contracts. In order for a contract to be valid, four conditions must be present: 1) Parties with full contractual capacity should willfully and in the absence of fraudulent activity have signed the contract; 2) the underlying purpose for the agreement must be legal; 3) all conditions regarding the offer and acceptance of the contract must be met; 4) the contract should have an element of mutual obligation; that is both parties must agree to do something they otherwise would not be required to do. Another topical area of commercial law that is relevant to purchasing professionals has to do with laws regarding agency. The laws regarding agency outline the types of authority that an agent possesses in performing duties for the principal. An agent is a person, who, by express or implied agreement is authorized to act for someone else in business dealings with a third party. This is precisely what purchasing managers and buyers do. By law, a buyer operates under two types of authority - actual authority and apparent authority. Apparent authority is that level of authority perceived by outside parties to be available to the purchasing manager. The concepts of actual and apparent authority are important in terms of a buyer's legal liability. If a purchasing manager, in carrying out normal procurement activities, exceeds his or her actual authority but not apparent authority, then the employer is still responsible for performance of the contract but could seek legal action against the purchasing manager personally. If, on the other hand, the agent exceeds both his or her actual and apparent authority, a seller cannot usually hold the buying firm liable but may be able to hold the agent personally liable for his actions. Source: Monczka, R., Trent, R., & Handfield, R. (1998). Purchasing and Supply Chain Management. Cincinnati, OH: South Western College Publishing. Dobler, D.W., & Burt, D.N. (1996). Purchasing and Supply Management. (6th ed.). New York: McGraw Hill. top |
| Logistics Information Systems |
| Converting data to information, portraying it in a manner useful for decision making, and interfacing the information with decision-assisting methods are considered to be at the heart of an information system. Logistics information systems are a subset of the firm’s total information system, and it is directed to the particular problems of logistics decision making. There are three distinct elements that make up this system: the input, the database and its associated manipulations, and the output. The inputs are data items needed for planning and operating logistics system obtained from sources like customers, company records, and published data and company personnel. Management of the database involves selection of the data to be stored and retrieved, choice of the methods of analysis and choice of the basic data-processing procedures. The outputs of a logistics information system include: 1) summary reports of cost or performance statistics, 2) status reports of inventories or order progress, 3) exception reports that compare desired performance with actual performance, and 4) reports that initiate action. Output can also be in the form of documents such as transportation bills of lading and freight bills. Source: Ballou, R.H. (1999). Business Logistics Management. (4th ed.). Upper Saddle River, New Jersey: Prentice Hall. top |
| Logistics Management |
| Logistics management is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and the related information flows) through the organization and its marketing channels in such as way that current and future profitability are maximized through the cost-effective fulfillment of orders. Source: Christopher, M. (1998). Logistics and Supply Chain Management: Strategies for reducing cost and improving service, (2nd Ed.). New York: Prentice Hall. top |