ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Supply Management Snapshots

Updated on May 22, 2010

This article gives snapshots of Supply Management, how supply management strategies are developed and how Buyers are responsible for developing supply management strategy. I have also touched upon procurement process, logistics role in efficient supply management and some sustainable initiatives of key players in global supply management.

How Buyers go for shopping

Buying or procurement process begins with negotiation of prices. Low prices are obtained by booking the orders in bulk. This helps in lowering of prices. e.g. if a company is operating in several countries and same raw materials are being used in all or several countries then the negotiating of prices with suppliers is done by combining the forecast of all the countries.

e.g. a company A is operating in Pakistan, China and Indonesia. Now if all the sister companies go on buying a raw material X separately then they would not be able to get quantity discounts as efficiently as they would have if the volumes were combined. So price is negotiated by combining the volumes so that cost is reduced.

Once cost is negotiated Buyer starts to buy the raw material as per PRs (Purchase Requisition). Email is sent to the supplier asking him about PFI (Proforma Invoice). It lists the price and quantity of the raw material that is needed. An indent is then raised and Bank contract or letter of credit is initiated, depending upon the mode of payment agreed between the parties.

Imports & Supply Logistics

Imports & Logistics part of Supply Management ensures that goods are cleared from the port on time. They look after the shipment of FOB (Free on Board) cargoes as well. Only those goods can be imported that are on the positive list of Customs authorities. Countries can place restrictions as to what goods or raw materials can be imported from a particular country in order to save their own markets or to restrict trade due to unfriendly diplomatic relations, Customs authorities pass what they call "positive list" of those items that can be imported from a specific country. Each item or raw material is identified with its H.S. code (Harmonized System code). The list contains the names of items with their H.S. codes.

Importance of H.S. codes

Most of the countries of the world use H.S. codes in foreign trade these days. H.S. codes are the unique codes allotted to unique goods. H.S. codes are important for the following reasons:

1. They help importers to find out whether they are allowed to import certain goods from a particular country or not.
2. They are used to calculate Customs duty for a particular good.
3. They are used to calculate tariff.

With one supplier only, one can expect supplies with kinks and knots.
With one supplier only, one can expect supplies with kinks and knots.

Strategic Supplier Development

Its necessary that the Supply Manager should have more than one suppliers at hand to fulfill the supplies.

Having one supplier for one material is extremely risky. Even the most reliable suppliers can have problems that can lead to delays in material shipments. In order to obviate any supply delays there should be more than one suppliers. Having more suppliers is costly. Buyers have to look for trade-offs amongst several options. They have to develop the supplier before using any of its products. They ensure that their supplier is making the best quality material in
the safest possible manner. Supply Mangers have to audit the suppliers several times to ensure that everything is OK. Plant trials are then carried out to test the chemical stability of the products made out of the material supplied by the approved supplier. Products are kept under observation for their complete shelf life and closely monitored for their chemical stability. This complete process, which is a part of supply management strategy, consumes time and money. But once they are through with this process, seamless supplies are ensured.

Supplier development is the most important part of procurement process.

Environment And Supply Management

Industries are getting more productive than ever. They are making more products than ever produced. With the increase in population, the demand for different types of goods has increased to astounding levels. This translates in to an even greater waste and impact on environment. From Supply management's perspective it means more shipments have to be made to make more goods.

Some initiatives by some key players of global supply chain are mentioned below:

Green Supply Management Initiatives


By optimizing the their truck routes and loading methods Walmart saved 140 million miles of driving which in turn saved 200,000 metric tonnes of CO2 from being released into the atmosphere while saving $200 million in 2008. They are now working toward their goal to double the efficiency of their fleet by 2015 compared to our fleet in 2005.


In 2010 Unilever plans to move around 30% of freight, in Europe, by ‘off road networks’ such as rail, sea and inland waterways, generating savings of 9,000 tonnes of CO2 emissions – equivalent to a truck driving round the world 240 times (9.5 million km).


Since September 2008, P&G Brazil has bypassed most of the 4,000 kilometers of road. The new route takes product via the Amazon River to the Atlantic coast where it embarks on an ocean journey, then a rail ride, and finally a short road trip to the distribution center. This route is 40% longer but it’s more environmentally sound than truck transport alone because the river and ocean portions of the trip reduce CO2 emission by at least 60%.

Sources for above statistics:


Submit a Comment

No comments yet.


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)