Generation of Requirements:

An entrepreneur should know his/her requirements, and ways to get them fulfilled?

This is a question that is continuously lingering in the minds of all of the managers involved with supply management. It is a critical activity that terminates in identifies the right and the best material along with the development of specifications & statements of work that describe these requirements. The exodus of materials, services and equipments are 'designed in' during this specific phase, to the tune of almost 85%. Thus in order to ensure appropriate consideration to the services, raw materials and costs, supply management should be involved right from the word go during generation of requirement phase.

Sourcing

While one decides to go shopping just try and visualize what all plays up in one's mind? Say, you have to buy a Music System for example. Then what? The mental appreciation rapidly says them following:

Budget

How much money can you expend on a system?

Brand

Which is the best suited brand in the market in your budget?

Availability

Is it willingly available too?

Services

In case this is available, how are its after sales services?

Final Selection

What is the best that suits all of the above?

That is precisely the appreciation one got to do before sourcing. Identifying and selecting the best supplier available in the market, whose materials, costs, dependability, quality and services suits the manufacturer's needs, are initial step of sourcing. Sourcing is development of a supply alliance, and it is an activity by itself.

Pricing

This is a two way traffic aimed both at the supplier and the manufacturer. This is done in such a way that it benefits the supplier for its effort and also results in lower cost for the firm who purchase the supplies. Keep in mind inflationary trends, pricing forms part of the on-going process in supply management with inbuilt negotiations, to arrive at the best deal possible. If the supplies are costly, the price of the commodity also rises. Thus, in order to strike a balance, the job of supply management is to continuously monitor this aspect so as to keep the prices from rising. For instance, when the prices of diesel go up, the transportation cost increases leading to enhance in price of supply. Foresight and planning on the part of the manufacturer play a leading role in assessing and reacting to such eventualities in a big way.