This document discusses various topics related to logistics management and sourcing, including: 1) Sourcing involves identifying, selecting, and developing suppliers to acquire materials, products, or services. It includes all business processes for purchasing goods and services. 2) Global sourcing presents issues like hidden costs, financial and political risks, losing intellectual property, and quality problems due to a focus on cutting costs. 3) E-procurement uses the internet and information technologies to purchase supplies through reverse auctions and other means.

1. LOGISTICS
MANAGEMENT
Unit-II
PRESENTED BY
K.BALASRI PRASAD
B.Sc(KU), M.B.A(OU), NET(UGC), (Ph.D)(MGU)

2. Sourcing of material:
SCM sourcing is a key activity in procurement an
purchasing processes. A good logistic and supply chain
professional should know the sourcing alternatives
available when selecting suppliers! Sourcing is the
process of identifying, selecting, and developing suppliers.
 It is a process of acquiring raw materials and other
components, products or services of a company from its
suppliers to execute its operations.
 Sourcing is the entire set of business processes required to
purchase goods and services.
 it’s a major decision whether you outsource your
production/function or perform in-house. Outsourcing
results in the supply chain functions being performed by a
third party.

3. Global Sourcing – Issues and Problems:
(i) No exposure of international culture,
traditions and beliefs
(ii) Hidden costs related to different time
zones and languages
(iii) Financial and political risks associated
with emerging economies
(iv) Risk of losing intellectual properties,
patents and copyrights
(v) Long lead times

4. (vi) Labor problems and labor
related issues
(vii) Unnecessary shutdowns and
supply interruptions
(viii) Difficulty in supervision
(ix) Difficulty of monitoring goods
and services quality

5. Quality problems:
 A sourcing company will be stimulated by profit. Because
the contract will fix the cost, the only way they can increase
the profit will be to cut down the cost of production.
 As long as they meet the terms of the agreement, you’ll
have to pay. Additionally, you’ll lose the ability to quickly
respond to changes in business environment. The
agreement will be specific and you’ll have pay extra for
changes.
Loss of intellectual uniqueness:
 There’s a steady flow of cash into developing nations;
nonetheless, globalization can lead to loss of intellectual
distinctiveness as Western ideas are often forced upon
Eastern thoughts.

6. Job loss:
 Global sourcing is commonly criticized by local labor
advocates as well as economic nationalists.
 Moving a manufacturing procedure to another nation, for
example, puts domestic employees out of work. This can
negatively affect the economy of the country.

7. E-procurement:
E-
procurement (electronic procurement,
sometimes also known as supplier
exchange) is the business-to-
business or business-to-
consumer or business-to-
government purchase and sale
of supplies, work,
and services through the Internet as
well as other information and

8. The e-procurement value chain consists of
indent management, e-Informing, e-
Tendering, e-Auctioning, vendor
management, catalogue management,
Purchase Order Integration, Order Status,
Ship Notice, e-invoicing, e-payment, and
contract management.

9. Reverse Auctions:
 A reverse auction is a type of auction in which
the roles of buyer and seller are reversed.
In an ordinary auction (also known as a
forward auction), buyers compete to obtain a
good or service by offering increasingly higher
prices.
In a reverse auction, the sellers compete to
obtain business from the buyer and prices will
typically decrease as the sellers undercut each
other.

10. Group Purchasing:
 A group purchasing organization (GPO) is
an entity that is created to influence
the purchasing power of a group of
businesses to obtain discounts from
vendors based on the collective buying
power of the GPO members.
Group purchasing is used in
many industries to purchase raw
materials and supplies, but it is common
practice in the grocery industry, health
care, electronics, industrial

11. Creating and Managing Supplier
Relations:
Developing Supplier relationship:
- Building Trust
- Shared Vision and Objectives
- Personal Relationships
- Mutual benefits and needs
- Commitment and top management support
- Change Management
- Information sharing and lines of communication
- Relationship capabilities
- Performance metrics
- continuous improvement
- Monitoring Supplier relationships
Supplier Evaluation and Certification
Supplier Development

12. Reserve Auctions:
The minimum amount that the owner of an item
up for auction will accept as the winning bid in
the auction.