Preface

Along with developments in technology and globalization movements in recent years, significant changes have occurred in the activities of businesses. These developments have also led to the diversification of consumers' demands and expectations. This situation required the needs of the consumers to be met faster than the competitors. In addition, it has become necessary for companies to attract the attention of consumers in a highly competitive environment. As a result, the importance of sales management and supply management has increased.

In the context of marketing, businesses should plan their activities carefully. At this point, sales management activities and coordination of sales forces are very important. Besides, some of the concepts such as being customer-oriented and creating value, which have become very important in the planning of activities related to sales management, should be taken into consideration. Within the scope of sales management, in addition to organizing sales-related activities, some points related to the training, motivation, and planning of sales forces should be arranged within the framework of today's modern perspectives.

For most of its history, procurement has been focused primarily on transactional processing, with virtually no strategic decision-making responsibilities. The typical purchasing routine has been simple: receive a requisition from the user, place the purchase order with the supplier, expedite when necessary, and resolve invoice discrepancies. In this process, there was very little room for decision-making such as supply sourcing and even less discretion.

Today, this is certainly no longer the case, procurement and supply management has evolved into a strategic element in the competitive arsenal of most organizations. There is now a justifiable movement toward centralized control of corporate spending for compliance, risk management, and cost reduction.

This book is unique! Until now, purchasing and supply management books have had a primarily domestic outlook. However, in this book, important issues related to sales management and supply management are handled with a modern perspective. This book has global vision tied into management principles based on an understanding of the sales management and basic job of purchasing and supply management, as all authors have held high-level positions directing the effort. Distinguished researchers from prestigious universities have written chapters and case studies from real-world events that challenge the brightest minds.

In the end, we would like to thank the contributors/authors of the book for their extraordinary hard work to submit their valuable and innovative work in the form

**II**

**Chapter 7 87**

**Chapter 8 107**

Organizational Capabilities, Value Cocreation, and Marketing Innovation: How Well Are We Prepared to Face Future Challenges? *by Leslier Valenzuela-Fernández and Natacha Peñaloza-Briones*

Empowerment of the Sales Forces in 2000s *by Leslier Maureen Valenzuela Fernández and Francisco Javier Villegas Pinuer*

of chapters. We would also like to thank the author service manager *Mr. Mateo Pulko* for his milestone coordination and facilitating of the authors. We also extend our thanks to the IntechOpen publisher for all of their support.

**Syed Abdul Rehman Khan, PhD**

Tsinghua University, Beijing, China

### **Dr. Selay Ilgaz Sümer** Assistant Professor, Baskent University, Ankara, Turkey

Section 1

Introduction

**1**

Section 1 Introduction

**Chapter 1**

Introductory Chapter: Purchasing

There is no doubt that each and every firm have their purchasing department/ professionals. Purchasing is the process of acquiring materials, components, and services from another firm. Professional purchasing have addresses following main rights: purchase of the right material, component or service, in the right quantity and quality, at the right place and time [1]. Purchasing gives the foundation of supply management, which tends to have a wider scope of activities [2]. The focus

Supply management is a five-phase process that starts with the identification of the materials or components required to fulfill the requirement of the enterprise. During this phase, the need is to convert into a statement describing the materials or components required to fulfill the need. It is projected that around 85% of the cost

multinational firms, supply management professionals and pre-qualified vendors are involved in this phase. The second phase of supply management contains identifying the supplier who will best fulfill the need. The third phase comprises the process of establishing a reasonable and fair price for the material to be purchased. The fourth phase results in an enforceable contract for the purchase that fulfills the requirement of both firms (supplier and buyer). The last phase needs managing the relationship to guarantee quality and delivery time of the material. During this last stage, the supply management firm may work with the supplier in an effort to enhance the efficiency of the supplier with the objective of reducing cost and/or

There is a long list of definitions on supply management and procurement management (**Figure 1**). But the most common definition of supply management

*"The process of obtaining and managing of materials, components or services needed to operate a business or other type of firm. The elements of supply management contain the actual materials/components, budgets, information, and employees. The key purpose of this procedure is to keep costs stable and use resources effectively to*

Following are the basic responsibilities of an effective purchasing and supply

of material is determined during this phase [3, 4]. In sophisticated and

and Supply Management

*Syed Abdul Rehman Khan and Zhang Yu*

shifts from price to the total cost of ownership.

improving quality [2, 5].

is as follows:

management team.

**3**

**1. Definition of supply management**

*increase the efficiency of the business and profits*" [6].

### **Chapter 1**

## Introductory Chapter: Purchasing and Supply Management

*Syed Abdul Rehman Khan and Zhang Yu*

There is no doubt that each and every firm have their purchasing department/ professionals. Purchasing is the process of acquiring materials, components, and services from another firm. Professional purchasing have addresses following main rights: purchase of the right material, component or service, in the right quantity and quality, at the right place and time [1]. Purchasing gives the foundation of supply management, which tends to have a wider scope of activities [2]. The focus shifts from price to the total cost of ownership.

Supply management is a five-phase process that starts with the identification of the materials or components required to fulfill the requirement of the enterprise. During this phase, the need is to convert into a statement describing the materials or components required to fulfill the need. It is projected that around 85% of the cost of material is determined during this phase [3, 4]. In sophisticated and multinational firms, supply management professionals and pre-qualified vendors are involved in this phase. The second phase of supply management contains identifying the supplier who will best fulfill the need. The third phase comprises the process of establishing a reasonable and fair price for the material to be purchased. The fourth phase results in an enforceable contract for the purchase that fulfills the requirement of both firms (supplier and buyer). The last phase needs managing the relationship to guarantee quality and delivery time of the material. During this last stage, the supply management firm may work with the supplier in an effort to enhance the efficiency of the supplier with the objective of reducing cost and/or improving quality [2, 5].

### **1. Definition of supply management**

There is a long list of definitions on supply management and procurement management (**Figure 1**). But the most common definition of supply management is as follows:

*"The process of obtaining and managing of materials, components or services needed to operate a business or other type of firm. The elements of supply management contain the actual materials/components, budgets, information, and employees. The key purpose of this procedure is to keep costs stable and use resources effectively to increase the efficiency of the business and profits*" [6].

Following are the basic responsibilities of an effective purchasing and supply management team.

Further, buyer–supplier relationships benefit both and build trust and collabora-

Purchasing and management have a responsibility to understand the potential risks and develop innovative strategies to manage them. An effective risk mitigation strategy may protect firms from a big loss [1, 13]. Potential risks contain transparency and fraud, counterfeit materials and intellectual property. Further, supply management professionals need to have a plan B in place if supplies are delayed

tion, which allowing both parties to succeed [12].

*Introductory Chapter: Purchasing and Supply Management*

*DOI: http://dx.doi.org/10.5772/intechopen.85380*

from the suppliers'side or due to changes in schedule.

**5. Mitigating risk**

**Author details**

**5**

Syed Abdul Rehman Khan<sup>1</sup>

\* and Zhang Yu<sup>2</sup>

\*Address all correspondence to: sarehman\_cscp@yahoo.com

provided the original work is properly cited.

1 School of Economics and Management, Tsinghua University, Beijing, China

2 School of Economics and Management, Chang'an University, Xi'an, China

© 2019 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium,

**Figure 1.** *The complex procurement process.*

### **2. Reducing cost**

Purchasing has a direct impact on firms' profitability and expenditure. The procurement professional task is to reduce the cost of product, material or service through supplier relationship development and negotiations [7]. In addition, procurement professionals have a responsibility to create value for the firm in terms of cost reduction and improving the quality of the item. Generally, the material cost is two and a half times the payroll costs [1, 8]. It is the key reason firms see great value in procurement professionals who are able to increase the quality of products and savings.

### **3. Negotiation**

Negotiation plays a vital role in the reduction of cost and enhancing the quality of the item. Procurement professionals are tasked with negotiating terms with suppliers that benefit to the firm in terms of delivery time, quality of materials, and reduction in price/cost of material [1, 9, 10]. Undeniably, this not only affects the sales and revenue of firms but also create a competitive advantage. The successful supply management professionals' team is relying on the ability to foresee longterm business relationship and strong negotiation skills.

### **4. Developing supplier relationships**

Usually firms require suppliers on an ongoing basis due to one-off purchases is very costly and as a result, it is crucial to building a long-term relationship with suppliers. A supplier–buyer good relationship can create flexibility in the supply chain [6, 11]. In addition, by working with the supplier on a long-term basis, firms may increase competitive edge, higher cost savings, and fine-tune schedules.

Further, buyer–supplier relationships benefit both and build trust and collaboration, which allowing both parties to succeed [12].

### **5. Mitigating risk**

Purchasing and management have a responsibility to understand the potential risks and develop innovative strategies to manage them. An effective risk mitigation strategy may protect firms from a big loss [1, 13]. Potential risks contain transparency and fraud, counterfeit materials and intellectual property. Further, supply management professionals need to have a plan B in place if supplies are delayed from the suppliers'side or due to changes in schedule.

### **Author details**

**2. Reducing cost**

*The complex procurement process.*

*Modern Perspectives in Business Applications*

savings.

**4**

**Figure 1.**

**3. Negotiation**

Purchasing has a direct impact on firms' profitability and expenditure. The procurement professional task is to reduce the cost of product, material or service through supplier relationship development and negotiations [7]. In addition, procurement professionals have a responsibility to create value for the firm in terms of cost reduction and improving the quality of the item. Generally, the material cost is two and a half times the payroll costs [1, 8]. It is the key reason firms see great value in procurement professionals who are able to increase the quality of products and

Negotiation plays a vital role in the reduction of cost and enhancing the quality

Usually firms require suppliers on an ongoing basis due to one-off purchases is very costly and as a result, it is crucial to building a long-term relationship with suppliers. A supplier–buyer good relationship can create flexibility in the supply chain [6, 11]. In addition, by working with the supplier on a long-term basis, firms may increase competitive edge, higher cost savings, and fine-tune schedules.

of the item. Procurement professionals are tasked with negotiating terms with suppliers that benefit to the firm in terms of delivery time, quality of materials, and reduction in price/cost of material [1, 9, 10]. Undeniably, this not only affects the sales and revenue of firms but also create a competitive advantage. The successful supply management professionals' team is relying on the ability to foresee long-

term business relationship and strong negotiation skills.

**4. Developing supplier relationships**

Syed Abdul Rehman Khan<sup>1</sup> \* and Zhang Yu<sup>2</sup>

1 School of Economics and Management, Tsinghua University, Beijing, China

2 School of Economics and Management, Chang'an University, Xi'an, China

\*Address all correspondence to: sarehman\_cscp@yahoo.com

© 2019 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

### **References**

[1] Khan SAR, Dong Q. Impact of green supply chain management practices on firms' performance: An empirical study from the perspective of Pakistan. Environmental Science and Pollution Research. 2017;**24**:16829-16844. DOI: 10.1007/s11356-017-9172-5

[2] Khan SAR, Qianli D, SongBo W, Zaman K, Zhang Y. Environmental logistics performance indicators affecting per capita income and sectoral growth: Evidence from a panel of selected global ranked logistics countries. Environmental Science and Pollution Research. 2017;**24**(2): 1518-1531. DOI: 10.1007/s11356-016- 7916-2

[3] Khan SAR. Introductory chapter: Introduction of green supply chain management [online first]. IntechOpen. 2018. DOI: 10.5772/intechopen.81088. Available from: https://www.intechopen. com/online-first/introductory-chapterintroduction-of-green-supply-chain-ma nagement

[4] Sarkis J, Zhu Q, Lai K. An organizational theoretic review of green supply chain management literature. International Journal of Production Economics. 2011;**130**(1):1-15

[5] Andic E, Yurt O, Baltacioglu T. Green supply chains: Efforts and potential applications for the Turkish market. Resources, Conservation and Recycling. 2012;**58**:50-68

[6] Khan SAR, Dong QL, Yu Z. Research on the measuring performance of green supply chain management: In the perspective of China. International Journal of Engineering Research in Africa. 2016;**27**:167-178. DOI: 10.4028/ www.scientific.net/JERA.27.167

[7] Luthra S, Garg D, Haleem A. The impacts of critical success factors for implementing green supply chain management towards sustainability: An empirical investigation of Indian automobile industry. Journal of Cleaner Production. 2016;**121**:142-158

[8] Gunasekaran A, Spalanzani A. Sustainability of manufacturing and services: Investigations for research and applications. International Journal of Production Economics. 2012;**140**(1): 35-47

[9] Mangla S, Madaan J, Chan FT. Analysis of flexible decision strategies for sustainability-focused green product recovery system. International Journal of Production Research. 2013;**51**(11): 3428-3442

[10] Omkareshwar M. Green marketing initiatives by corporate world: A study. Advances in Management. 2013;**6**(3): 20-26

[11] Zhu Q, Sarkis J, Lai KH. Green supply chain management: Pressures, practices, and performance within the Chinese automobile industry. Journal of Cleaner Production. 2007;**15**(11): 1041-1052

[12] Awasthi A, Kannan G. Green supplier development program selection using NGT and VIKOPR under fuzzy environment. Computers and Industrial Engineering. 2016;**91**:100-108

[13] Hu AH, Hsu CW. Critical factors for implementing green supply chain management practice: An empirical study of electrical and electronics industries in Taiwan. Management Research Review. 2010;**33**(6):586-608

**7**

Section 2

Supply Management

Practices and Strategies

## Section 2
