Question

Does a firm's Purchasing Department (sometimes known as Procurement Department) play a role in an industry's supply chain of today? What do they mean by upstream and downstream in a supply chain?

Answer 1

Purchasing department of a firm plays an important role in an industry's supply chain these days as the efficiency of the purchasing department will determine that the goods required to be procured in correct quantity and time. If the purchase department is well planned and organised then supply chain functions efficiently and effectively. Purchasing department requires to manage the procurement of raw materials, finished goods, organisational supplies and work with well developed network of suppliers doing timely payments and requisition. It sets standards for costs of materials to be paid, purchase and payment cycles that influence supply chain. The technology used for purchasing can save time and help in purchasing in an organised and planned method.

Upstream activities in a supply chain are those that are related to the suppliers and procurement of raw materials for manufacturing the goods to be supplied to consumers. The downstream activities are planned towards supplying goods to the consumers and are more customer oriented. The upstream activities are associated with a firm's procurement and downstream activities are connected with supplying finished goods to the customers.