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54 Cards in this Set
- Front
- Back
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Purchasing/Sourcing:
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More of a Functional Group responsible for
supplier selection and buying of both direct and indirect materials plus services. |
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Purchasing
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Place and Chase parts
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Sourcing
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Awarding contracts
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Commodity Management
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Putting groups of purchases together
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Purchasing History - P1
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The Early Years (1850 – 1900):
– Railroad Focus / Does it all |
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Purchasing History - P2
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Growth of Purchasing Fundamentals (1900-1939)
– Looking for Qualified people and standardization |
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Purchasing History - P3
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The War Years (1940 – 1946)
– Emphasize Execution: Getting Material College Programs |
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Purchasing History - P4
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The Quiet Years (1947 – 1960’s)
– Satisfy Customer Demand |
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Purchasing History - P5
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Materials Management (1960’s to 1970’s)
– Price Escalation with Vietnam / Overall Materials System Focus |
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Purchasing History - P6
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Global (1970’s to 1999)
– Fierce Global Competition / Rapid technology Chg |
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Purchasing History - P7
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Integrated SCM (2000+)
– Adversarial to Cooperative Supplier Relations |
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Purchasing History - P6 & P7 - ESSAY QUESTION - SCM Initiatives
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1. Out-Source for Cost Benefit
2. Reduce Supply Base Supplier Rationalization 3. Commodity Management 4. Supply Chain Management for Multiple Tiers 5. Collaboration with Suppliers (from Traditional / Adversarial) 6. Supplier Development (External Focused) |
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SCM Enablers to P6 & P7
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1. HR
2. Organizational Design: Exec Sponsor, Cross- Functional, Co-Located, Staffed 3. Information Technology: (Most important) 4. Measurement: Metrics, Quantifiable Data, Goal Driven |
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Commodities:
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Supply management strategies often apply to categories or
general families of purchased products or services. |
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6 Purchasing Objectives
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Manage the Purchase Process
Cross-functional relationships Support Org Goals Supply Contuinity Choose good suppliers |
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Buyers stress 3 main things
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Price
Quality (most important) Delivery |
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Example of a direct purchase
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Raw materials
Steel Manufacturing Parts |
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Example of a indirect purchase
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Office Supplies
Cleaning Supplies |
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Purchase Process - ESSAY question
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1) Forecast and plan requirements
2) Needs Clarifying: Requisitioning 3) Choose a supplier - Bid, RFI, RFQ, RFP 4) Approve and make PO 5) Receive and inspect 6) Invoice settlement and payment 4) |
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Supplier Justification/Rationalization
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When you try to decrease the amount of suppliers you have on the approved list
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What are different ways orders are triggered?
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MRP Schedule
Reorder point Stock check Just in time Consignment/Vendor managed Manual Purchase requesition Manual statement of work (for services) |
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Back-Door (Maverick) Buying:
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Internal customers that negotiate and purchase items
outside the purchase process. |
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Spot Buy
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: Unplanned purchase in the market
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Blanket PO:
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A generic Open/Approved PO in the system where a firm’s Purchasing
Group can place PO’s on a supplier without having to go-through the approval process each time. Blanket PO’s are usually approved in an annual process by Supplier and Amount (not specific items). The most common uses are services and low-value capital equipment. |
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Electronic Data Interchange (EDI)
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Involves the electronic transfer of purchase
documents between the buyer and seller. Due to cost structure, larger firms drive EDI. Small firms use Auto-Fax Systems to transmit information. |
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Proof-of-Delivery (POD)
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: In the event of a lost shipment, involves a Bill-of-Laden:
– Generated and Delivered by the Transportation Provider (trucking company) – Signed by the Dock/Well Operator – A Packing List is generated by the Supplier and is inside the box. |
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Integration - Internal and External
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Integration is the process of incorporating or
bringing together different groups, functions, or organizations, either formally or informally, physically or by information technology, to work jointly & often concurrently on a common business-related assignment or purpose. Internal = Cross-Functional External = Collaboration |
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Purchasing Organizations typically lack the following
resources/control: |
– Technical: Ability to change specifications
– Legal: Terms and Conditions (Intellectual Property) – Supplier/Process Qualification (Quality Org) – Capital $: Tooling/Equipment |
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Joint-Ventures:
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More formal/legal in nature. Sharing of
investment cost for rights of revenue streams. |
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Outcomes of Collaboration:
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Trust: Built over time
– Long-Term Agreements / (LTA) |
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Why don't firms collaborate?
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Trust
Conflicting Goals Confidentiality Legal Barriers - Anti Trust Resistant to change - more work Short term financial risk Size relationship of firms |
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Collaboration...Escapes/Quality:
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Tactical:Reactive (often no choice)
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Collaboration...Late Hardware:
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Tactical
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Collaboration Cost Reduction
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2-Way exchange of ideas
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Collaboration Supplier Development
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Capability/Knowledge
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Collaboration New Product Development
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Strategic:
Early Supplier Selection Intelectual Property Sharing/Technology Sharing |
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Advantages of consignment for a supplier
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More Business
Stabilized Production Fewer Transactions Quicker payments Less selling expense |
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What’s important for Buyer to award PO:
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1. Capability: Can they make the part
2. Cost: At lowest cost 3. Capacity: In the necessary quantity 4. Timing: When I need it 5. Technical Innovation 6. Resource Commitment 7. Management Philosophy: Trusting / Lean / Training |
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Joint Design in product with supplier is _______ at the beginning but very ______
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expensive, flexible
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Organizational Design
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Refers to the process of assessing and selecting
the structure and formal system of communication, division of labor, coordination, control, authority, and responsibility required to achieve organizational goals and objectives. |
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4 Purchasing Areas
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Sourcing and Negotiation
Purchasing Research: Operational Support (Buyers) Administration and Support |
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What is centralized procurement? Examples?
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Where all of the buying is out of one office...example is walmart or target
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What is decentralized procurement? Example?
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When buying is separated by either division, product, plant center, region, etc
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What is purchase authority?
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Person who is allowed to sign off
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Factors that determine whether to centralize or decentralize
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Overall Strategy - Responsive or Efficient?
Similarity of Purchases within the Firm Total Purchase Dollar Expenditures Management Philosophy |
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Advantages to Centralized Purchasing
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Combines Purchases into big ones to gain leverage
Reduce Duplication: Multiple PO placement and policies Coordinated Corporate Purchase Systems People Development: Best Practices Change Management is more coordinated/focused |
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Advantages of Decentralized Purchasing - ESSAY question
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Speed and Responsiveness
Understanding unique Operational Requirements Product Development Support Ownership and Control |
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Which is better centra or decentra?
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Depends, centra for common items, decentra for unique requirements
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What is the director of purchasing responsible for?
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Place and Chase
Negotiations/Sourcing Back Room Policies` |
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What is the director of Supply Chain responsible for?
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Production Planning
Logistics Wells Material Control Material Handling Supplier Development |
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Advantages of Decentralized Purchasing - ESSAY question
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Speed and Responsiveness
Understanding unique Operational Requirements Product Development Support Ownership and Control |
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Which is better centra or decentra?
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Depends, centra for common items, decentra for unique requirements
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What is the director of purchasing responsible for?
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Place and Chase
Negotiations/Sourcing Back Room Policies` |
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What is the director of Supply Chain responsible for?
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Production Planning
Logistics Wells Material Control Material Handling Supplier Development |
