Purchasing and supply management as part of business management Purchasing and Supply planning is part of the firms general planning mainly because the continuous supply of raw materials, materials , components and services is of strategic importance to the enterprise. The Organizational structure of the purchasing and supply function should be aimed mainly at linking into the firms overall structure in the most effective way. Purchasing and supply coordination should be aimed at harmonizing and aligning the activities of the purchasing and supply function with those of the other business functions. Control is that element of management which ensures that the activities are executed according to plan and within the allowed parameters. NB. Purchasing and supply planning is the first responsibility of purchasing and supply management. The other management tasks (organization, coordination and control) can only be executed after the planning task has been completed.
Levels of Purchasing and supply planning and objectives:
Highest level – Organizational planning (strategic planning) Middle management Level – Functional and Tactical Planning Lowest Level – Operational Planning at the Lowest Level.
All interlinked and all should support each level.
Highest level – Organizational planning (strategic planning) Overall planning of the enterprise – Long term or strategic planning *Ensure purchasing requirements at competitive pricing
*develop existing or new suppliers
* keep investment in inventory as low as possible
Middle management Level – Functional and Tactical Planning Objectives:
*To enter into long term contracts with reliable suppliers of materials *To put together a project team responsible for developing suppliers *To study alternative inventory control systems or the flow of materials to and within the enterprise. Purchasing ahs supply planning at middle management level entails formulating derived objectives, planning and effective application if resources. Categories:
Enterprises needs for raw materials, materials, parts and services over the medium term must be determined. – Depends to a large degree on marketing research, marketing and sales estimates and the master production schedule for a reliable estimate of the quantity and variety of materials likely to be required by the firm. 2.Purchasing and supply program planning
Keyword: “external” Transport, deliveries , quantities required, contracts Development of plans and programmes to provide for estimated needs in the most efficient way, Planning for time scheduled deliveries, planning of transport, preparing the materials budget for the quantities required, preparing and negotiating contracts and agreements with suppliers. Important for planning: JIT, MRP
3.Purchasing and supply system
Keyword: Inventory, system planning, training, information system Planning category includes determining procedures for purchasing activities, planning inventory investment and inventory control system, planning for personnel training and development , as well as planning the information system. Important for planning EDI,MRPII
Planning for extraordinary projects – Planning at middle management level for purchasing and supply function - Purchasing capital equipment, change to the organizational structure of the purchasing and supply function and planning by large contracts between 2-5yrs.
Lowest Level – Operational Planning at the Lowest Level. *To maintain sound relations with suppliers by means of ethical conduct and adherence to contract clauses, and also to order on time. *To study the situation in the supplier market and provide technical support to developing suppliers. *To conduct an inventory analysis, reduce A category products improve the understanding with suppliers or implement JIT. Planning for specific purchasing and supply activities over short term. 1. Materials requirement planning...
Please join StudyMode to read the full document