Supply Chain Management
Evaluating the ‘five rights’ framework, it’s suitability and relevance, when planning industrial purchasing activities.
Purchasing is one of the basic functions in many organizations, it represent an important part in the company budget. It can be difficult to make judicious purchasing decisions because there are currently so many different products on the market. A buyer cannot make a purchasing decision based off of impulse or feelings. A careful purchasing decision requires a serious attention before, during and after the purchase process. To ensure a beneficial purchase process, companies can follow five purchase objectives: the 'five rights'. But do the ‘five rights’ answer to real needs of the modern businesses?
This essay explains in a first part what purchasing is and how performance measurement contributes to management. Then in a second part, it defines the 'five rights' framework. Finally the last part considers the relevance and suitability of this framework when planning industrial purchasing activities.
What is purchasing?
In order to evaluating the ‘five rights’ framework and its relevance to purchasing, we need first to explain what the industrial purchasing is.
Purchasing is a very wide concept, defined differently by many authors. According to W.Dobler and David N.Burt (1996) purchasing is simply “the acquisition of required materials, departments and equipments” in a company. The Van Weele definition of purchasing is more detailed: “The management of the company’s external resources in such a way that the supply of all goods, services, capabilities and knowledge which are necessary for running, maintaining and managing the company’s primary and support activities is secured at the most favourable conditions” (2010).
Why is purchasing so important in business management? In his Value Chain, Porter represents the purchasing as a support activity in the business. Support activities are aimed at maintaining the company's
Purchasing is one of the basic functions in many organizations, it represent an important part in the company budget. It can be difficult to make judicious purchasing decisions because there are currently so many different products on the market. A buyer cannot make a purchasing decision based off of impulse or feelings. A careful purchasing decision requires a serious attention before, during and after the purchase process. To ensure a beneficial purchase process, companies can follow five purchase objectives: the 'five rights'. But do the ‘five rights’ answer to real needs of the modern businesses?
This essay explains in a first part what purchasing is and how performance measurement contributes to management. Then in a second part, it defines the 'five rights' framework. Finally the last part considers the relevance and suitability of this framework when planning industrial purchasing activities.
What is purchasing?
In order to evaluating the ‘five rights’ framework and its relevance to purchasing, we need first to explain what the industrial purchasing is.
Purchasing is a very wide concept, defined differently by many authors. According to W.Dobler and David N.Burt (1996) purchasing is simply “the acquisition of required materials, departments and equipments” in a company. The Van Weele definition of purchasing is more detailed: “The management of the company’s external resources in such a way that the supply of all goods, services, capabilities and knowledge which are necessary for running, maintaining and managing the company’s primary and support activities is secured at the most favourable conditions” (2010).
Why is purchasing so important in business management? In his Value Chain, Porter represents the purchasing as a support activity in the business. Support activities are aimed at maintaining the company's