supply chain managerment

Topics: Procurement, Supply chain management, Logistics Pages: 19 (916 words) Published: October 18, 2014
Purchasing and Supply Chain Management

The Purchasing Process

Chapter 2
Chapter 2

Purchasing and Supply Chain Management, 3e Monczka/Trent/Handfield Thomson Learning

Copyright 2005

1

Chapter Overview
This chapter address the following topics
and ideas associated with achieving world
class efficiency and effectiveness:
Purchasing objectives
Purchasing’s responsibilities
The purchasing process and role of eprocurement.
Types of purchases
Improving the purchasing process
Purchasing and Supply Chain Management, 3e Monczka/Trent/Handfield Thomson Learning

Copyright 2005

2

Companies Look to
Purchasing to Add Value
• A world-class purchasing staff must provide
cost-reductions, improve supply chain quality,
gain access to new sources of technology,
improve cycle time, involve suppliers in
product and process development, and
streamline processes.
Purchasing and Supply Chain Management, 3e Monczka/Trent/Handfield Thomson Learning

Copyright 2005

3

Purchasing Objectives
“What makes a department world-class?”
• Objective 1: Support Operational
Requirements
– Uninterrupted flow of high-quality material.

• Objective 2: Manage the Purchasing Process
Efficiently and Effectively
– Limited resources necessitate best use of
resources.
Purchasing and Supply Chain Management, 3e Monczka/Trent/Handfield Thomson Learning

Copyright 2005

4

Purchasing Objectives
“What makes a department world-class?”
• Objective 3: Supply Base Management
– Develop reliable, high-quality sources of supply.

• Objective 4: Develop Strong Relationships
with Other Functional Groups
– Strong cross-functional relationships must exist
internally.

Purchasing and Supply Chain Management, 3e Monczka/Trent/Handfield Thomson Learning

Copyright 2005

5

Purchasing Objectives
“What makes a department world-class?”
• Objective 5: Support Organizational Goals
and Objectives.
– Purchasing must follow organizational
directives.

• Objective 6: Develop Integrated Purchasing
Strategies That Support Organizational
Strategies.
– Purchasing’s goals must be aligned with
company’s goals
Purchasing and Supply Chain Management, 3e Monczka/Trent/Handfield Thomson Learning

Copyright 2005

6

Purchasing’s Span of Control
• What decisions does Purchasing have
legitimate authority to make?





Evaluate and Select Suppliers
Review Specifications
Act as the Primary Contact with Suppliers
Determine the Method of Awarding Purchase
Contracts.
Purchasing and Supply Chain Management, 3e Monczka/Trent/Handfield Thomson Learning

Copyright 2005

7

The Purchasing Cycle
The Purchasing Process as a Cycle consists of
five major stages.







Identify user need
Evaluate potential suppliers
Bid, negotiate and select supplier
Purchase approval
Release and receive purchase requirements
Measure supplier performance
Purchasing and Supply Chain Management, 3e Monczka/Trent/Handfield Thomson Learning

Copyright 2005

8

The Purchasing Process
1. User need for Product or Service

YES
Purchasing Card
On-line catalog
Electronic Data
Interchange
Stock Check
Automated Reorder
Point

Approved
Supplier?

Specification
Statement of Work
New product requirement
Customer order / MRP
Traveling req / barcode
Purchase requisition

NO
YES

Small $
Amount?

NO

Complex
Requiremen
t
?

NO
Purchase Order
Blanket PO
Purchase Release

5. Release and
Receive
Product or
Service
E-Procurement
Documents

4. Purchase
Approval

Bill of Lading
Packing Slip
Discrepancy Report
Kanban
Acknowledgement

YES

Request for
Quote /
Information

2. Evaluate
Suppliers
3a. Bid and/or
Negotiation

Supplier
Invoice

Match PO and
Invoice

6. Update
Supplier
Scorecard

Payment to
Supplier

Purchasing & Supply Chain Management 3e, Monczka/Trent/Handfield Thomson Learning, Copyright 2005

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