Chapter 5 An Overview of the Purchasing Function

Purchasing Activities Determine when to order Control inventory levels Establish quality standards Determine specifications Obtain competitive bids

Purchasing Activities, Continued Investigate vendors Arrange financial terms Oversee delivery Negotiate refunds Handle adjustments Arrange for storage

Purchasing Activities Center On: Recipe development Menu development Specification writing Approval of buying source Designation of approved brands Supplier evaluation

Purchasing Activities Center On: Negotiation Change of suppliers Change of brands Substitution Approval of new products Invoice approval Payment Order placement with supplier

MINIMUM Purchasing Activities Selection and procurement plan Determine requirements Supplier selection Sourcing Maintain a convenient and sufficient inventory Conduct negotiations Research activities Value analysis Forecasting What-if analysis Make or buy Plant visits

Research activities Value analysis Forecasting What-if analysis Make or buy Plant visits

MINIMUM Purchasing Activities Maintain supplier diplomacy Educate the suppliers Purchase, receive, store and issue products Disposal of excess and unsaleable items Recycling Record-keeping controls Organize and administer the purchasing function Self improvement Help competitors

Maintain an adequate supply Minimize investment Maintain quality Obtain the lowest EP cost Maintain the company’s competitive position

Problems of the Buyer Backdoor selling Wastes of time Responsibility vs. authority and time Working with other departments Late deliveries, substitutions, and back orders Receiving and storage inadequacies

Copyright ©2008 John Wiley & Sons, Inc.