PURCHASING AND SUPPLY MANAGEMENT

Slides:



Advertisements
Similar presentations
Principles of Marketing
Advertisements

Supply Management Chapter 7.
DPS 304 : Purchasing /Procurement Activities
THE CONTEXT OF LOGISTICS. Cycle of Supply and Demand Customers Other Inputs Other Outputs Operations Demand for Products Supply of Products passed to.
Principles of Marketing
CHAPTER 2 THE ROLE OF RETAIL PRODUCT MANGAGERS. LEARNING OBJECTIVES To understand the basic stages in the retail product management process To appreciate.
Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy 2–1 Part 1: Marketing strategy and.
McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 13 Sourcing Materials and Services Learning Objectives After reading this chapter, you should be able to do the following:  Understand the role.
13. Getting organized for purchasing
Purchasing.
ILearningCampus.com Understanding by doing and learning by talking.
Business Markets. Business Markets and Business Buying Behavior The nature and scope of the business market. The six categories of business buyers. The.
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin Marketing Management, 8e Chapter Ten Distribution Strategy Key Words /
Chapter 6 Sourcing. Objectives After reading the chapter and reviewing the materials presented the students will be able to: Explain the difference between.
Chapter 13 Research and Metrics McGraw-Hill/Irwin Purchasing and Supply Management, 13/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Chapter 11: Strategic Leadership Chapter 8 Production and operations management.
CHAPTER 2 Supply Chain Management. SCM (CSCMP Definition) The integration of key business processes from end user through original suppliers, that provides.
Inventory/Purchasing Questions
15-1 Ch 15 - Place: The Final Frontier  Supply chain: –All of the activities necessary to turn raw materials into a good or service and put it in the.
1 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 12 Prepared by Deborah Baker Texas Christian University.
Based on Kotler Business Markets and Business Buyer Behavior Principles of Marketing.
Chapter 20 Strategy in Purchasing and Supply Management.
Operations Management $100 Production Method Cost and Revenue Quality Assurance Location Production Planning $200 $300 $400 $500 $400 $300 $200 $100 $500.
Department of Marketing & Decision Sciences Part 5 – Distribution Wholesaling and Physical Distribution.
Supply Processes and Technology
Introduction to Supply Chain Management Designing & Managing the Supply Chain Chapter 1 Byung-Hyun Ha
D. Marketing a Small Business 6.00 Explain the fundamentals of marketing in a small business Explain marketing and its importance.
Chapter 7 Supply Management. Chapter Objectives Be able to:  Discuss the rise of global sourcing and the important financial and operational performance.
Slide 4.1 Chapter 4 Annual Report: Additional Financial Statements.
McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 4 Supply Processes and Technology.
Chapter 3: Purchasing Research and Planning Strategic Planning for Purchasing Strategic planning for purchasing involves the identification of critical.
Marketing Management.  According to Phillip Kotler marketing management is the process of planning & executing the pricing, promotion & distribution.
Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 22-1 Operations Management 10.
BUSINESS STRATEGY AND PLAN 2010 Emerging Energy Solutions 1.
D. Marketing a Small Business
NEW TECHNIQUES IN INTERNATIONAL MARKETING
Chapter 16: Global Sourcing and Procurement
Supply Chain Management
OUTLINE Questions, Comments? Quiz Go over Quiz Go over homework
Developing Merchandise Plans
OUTLINE Questions, Comments? Quiz Results Target Strategy:
OUTLINE Questions, Comments? Quiz Target Comments Go over homework
Planning at Product Level
Annual Report: Additional Financial Statements
Chapter 19 Pricing Strategies.
Logistics/Supply Chain Strategy and Planning
Business Markets and Business Buying Behavior
Business Markets and Business Buying Behavior
Annual Report: Additional Financial Statements
רכש בתחרות או ספק יחיד הערכת הצעות של ספקים
Understand that corporate-level strategies include decisions regarding diversification, international expansion, and vertical integration Describe the.
Quality Management Systems – Requirements
Chapter 3 Supply Chain Drivers and Obstacles
Distribution Strategy
Engineering Project Tendering.
The Accountant’s Role in the Organization
DEFINING REQUIREMENTS (REV. 05/22/2008)
MARKETING, PURCHASING AND PRODUCTION (7 - 9%)
Business Markets and Business Buying Behavior
D. Marketing a Small Business
Purchasing and Supply Chain Management
PURCHASING MANAGEMENT
GBS 520 :FINANCIAL AND MANAGEMENT ACCOUNTING
Principles of Marketing
Principles of Marketing
Annual Report: Additional Financial Statements
Chapter 9: Setting the list or quoted price
Ch. 8 - Controlling.
Business Markets and Business Buying Behavior
Presentation transcript:

PURCHASING AND SUPPLY MANAGEMENT CHAPTER 15 PURCHASING AND SUPPLY MANAGEMENT

Chapter content Introduction The importance of the purchasing and supply function to the business The management task of the purchasing and supply manager Purchasing process and activities Summary

Introduction Purchasing and supply function often under- estimated Buyers buy variety of materials Expected to keep abreast of better substitute materials, market trends, seasons and state of market Buyers’ expertise can improve progressiveness, productivity and profitability

Introduction (continued) Need to ensure quality Purpose of purchasing and supply function is to provide right materials, services and equipment at reasonable price, to satisfy quality requirements, and to have correct quantity at right time and place

Purchasing and supply function Select suppliers Purchase and arrange for the transport of materials to the business Decide what prices to accept Determine quantity and quality of materials or services Expedite and receive materials Control warehousing and inventory-holding Determine the timing of purchases

Greatest expenditure for the business Purchasing costs are business’ biggest expense - represent an area where cost savings can make a vital contribution to the business profits Stock is held to prevent disruptions when there is interruption in the flow of material to a business – aim to keep inventory levels low without risking an interruption in the operational process

Greatest expenditure for the business (continued) Profit-leverage means that purchasing costs are major portion of total cost and saving on these costs has greater profit potential than similar increase in sales Purchasing materials of the right quality and price at the right time can make final products available in the right quantities at a competitive price at the right time to its customers

Purchasing and supply planning Purchasing and supply planning is subject to overall business planning – should be conducted in consultation with other functional areas of the business Planning takes place at the following levels: Strategic level Tactical or middle-management level Operations level. Formulation of objectives is one of the most important planning tasks

Levels of purchasing and supply planning

Organising the purchasing and supply function Four main issues need to be addressed: The place of the purchasing and supply function in the organisational structure The internal organisation of the purchasing department Coordination with other functional management areas Cross-functional sourcing teams.

Place of purchasing and supply function in organisational structure Place of the purchasing and supply function in the business is affected by two elements: Centralisation or decentralisation The hierarchical level of the purchasing and supply function in the organisational structure.

Internal organisation of the purchasing and supply function Specific activities for activity groups: Purchasing and negotiation Follow-up and expediting Administration Purchasing research Inventory holding

Coordination with other functional management areas Coordination occurs at three levels: Various purchasing and supply activities must be coordinated internally in the purchasing and supply function The purchasing environment must be coordinated with purchasing and supply activities The purchasing and supply function must be coordinated with other functional management areas, as well as the needs of the final consumer.

Cross-functional sourcing teams Tasks of cross-functional sourcing teams include: Supplier selection Negotiating corporate-wide purchasing agreements Developing cost-reduction strategies Developing sourcing strategies Developing suppliers and the evaluation of suppliers’ performance.

Control in the purchasing and supply function Control is essential Measures need to be put in place to ensure purchasing and supply objectives are pursued within acceptable and accepted standards or norms according to policy Specific attention should be given to the management task in the purchasing and supply function, and the performance of purchasing and supply activities

The assessment of purchasing and supply management Essential that management performance be evaluated, just like other activities of the purchasing and supply function Management is intangible and difficult to measure quantitatively Use of an evaluation sheet or questionnaire can be used to assist in the assessment of management performance

The assessment of purchasing and supply activities Control points used to gauge effectiveness of purchasing and supply activities: Price proficiency Supplier performance Timeliness Cost-saving Workload Purchasing costs Inventory-holding Relationship performance with suppliers Relationship with other functional management areas.

The purchasing process Steps of the purchasing and supply cycle: Development and description of a need Choice of suppliers Research on prices and availability Issuing the order and concluding a contract Follow-up and expediting Receipts, inspection and distribution Handling errors and discrepancies Paying for the order Closing the order.

Quality decisions - a purchasing and supply activity Determining the right quality: Engineers and designers – technical considerations important End user and/or marketing function – commercial considerations. Description of quality: Specifications –general method of describing quality Standardisation Other: Market grades, brands, SABS standards, engineering drawings and samples.

Quality decisions - a purchasing and supply activity (continued) Control of quality: Inspection – samples of delivered materials or services are subjected to tests by quality controllers Supplier certificate agreement SABS – ISO 9000 to ISO 9004 and ISO 14000 international standards.

Deciding on purchasing and supply quantities Need for inventory-holding Helps ensure the operations process continues without interruption Allows businesses to utilise cost savings through longer production runs and volume discounts Inventory costs Inventory-carrying costs Inventory-ordering costs Total inventory costs

Deciding on purchasing and supply quantities (continued) Inventory-control systems The system of fixed order quantities The cyclical-ordering system The materials requirements planning (MRP) system The just-in-time (JIT) system The quick-response (QR) and automatic- replenishment (AR) systems The efficient consumer response (ECR) system

The selection and management of suppliers The selection process: Compilation of a list of suppliers Reduce list to a short list Short list suppliers requested to give a quote or negotiations with them are started Choose a supplier Evaluation of supplier performance.

The selection and management of suppliers (continued) Developing suppliers Black economic empowerment (BEE) through purchasing Materials or service not available Normal performance appraisals Long-term relationships with suppliers

Pricing decisions Price determination Methods depend on nature of materials and the value of the transaction Published price lists Quotations Tenders

Timing of purchases The ‘right’ time to buy: Ensure business is supplied on an ongoing basis Reduce risk of price fluctuations Keep inventory-holding at an optimal level. Factors influencing the scheduling of purchases: Internal factors External factors.

Summary Purchasing and supply function important: Significant influence on profitability of business Greatest spender of business revenue Function makes it possible for business to sell final products at competitive prices Should be planned, organised and controlled Main purchasing activities are quality, quantity, price, supplier selection and timing Different purchasing and supply activities do not occur in isolation, but integrated Integration allows system to operate as a whole