1. Chapter 5 An Overview of the Purchasing Function

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

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

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

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

6. 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

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

8. 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

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

10. 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

11. Copyright ©2008 John Wiley & Sons, Inc.