1. Purchasing and Supply Chain Management
Particularities of the companies market and the role of purchase within the company.
(What is purchasing?)

2. As a link in the supply chain
What is Purchasing?
Perspectives on Purchasing
- To perform specialised tasks 1
As a function
- To achieve an output 2
As a process
- With production and warehousing 3
As a link in the supply chain
- Internal and external focus 4
As a relationship
- Knowledge based 5
As a discipline
- Demonstrable skills and knowledge 6
As a profession

3. MARKETING STRUCTURE AND DEMAND
What is Purchasing?
MARKETING STRUCTURE AND DEMAND
Business markets contain fewer but larger buyers.
Business customers are more geographically concentrated.
Business buyer demand is derived from final consumer demand.
Demand in many business markets is more inelastic—not affected as much in the short run by price changes.
Demand in business markets fluctuates more, and more quickly.

4. NATURE OF THE BUYING UNIT TYPES OF DECISIONS AND THE DECISION PROCESS
What is Purchasing?
NATURE OF THE BUYING UNIT
Business purchases involve more buyers.
Business buying involves a more professional purchasing effort.
TYPES OF DECISIONS AND THE DECISION PROCESS
Business buyers usually face more complex buying decisions.
The business buying process is more formalized.
In business buying, buyers and sellers work more closely together and build close long-run relationships.

5. What is Purchasing?

6. The Classic Definition
What is Purchasing?
Definitions
The Classic Definition
To buy materials of the right quality , in the right quantity
from the right source delivered to the right place at the
right time at the right price.
To be Contrasted with
Modern Definition
The process undertaken by the organisational unit that, either as a
function or as part of an integrated supply chain, is responsible for
procuring or assisting users to procure in the most efficient manner the
required supplies at the right time, quality, quantity and price and
the management of suppliers, thereby contributing to the competitive
advantage of the enterprise and the achievement of its corporate strategy.

7. The scope of purchasing
To supply the organisation with a flow of materials and services to meet its needs.
To ensure continuity of supply by maintaining effective relationships with existing sources and by developing other sources of supply either as alternatives or to meet emerging or planned needs.
To buy efficiently and wisely, obtaining by ethical means the best value for every EURO spent.
To maintain sound co-operative relationships with other departments, providing information and advice as necessary to ensure the effective operation of the organisation as a whole.
To develop staff, policies, procedures and organisation to ensure the achievement of these objectives.

8. More specific objectives
To select the best suppliers in the market.
To help generate the effective development of new products.
To protect the company’s cost structure.
To maintain the correct quality/value balance.
To monitor supply market trends.
To negotiate effectively in order to work with suppliers who will seek mutual benefit through economically superior performance.
To adopt environmentally responsible supply management.

9. The Evolution of Purchasing
What is Purchasing?
The Evolution of Purchasing
The Reck and Long Model
Stage
Characteristics
Concerned with the five rights that concentrate
exclusively upon the purchasing of tangible products and outcome dimensions.
1. Product centered
Moves beyond a concern with outcomes and begins to
measure the process through which the outcome is
delivered.
2. Process centered
Process and relationally focused, expanded to include
purchaser-supplier relationships.
3. Relational
Focused on best product management methods. Employs an integrated methodology to manage relationships, processes and outcomes.
4. Performance
centered

10. What is Purchasing? Purchasing and Change Globalisation Impact
Information
Technology
Impact
Chasing Production &
Management
Philosophies Impact
Transgression of
national boundaries
Advantage of cost
Specialised labour skills
Emerging economies
Slicker transactions
Quality of management
data
Strategic link with
suppliers
Paperless environment
Competitive advantage
Outsourcing
Supply chain
management
Supply networks

11. What is Purchasing?
Purchasing in the Future
Increase in strategic importance
Automated tactical activities
Master contracts
Electronic purchasing
Strategic purchasing competency centres
Shared supply chain resources
Profit contribution
Changed emphasis on individual skills

13. The increasing importance of purchasing and supply in the manufacturing sector

14. Changing purchasing roles: reactive and proactive buying

15. The ‘transactional’ relationship

16. The ‘mutual’ relationship

17. Pareto´s principle – 80 % of expenditures will be with 20 % of suppliers
The ‘Procurement Positioning’ tool

18. Total acquisition costs and total cost of ownership
The price/cost iceberg

19. A four-stage purchasing development model

20. A four-stage purchasing development model (Continued)

21. The purchasing development matrix (Source: Jones, 1997)
Aims:
Identify the development of profiles
Weaknesses
Provide benchmarking

22. What is Purchasing?
Must Accommodate
World-class Purchasing
TQM
JIT
Total cycle time reduction
Long-range planning
Supplier relationship engineering
Strategic cost management
Performance accountability
Professional flexibility and development
Service excellence
Corporate social responsibility

23. The Status of Purchasing and Supply Management
What is Purchasing?
The Status of Purchasing and Supply Management
Bigger quantity – better price
(better position of purchasing on supply market – better impact on results)
Status Influenced by:
Leverage
Power of purchasing to enhance profitability
Focus
Is it transactional, commercial or strategic?
Professionalism
Perception of influencers
Academic activity
Depth of knowledge and skill
Future focus