1. The Purchasing Process IDIS 424 Spring 2004
Chapter 2
The Purchasing Process IDIS 424 Spring 2004

2. The Purchasing Cycle 1. Identify or Anticipate
Material & Service Needs
2. Evaluate Suppliers
5. Continuously Measure and
Manage Supplier Performance
3. Select Suppliers
4. Release and Receive
Purchase Requirements

3. Identify or Anticipate Material and Service Needs
Purchase requisitions
Forecasts and customer orders
Reorder point systems
Stock checks
Cross-functional new product development teams

4. Evaluate Suppliers Develop list of potential suppliers
Look at past performance
Determine important performance criteria
Visit supplier facilities as required

5. Select Suppliers Evaluate past performance or site visit data
Analyze request for quotations or proposals.
Negotiate with suppliers as required
Make selection decision and issue purchase order or finalize contract.

6. Release and Receive Purchase Requirements
Transmit purchase requirements electronically, by fax or through the mail.
Shorten order cycle time through electronic data interchange and bar-code technology.

7. Continuously Measure and Manage Supplier Performance
Do not assume that purchasing cycle ends with receipt of material or service
Identify improvement opportunities or supplier nonperformance

8. How Purchasing Communicates with Suppliers
Traditional
Point-To-Point

9. Traditional Purchasing Communication Model
Engineering
Engineering
Quality
Control
Quality
Control
Purchasing
Sales
Production
Planning
Production
Planning
Transportation
Transportation

10. Point-To-Point Purchasing Communication Model
Engineering
Engineering
Quality
Control
Quality
Control
Purchasing
Sales
Production
Planning
Production
Planning
Transportation
Transportation

11. Purchasing Documents Purchase Requisition Request for Quotation
Purchase Order
Blanket Purchase Order
Purchase Release

12. Purchasing Documents Raw Materials Components Semi-finished Products
MRO (Maintenance, repair, and operating items)
Services
Capital Equipment