Professional Documents
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Vendor Management
What Is Purchasing?
Purchasing is a functional group and a functional activity.
Objectives of Purchasing may be defined as: 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.
Purchasing is proactive.
Purchasing is transactional as well as relational
Purchasing is strategic.
Perspectives on Purchasing
Purchasing as a function: people use specialized
knowledge skills and resources to perform specialized
tasks.
Purchasing as a process
Purchasing as a link in the supply or value chain.
Purchasing as a relationship
Purchasing as problem solving
Purchasing as a discipline.
Purchasing as a profession.
Definition of Purchasing:
Information Technology
Supplier Development
Advantages:
1. Reduced concept-to-customer development time.
2. Improved product specifications.
3. Enhanced quality
4. Access to new technology
5. Lower development costs.
6. Interchange of knowledge.
7. Improved manufacturing.
Steps in Supplier Development
Categorical System
Weighted-Point System
2. Absence of competition
3. Supply disruptions
Twenty-Eighty Rule
Triage Approach
Centralized Purchasing:
Economies of Scale:
1. Forecasting benefits
2. Negotiation on quantities
3. Compete for preferred supplier status
4. Reduction in prices by spreading overheads.
5. Professional can be employed.
Centralized Purchasing
Coordination of Activities:
1. Strategic focus possible
2. Uniform policies can be adopted such as ‘single
sourcing’
3. Competitive buying is eliminated.
Centralized Purchasing
Control of Activity:
1. Separate profit centre
2. Budgetary control
3. Uniformity of prices.
4. Inventories can be controlled.
5. Performance can be monitored
Decentralized Purchasing