Strategic

Purchasing
Management
“Money can buy some
things to create happiness,
but it can never buy
happiness.”
1 Prepared By: M. Imran Taseer
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Synopsis
 Purchasing Planning and Purchasing
Strategies
 Development of a Corporate Plan for
Purchasing
 Purchasing Strategies
 Elements of Supplier Partnership
 Make or Buy
 Ethical Purchasing
 Procurement Agencies
Prepared By: M. Imran Taseer
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Purchasing Planning and

Purchasing Strategies
 Make or buy?
 How many suppliers do we have?
 What is the total value of our spend p.a.?
 Who are our top 10 suppliers by value?
 What are the top 10 products by spend?
 What are the critical low value items?

Prepared By: M. Imran Taseer

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Development of a Corporate
Plan for Purchasing
 Collect
information and monitor factors in
supply markets and the external
environment of the organization.

 what new materials are being developed?

 what changes in supply and demand can
be expected?
 what price trends can be expected?

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Development of a Corporate
Plan for Purchasing
 Collect information and data concerning
demand for materials and equipment
within the company.
 Develop a long-term plan that establishes
objectives and strategies.
 Design an organization and devise
procedures and policies to implement the
plan.

Prepared By: M. Imran Taseer

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Development of a Corporate
Plan for Purchasing
 Construct a manpower plan so that the
required human resources are available
to put the plans into operations.

 Monitor the performance of the

department and of the staff to check that
results are in accordance with the plans.

Prepared By: M. Imran Taseer

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Purchasing Strategies
 TheDevelopment of New Materials and
Equipment

 The Development of Supply Capacity

 Single or multiple sourcing
 Supplier appraisal methods
 Supplier performance
 Finding new suppliers

Prepared By: M. Imran Taseer

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Purchasing Strategies
 Price
Strategies and the Structure of
Supply Markets
 Develop price-cost analysis techniques to
improve negotiating ability with existing
suppliers
 Allocate business to more than one supplier
as a means of preserving competition
 Encourage new suppliers to enter the
market or develop foreign sources of supply
to increase competition
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Purchasing Strategies
 Price
Strategies and the Structure of
Supply Markets
 Consider the possibilities of the buyer’s own
company making the product
 Investigate the possibility of takeover or
merger with a supplier in order to increase
control of essential supplies
 Develop substitute materials from other
suppliers to overcome shortages and
resulting price rises
Prepared By: M. Imran Taseer
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Purchasing Strategies
 Flexible Strategies
 Single vs. Multiple Sourcing
 Plans forStores and Stock Control
 Supplier Partnership

Prepared By: M. Imran Taseer

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Elements of Supplier
Partnership
 Partnership sourcing is where a buyer and
supplier develop such a close and long-
term relationship that the two work
together as partners in a win-win
arrangement.
 Both add value and reduce cost is the
objective of partnership.

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Elements of Supplier
Partnership

 Cost versus price.

 Long term versus short term.
 Quality control versus checks.
 Single versus multiple sourcing.

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Make or Buy
 Spare manufacturing capacity is available
 Technical considerations may be similar
 Have financial resources
 Knowledge and skills, availability of labor,
materials, and finance, as well as suitability of
plant and equipment.
 Difficulties regarding quality, delivery, and
price that can be solved by internal
manufacture?
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Make or Buy
 Any particular advantages that external
suppliers have regarding research and
development expertise, long production
runs, and specialist equipment?

 Totalcost of manufacture against the

Total cost of acquiring

Prepared By: M. Imran Taseer

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Ethical Purchasing

 Have an eye on employees

 Purchase locally

Prepared By: M. Imran Taseer

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Procurement Agencies

 Outsource procurement
 Specialist in purchasing

Prepared By: M. Imran Taseer