PURCHASING MANAGEMENT – CONCEPT MAP

STUDENT: ABRIL ESMERALDA PACHECO RODRIGUEZ

GROUP: DNM42 TEACHER’S NAME: MYRIAM LÓPEZ PÉREZ

The requirements for
purchasing organization
FUNCTION
S An organizational structure must be able
1.Ordering includes mainly
the administrative side of
purchasing in the form of
expediting orders. This is a
purely operational activity.
2.Negotiating deals with
selecting the economically
most feasible supplier(s)
from the list of approved
vendors; while
3. Sourcing involves the
purchasing function in
procurement decisions prior
to the decision of approved
list. Purchasing is considered
strategic from that point.
4.Supply chain management
broadens the scope of
purchasing by taking
responsibility for
synchronizing inbound
material flows with the rest
of company’s operations.
PURCHASING
MANAGEMENT
Purchasing organization Other organizational
factors
structure
As specialization on one category
Centralization Formalization Dynamics alters the efficiency of the others,
the division should be made with
TRENDS considerations to:
Can be found applicable in case of Its combinations with centralization decision 1.Practical and technical feasibility of
to change to cope with external pressures.
similarities between multiple help to describe four essentially different dividing the line of work; and
1. increasing company. organization types which are also suitable 2.Sub‐tasks should not seriously
strategic role of for defining different purchasing function’s impact the values of other sub‐tasks.
purchasing in Centralized: Advantages: Increased
characteristics. It is suggested as being progressive with
corporate professionalism of buyers, More
efficient allocation of purchasing different types of organization evolving
policy; and thus Include machine bureaucracy‐,
Budget, Higher bargaining power. over time. Also cyclical and oscillating Characteristics
2. shift towards entrepreneurial‐, professional‐, and
patterns between discrete numbers of
more adhocracy types (Wood, 2005). 1.In centralized and hybrid structures
Disadvantages: Indirect contact configurations have been described.
centralized between supplier and actual user of the implementation of these
Control as well as decision‐ making is
control the component/producto, methods is more common tan in
agglomerated to the manager which leaves
3. decreasing Increased specialization can limit According to Johnson, et al. (2001) and decentralized organizatios.
little or no reasons why to formalize the
number of purchasing function integration Wood (2005), it is not proven that CPOs
operational communication too much 2.Common methods to facilitate such
suppliers with other department, losing the restructure or design the organization
(Wood, 2005). interaction are cross-functional
4. increasing overall coherence requirement. driven by and based on an analysis of
teams that include various
number of long it fits to a development intense multi site available alternative.
Decentralized: Advantages: counterparties related to the final
term contracts MTO type of company with heterogeneous
Purchasing department’s better producto.
5. buying groups supply demand where contracts are done
organized contact with local organization, autonomously at different locations due to 3.Indicates the influence of
around end Integration with other functions; different or changing characters of the centralization decisions on the use of
buyers are often located together
items rather product. these tools.
with engineering or manufacturing
than
specialists.
commodities
Disadvantages: Coordination
difficulties between different sites,
No clear overview of inbound
material flow leading to
inefficiency