procurement part one marketing logistics. procurement or purchasing purchasing: actual buying of...
TRANSCRIPT
Procurement Part One
Marketing Logistics
Procurement or Purchasing
• Purchasing: actual buying of materials and services.
• Procurement: process-oriented and strategic.
• Purchasing is usually the largest single expense of doing business. More so as outsourcing increases.
Procurement or Purchasing
Procurement or Purchasing
Outsourced
Purchasing Goals
• Provided uninterrupted flow of materials.• Minimize inventory costs.• Maintain, improve quality.• Find, develop suppliers.• Standardize where possible.• Optimize costs.• Improve organization’s competitive position.• Harmoniously interact with all of organization.
Cost trade-offs to Be Considered by the Purchasing Executive
Source: Douglas M. Lambert and Jay U. Sterling, “Measuring Purchasing Performance,” Production and Inventory Management Review 4, no.6 (June 1984), p. 52. Reprinted with permission from P&IM Review, June 1984. Copyright 1984 by T.D.A. Publications, Inc., Hollywood, FL.
Cost trade-offs to Be Considered by the Purchasing ExecutiveCost savings
associated with volume buying
Inventorycarrying
costs
Source: Douglas M. Lambert and Jay U. Sterling, “Measuring Purchasing Performance,” Production and Inventory Management Review 4, no.6 (June 1984), p. 52. Reprinted with permission from P&IM Review, June 1984. Copyright 1984 by T.D.A. Publications, Inc., Hollywood, FL.
Cost trade-offs to Be Considered by the Purchasing Executive
The savings associated with volume buying include: Lower per-unit purchasing pricesLower transportation costsLower warehouse handling costsLower order-processing costsLower production lot quantity costsLower stockout costs
The costs of carrying inventory include:Capital costs associated with the inventory investmentInventory service costs (insurance and taxes)Storage space costsInventory risk costs
Cost savingsassociated with volume buying
Inventorycarrying
costs
Source: Douglas M. Lambert and Jay U. Sterling, “Measuring Purchasing Performance,” Production and Inventory Management Review 4, no.6 (June 1984), p. 52. Reprinted with permission from P&IM Review, June 1984. Copyright 1984 by T.D.A. Publications, Inc., Hollywood, FL.
Go to Part Two.
Procurement Part Two
Marketing Logistics
Purchasing Decision Variables: How to Rate Suppliers
• Lead time and lead time variability.
• On-time rate.• Supplier’s inventory.• Ordering convenience.• Ability to expedite.• Downtime risks due to
vendor problems.• Product reliability, quality,
maintenance requirements.• Technical specifications.
• Technical/training services offered.
• Price competitiveness.• Sales representative(s).• Past experience with
vendor.• Reputation of vendor.• Financing.• Vendor flexibility.• Engineering/design
capabilities.
Supplying a Manufacturer
Supplying a Manufacturer
Procurement or Purchasing
Warehouse
Procurement or Purchasing
Procurement or Purchasing
Procurement or Purchasing
Lead time and lead time variability.
Procurement or Purchasing
On-time rate.
Procurement or Purchasing
Supplier’s inventory.
Procurement or Purchasing
Ordering convenience
Procurement or Purchasing
Ability to expedite.
Procurement or Purchasing
Downtime risks due tovendor problems.
Procurement or Purchasing
Product reliability, quality,maintenance requirements.
Procurement or Purchasing
Product reliability, quality,maintenance requirements.
15 pounds
12 inches
10-year service life
Technical specifications
Engineering/Design capabilities
Supplying a Manufacturer
• Technical, training services offered.
Supplying a Manufacturer
Price competitiveness.
$ Financing
Supplying a Manufacturer
Sales representatives.Past experience with vendor.Reputation of vendor.Vendor flexibility.
Purchasing Decision Variables: How to Rate Suppliers
• Lead time and lead time variability.
• On-time rate.• Supplier’s inventory.• Ordering convenience.• Ability to expedite.• Downtime risks due to
vendor problems.• Product reliability, quality,
maintenance requirements.• Technical specifications.
• Technical/training services offered.
• Price competitiveness.• Sales representative(s).• Past experience with
vendor.• Reputation of vendor.• Financing.• Vendor flexibility.• Engineering/design
capabilities.
Go to Part Three