Chapter 7:
Purchasing Procedures, EProcurement, and
Systems Contracting
Purchasing and Supply Chain Management
3rd edition
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Purchasing and Supply Chain Management, 3rd edition, Copyright 2013, W.
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Purchasing Department's Objectives
1.
Spend corporate funds wisely.
2.
Operate in a professional manner.
3.
Purchase:
4.
•
the right materials
•
in the right quantities
•
at the right time and price
•
from the right source.
Practice the highest level of ethical standards to ensure
confidence among all parties.
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
General Definitions
•
Purchasing process:
•
•
Buying process:
•
•
Buying goods and services for use by the buying organization
Procuring items for resale
These terms are sometimes used interchangeably.
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Purchasing Department's Main Functions
1.
Determine the supplier.
2.
Negotiate the actual price.
3.
Determine the delivery date.
•.
•.
More than 75 % of a firm’s procurement activities are
routine.
Thus, becoming increasingly automated.
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Purchasing Tools
•
Systems contracting
•
EProcurement
•
Reverse auctions
•
Electronic Data Interchange (EDI)
•
Radio Frequency Identification (RFID)
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Systems Contracting (cont.)
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Requirements:
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A negotiated agreement between buyers and sellers including:
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Type of material
•
Scope of contract
•
Price
•
Billing policy
•
Stocking policy
•
Delivery requirements
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Purchasing Tools
•
Systems contracting
•
EProcurement
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Eprocurement
•
Potential Savings:
•
•
Inventory and purchase costs
Detriments:
•
Total cost of implementing these systems
•
Lack of savings during development and deployment phases
•
Cost of training employees and getting suppliers to participate
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Reverse Auctions
•
Characteristics:
•
The buying firm initializes the auction by submitting a description
of the product or service.
•
Sellers place bids based on their offer to fulfill the buyer’s needs.
•
The competition between the sellers drives the price down,
instead of up.
•
The buyer chooses the winning bidder.
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Purchasing Tools
•
Electronic Data Interchange (EDI)
•
Radio Frequency Identification (RFID)
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Questions?
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.