Purchasing Foundations

1. Lynda Certification:
Purchasing Foundations
TAYLOR L. CANNON
BUSINESS STUDENT AT PENN STATE MONT ALTO

2. The Purchasing Process
Purchasing is important to a company because of the
impact of cost.

3. Purchase Orders
The purchase order is created when the buyer and
supplier reach an agreement.

4. Purchasing Policies
Purchasing Policies are put into place to define the
responsibilities of the purchasing department.

5. The Purchase Organization
The three type of purchasing structures are centralized
purchasing, decentralized purchasing, and the hybrid
approach.

6. Supplier Evaluation and Selection
When selecting a supplier you must recognize that you
have a need, understand the requirements of the
customer, determine the right strategy for buying this
item, identify the potential suppliers, and then pick a
supplier with quality products.

7. Supplier Quality Management
Supplier quality should focus mainly on the customers.

8. Supplier Management and Development
To determine the right supplier for your company you
must evaluate the supplier's performance.

9. World-Wide Sourcing
Globalization has allowed companies to use suppliers
all around the world regardless of their location.

10. Category Management
Category management is different from company to
company. The strategic sourcing group for each
company is the most knowledgeable for this topic.

11. Negotiation Planning
Not all purchases require negotiation, but effective
planning is important for negotiation.

12. Contract Management
The sale and purchase of good or property can be
contracted.

13. Legal and Ethical Considerations
Buyers should avoid accepting favors, reciprocity, and
not revealing company information.

14. Price and Cost Analysis
When spending the company’s money, buyers are
expected to find value in their spending.

15. Should-Cost Analysis
As a buyer you are looking to find a fair and
reasonable price to pay the supplier.

16. Total Cost of Ownership
There are four categories to total ownership, purchase
price itself, acquisition costs, usage cost, and end-of-
life costs.

17. Target Costing
When entering a new product to the market you must
make a lower price and still make a profit.

18. Learning Curve Analysis
Learning curve analysis helps establish the rate of
improvement, and the direct labor costs as production
volume increases.

19. Purchasing Services
Buyers also have to purchase indirect goods and
services that are not directly a part of providing a
product to the customer.

20. E-Sourcing
Buyers are making company purchases through
electronic transactions.

21. Supply Management Performance
Measurement
It is important that the purchasing department
measures their own performance.

22. Bottom-Line
The purchasing department needs to do a lot of
strategic planning to make sure they are finding value
in their spendings.

23. Thank you for your time!