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103 typesofpurchases


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103 typesofpurchases

  1. 1. Types of purchase
  2. 2. Type of purchase Capital equipment Raw materials Original equipment part (OEP) Maintenance, repair and operating (MRO) Services
  3. 3. Discuss Describe the types of goods IBM purchased for its operations? Types Items 1 2 3 4
  4. 4. Purchase of capital equipment Item may be physically large May be in single or multiple units The way it is handled is not affected by accounting classification Usually need approval from top management
  5. 5. Purchase of OEP Usually a standardized component of a finished product Needed continuously in manufacturing Components likely to remain the same over years Same items may be purchased over many years and for different purpose High volume
  6. 6. Pricing of OEP Usually substantially Low Factors that influence pricing Quality Delivery Packaging Additional features
  7. 7. Discuss Can IBM leverage on its power for its purchase of OEP? Explain
  8. 8. Purchase of MRO Usually purchase in low volume, sometimes in one or two pieces In low value But a repair item may require the entire plant to shut down, causing thousands of dollars, for the repair work Frequency: Can be low, maybe once in a life time of the machine
  9. 9. MRO buyers Under pressure to meet urgent needs Not too concerned about pricing The objective: To satisfy the requestor Most cost is with placing the order and documentation Modern purchasing use EDI or system contracts to reduce cost of transaction
  10. 10. Small value purchase Delegate order placement to users Methods Telephone orders Petty cash purchase Standing order, e.g. Electric fitting contractor Stockless buying
  11. 11. Discuss Recommend the efficient purchasing system for the following: a) Standard ‘Original Equipment Parts’ orders; b) MRO items (small orders)