The document discusses organizational buying behavior and supply chain management. It describes the different types of customers that organizations buy from, including producers, OEMs, resellers, government agencies, institutions, and consumers. It also outlines the typical buying process that organizations go through, which involves recognizing a need, searching for suppliers, evaluating proposals, selecting a supplier, and evaluating performance. Additionally, it discusses just-in-time inventory systems and how supply chain management aims to increase distribution channel efficiency.

2.  Producers
 OEM purchasers
 End users
 Resellers
 Government agencies
 Institutions
 Consumers

3. They buy products and
services to
manufacture and sell
their products and
services to customers.

4. Buyers for original
equipment
manufacturers (OEMs)
purchase goods to use
in making their
products.

5. When producer buy goods
and services to support
their own production and
operations.
CAPITAL EQUIPMENTS
Items are major purchases,
such as mainframe
computers and machine
tools that the producer
uses for a number of
years.

6. They buy finished
products or services
with the intention to
resell them to business
and customers.

7. Effective selling to
government agencies
requires a thorough
knowledge of their
unique procurement
procedures and rules.

8. Another important
customer group
consists of public and
private institutions as
churches, hospitals
and colleges.

9. Consumer purchase
products and services
for use by themselves
or by their families.

11. The typical organizational purchase is much
larger and more complex than the typical
consumer purchase.
Organizational buying decisions often involve
extensive evaluations and negotiations
overtime.

12. DERIVED DEMAND means that purchases
made by these customers ultimately depend
on the demand for their products – either
other organizations or consumers.

13. Steps in the Buying Process
Creeping Commitment

14. 1. Recognizing a need or a problem
2. Defining the type of a product needed
3. Developing product specification
4. Searching for qualified suppliers
5. Acquiring and analyzing proposals
6. Evaluating proposals and selecting a supp
7. Placing an order and receiving the product
8. Evaluating product performance

15. Someone realizes that a problem or
a need exists.
Who can recognize the
problem?
Employees in the customer’s firm or
outside salespeople can trigger this
recognition.

17. Developing general approach ainneed.
solving the existing problem or
Theof purchasing a product or in
terms
product solution is defined
service- the automated assembly
needed.

19. The specificationsproblemproduct
needed to solve the
for the
are
prepared.
Potential suppliers willproposals.
specification to develop
use these

20. Color
Size
Price
Warranty
Note:
Step 2 and 3 offer great
opportunities for
salespeople to influence
the outcome of the
buying process.

21. Looking for the potential supplier is
being held.
◦ Contact pervious suppliers
◦ Go through extensive search
procedure

23. Many organization nowadays use
the internet to locate suppliers
other than asking suppliers for
proposals.

24. Suppliers are ask to submit
proposals. Salespeople work with
people in their company to develop
their proposal.
Salespeople work with people in
their company to develop their
proposals.

26. Customer evaluates the proposals
 Afternegotiations supplier is selected,
further
a preferred
may occur concerning
price, delivery or specific performance
features.

27. Evaluating proposals and
selecting a supplier

28. Order is placed with the selected
supplier
Order goes to supplier
The product is shipped to the buying
firm.
During this step the salespeople need
to make sure the paperwork is correct
and their firm knows what has to be
done to satisfy the customer’s
requirements.

30. The product’s performance is being
evaluated.
the evaluation maybe formalpeople
informal assessment made by
or
involved in the buying process.

32. Customers:
a Family

33.  Recognition of
a problem or
need
◦ They are hungry

34.  Searching for
qualified
suppliers
◦ Jollibee
◦ McDonald’s

35.  Delicious meals
 Affordable

36.  Acquiring and
analyzing proposals

37.  Evaluating proposals
and selecting a
supplier

40.  Means that a customer becomes increasingly
committed top a particular course o action
while going through the steps in the buying
process.

41. New task
Straight Rebuy
Modified Rebuy

42. New Task Straight Rebuy Modified Rebuy
First time Same product; Same product;
Buyer same source unsatisfied needs
Limited Considerable Interestin
knowledge knowledge obtaining new
information
Initial
buying Satisfy with the in-suppliers
process steps suppliers performs
are critical performance unsatisfactorily

43. SALES PEOPLE NEED TO KNOW THE NAMES AND RESPONSIBILITIES
OF ALL PEOPLE IN THE BUYING CENTER FOR A PURCHASE
DECISION, AND SOMETIMES THEY NEED TO MAKE SURE THAT THE
RIGHT PEOPLE ARE PARTICIPATING.

44.  SUCH AS THE MANUFACTURING AREA
PERSONNEL FOR OEM PRODUCTS AND
CAPITAL EQUIPMENT, TYPICALLY DO NOT
MAKE THE ULTIMATE PURCHASE DECISION.
HOWEVER, THEY OFTEN HAVE INLUENCE ON
THE BUYING PROCESS.

45. ANOTHER ROLE OF THE BUYING PROCESS IS THAT
OF INITIATOR, OR THE PERSON WHO STARTS THE
BUYING PROCESS.

46.  THIS IS THE PEOPLE INSIDE OR OUTSIDE THE
ORGANIZATION WHO DIRECTLY OR
INDIRECTLY PROVIDE INFORMATION DURING
THE BUYING PROCESS.

47. IT CONTROLS THE FLOW OF INFORMATION AND
MAY LIMIT THE ALTERNATIVES CONSIDERED.

48.  IN ANY BUYING CENTER ONE OR MORE
MEMBERS OF THE GROUP,DECIDERS, MAKE
THE FINAL CHOICE.

50.  THE OBJECTIVES OF BUSINESSES IS TO MAKE
PROFIT. THUS BUSINESSES ARE VERY
CONCERNED ABOUT BUYING PRODUCTS AND
SERVICES AT THE KWEST COST.

51. QUALITY FIRMS RECOGNIZE THAT THE QUALITY
AND RELIABILITY OF THEIR PRODUCT ARE AS
IMPORTANT TO THEIR CUSTOMERS AS PRICE.

52.  ORGANIZATIONAL BUYERS WANT MORE
THATN PRODUCTS THAT ARE EXPENSIVE,
PERFORM RELIABLY, AND ARE AETHETICALLY
PLEASING.

54.  MEMBERS OF THE BUYING CENTER TEND TO
BE MORE CONCERNED ABOUT LOSING
BENEFITS THEY HAVE NOW THAN ABOUT
INCREASING THEIR BENEFITS.

55. THIS IS TO CONTINUE BUYING FROM SUPPLIERS
THAT HACE PROVE SATISFACTORY IN THE PAST.

56.  BY CONVERTING BUYING DECISIONS INTO
STAIGHT REBUYS, THE DECISIONS BECOME
ROUTINE, MINIMIZING THE CHANCES OF A
POOR DECISION.

57. THIS MEANS THAT THE BUYER WILL ALWAYS
ALLOCATE ONLY A SHARE TO EACH VENDOR

58. Supply Chain Management
The Internet and Business-to-Busine

59. Just- in- time Inventory System
Advantage and Disadvantage
Material Requirements Planning (MRP)
system
Automatic Replenishment (AR)
Supplier Relationship Management

60. Set of programs undertaken to
increase the efficiency of the
distribution channel that moves
products form producer’s facilities to
the end user.

61.  used by a producer to minimize its
inventory by having frequent deliveries,
sometimes daily, just in time for assembly
into the final product.
The ultimate goal is to eliminateall
inventory except products in production
and transit. Inventory is waste.
Rely on one supplier.

64. Funds that were tied up in inventories can be
used elsewhere.
Areas previously used, to store inventories
can be used for other more productive uses.
Throughput time is reduced, resulting in
greater potential output and quicker response
to customers.
Defect rates are reduced, resulting in less
waste and greater customer satisfaction.

65. PCs Just In Time Management:
Del Computer Corporation has finally tuned its
Just-in-Time system, Dell's low cost
production system allows it to under price its
rivals by 10% to 15%. How does the
company's just in time system deliver lower
costs? "While machines from Compaq and IBM
can languish on dealer shelves for two
months Dell does not start ordering
components and assembling computers until
an order is booked.

66. That may sound like no biggie, but the
price of PC parts can fall rapidly in just
a few months. By ordering right before
assembly, Dell figures its
parts, on average,
are 60 days newer than
those in an IBM or Compaq
machine sold at the same time.
That can translate into a 6% profit
advantage in components alone."

67.  JIT manufacturing also opens businesses
to a number of risks, notably those
associated with your supply chain. With no
stocks to fall back on, a minor disruption
in supplies to your business from just one
supplier could force production to cease at
very short notice.

68. Toyota the Developer of JIT System
Just-in-time manufacturing system has many
advantages, but they are vulnerable to
unexpected disruptions in supply. A
production line can quickly come to a halt if
essential parts are unavailable. Toyota, the
developer of JIT, found this out the hard way.
One Saturday, a fire at Aisin seiki Company's
plant in Aichi Prefecture stopped the delivery
of all break parts to Toyota. By Tuesday,

69. Toyota had to
close down all of
its Japanese
assembly line. By
the time the
supply of break
parts had been
restored, Toyota
had lost an
estimated $15
billion in sales.

70.  these systems are used to forecast sales,
develop a production schedule, and then
order parts and raw materials with delivery
dates that minimize the amount of inventory
needed, thereby reducing costs.

71. Week 1 2 3 4 5 6 7 8
Gross Requirements
Scheduled Receipts
Projected on hand I
Planned Receipts
Planned order releases

73.  A form of Just-in-time where the supplier
manages inventory levels of the customer.
 The materials are provided on consignment,
meaning the buyer doesn’t pay for them
until they are actually used.
(industrial settings)

74.  Computer-to-computer linkages between
suppliers and buyers sharing information
about sales, production and shipment and
receipts of products.

75. Sales Forecasts
Promotion Schedule
Request For Quote
Change Order
BUYER Material Release
SUPPLIER
Sh Quote Order
A ip
no dv m Acknowledge
Bi ti an en
r
ll ce ce t
de
of d S t Shipping Notice
Pi
t
or
sh at
us en
ck
La
ip us Invoice
up
at m
nd
up
pi
ip
in
ck
nPromotion
Sh
or
g g
Pi
Schedule
de
st
r
CARRIER

76.  is a strategy by which organizational buyers
evaluate the relative importance of suppliers
and use that information to determine with
whom they want to develop partnerships.

77. Step 1: Annual Spend
Step 2: Vendor Analysis
Step 3: Overall score is developed.

78.  Is the amount that is
spent with each
vendor (supplier)
and for what
products.

79.  The buyer rates the supplier and its
product on a number of criteria such
as;
◦ Price
◦ Quality
◦ Performance
◦ On- time Delivery

80.  The ratings of suppliers can be
affected by perceptions and personal
needs of the buyers.

81.  The ratings are weighted by importance of
the characteristics.

82.  Electronic
ordering through
EDI (Electronic
Data Interchange)
has been common
practice in
business for
more than 10
years.

83.  EDI activity, nowadays, was transacted
over private networks that required
buyers and sellers to use specialized
software to communicate with each
other.
 Special secure Internet-based networks
connecting buyers and suppliers are
called extranets.

84.  Reduced costs by making manuals and
technical documentation available online to
trading partners and customers
 more effective collaboration between
business partners - perhaps members of a
project team - by enabling them to work
online on common documentation
 improved business relationships with
key trading partners because of the close
collaborative working that extranets support

85.  improving the security of communications
between you and your business partners,
since exchanges can take place under a
controlled and secure environment