The document discusses several topics related to the purchasing function including:
1. The responsibilities of the purchasing department to provide appropriate levels of supply, quality, and lowest total cost.
2. A case study about a company manager receiving an expensive gift from a supplier and the ethical issues involved.
3. Factors that affect make-or-buy decisions such as financial risks, marketing risks, manufacturing risks, and political risks.
- What is Procurement Transformation?
- Launching a Transformation Initiative
- Taking the Organization Along With You
- Declaring Victory – What Next?
- What is Procurement Transformation?
- Launching a Transformation Initiative
- Taking the Organization Along With You
- Declaring Victory – What Next?
Purchasing mangement - Puchasing Process - Make Or Buy Decisions - Supplier S...FaHaD .H. NooR
Purchasing department in any organization assist with the identification, selection and acquisition of required materials and services.
Accomplish this as economically as possible, within acceptable standards of quality and service.
“Purchasing profession can be defined as the act of obtaining merchandise; equipment; raw materials; services; or maintenance, repair and operating (MRO) supplies in exchange for money or its equivalent”.
Warehouse management system presentationNimish Arora
Case study on how automation can be used in warehouse mangement system with Grey orange as an example. Content based on the course Industrial Automation.
Procurement training course -introduction to procurementSheila Elliott
Business Services Support offers its introduction to procurement training course for buyers. Buyers learn how to procure goods and services effectively to maximise value for their organisation. Value is a concept that many are unclear about. Procurement adds value through better product development, increased customer satisfaction, improved net cash flow and profitability and much more. Our course materials help you understand the nitty gritty of effective purchasing and procurement skills.
WAREHOUSING AND STORAGE IN SUPPLY CHAIN MANAGEMENTAjeesh Mk
This Presentation "Warehousing and storage in supply chain management" covers topics Warehouse and Storage, Warehouse Management, Functions, Economic and Service Benefit, Principles of Warehouse design, Kinds of Warehouse etc.
Distribution Strategy, Function of Channel Distribution, Marketing Intermediaries, Relationship Marketing in Channels, Types of Marketing Systems, and Non store retailing.
Supply chain definition
The systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.”
“A supply chain is the alignment of firms that bring products or services to market.”
“A supply chain consists of all stages involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers, and customers themselves.”
“A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.”
“Supply chain management is the coordination of production, inventory, location, and transportation among the participants in a supply chain to achieve the best mix of responsiveness and efficiency for the market being served.”
There is a difference between the concept of supply chain management and the traditional concept of logistics. Logistics typically refers to activities that occur within the boundaries of a single organization and supply chains refer to networks of companies that work together and coordinate their actions to deliver a product to market. Also traditional logistics focuses its attention on activities such as procurement, distribution, maintenance, and inventory management. Supply chain management acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service. Supply chain management views the supply chain and the organizations in it as a single entity. It brings a systems approach to understanding and managing the different activities needed to coordinate the flow of products and services to best serve the ultimate customer.
Different supply chain requirements often have conflicting needs. For instance, the requirement of maintaining high levels of customer service calls for maintaining high levels of inventory, but then the requirement to operate efficiently calls for reducing inventory levels. It is only when these requirements are seen together as parts of a larger picture that ways can be found to effectively balance their different demands.
Effective supply chain management requires simultaneous improvements in both customer service levels and the internal operating efficiencies of the companies in the supply chain. There is a basic pattern to the practice of supply chain management. Each supply chain has its own unique set of market demands and operating challenges and yet the issues remain essentially the same in every case. Companies in any supply chain must make decisions indivi
Distribution channels marketing management pptGanesh Asokan
Distribution channels - their Nature and importance of channels, Channel behavior & organization, Channel design decisions and Channel Management decisions.
Presentation done by the management students of D.G Vaishnav school of management for marketing internals..
ERP Pre-Implementation TCO Total Cost of Ownership Jyotindra Zaveri
Do your homework before embarking on to the ERP journey
TCO of ERP project is based on many things, and not only on the cost of the ERP software. Use the check-list given in this PowerPoint presentation to ensure that ERP implementation does not experience any hurdles. Prevent ERP failures during ERP implementation by allocating enough budget for the ERP project - Presentation by Jyotindra Zaveri, ERP Consultant with ten years of implementation experience with 50 successful ERP implementation
Purchasing mangement - Puchasing Process - Make Or Buy Decisions - Supplier S...FaHaD .H. NooR
Purchasing department in any organization assist with the identification, selection and acquisition of required materials and services.
Accomplish this as economically as possible, within acceptable standards of quality and service.
“Purchasing profession can be defined as the act of obtaining merchandise; equipment; raw materials; services; or maintenance, repair and operating (MRO) supplies in exchange for money or its equivalent”.
Warehouse management system presentationNimish Arora
Case study on how automation can be used in warehouse mangement system with Grey orange as an example. Content based on the course Industrial Automation.
Procurement training course -introduction to procurementSheila Elliott
Business Services Support offers its introduction to procurement training course for buyers. Buyers learn how to procure goods and services effectively to maximise value for their organisation. Value is a concept that many are unclear about. Procurement adds value through better product development, increased customer satisfaction, improved net cash flow and profitability and much more. Our course materials help you understand the nitty gritty of effective purchasing and procurement skills.
WAREHOUSING AND STORAGE IN SUPPLY CHAIN MANAGEMENTAjeesh Mk
This Presentation "Warehousing and storage in supply chain management" covers topics Warehouse and Storage, Warehouse Management, Functions, Economic and Service Benefit, Principles of Warehouse design, Kinds of Warehouse etc.
Distribution Strategy, Function of Channel Distribution, Marketing Intermediaries, Relationship Marketing in Channels, Types of Marketing Systems, and Non store retailing.
Supply chain definition
The systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.”
“A supply chain is the alignment of firms that bring products or services to market.”
“A supply chain consists of all stages involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers, and customers themselves.”
“A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.”
“Supply chain management is the coordination of production, inventory, location, and transportation among the participants in a supply chain to achieve the best mix of responsiveness and efficiency for the market being served.”
There is a difference between the concept of supply chain management and the traditional concept of logistics. Logistics typically refers to activities that occur within the boundaries of a single organization and supply chains refer to networks of companies that work together and coordinate their actions to deliver a product to market. Also traditional logistics focuses its attention on activities such as procurement, distribution, maintenance, and inventory management. Supply chain management acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service. Supply chain management views the supply chain and the organizations in it as a single entity. It brings a systems approach to understanding and managing the different activities needed to coordinate the flow of products and services to best serve the ultimate customer.
Different supply chain requirements often have conflicting needs. For instance, the requirement of maintaining high levels of customer service calls for maintaining high levels of inventory, but then the requirement to operate efficiently calls for reducing inventory levels. It is only when these requirements are seen together as parts of a larger picture that ways can be found to effectively balance their different demands.
Effective supply chain management requires simultaneous improvements in both customer service levels and the internal operating efficiencies of the companies in the supply chain. There is a basic pattern to the practice of supply chain management. Each supply chain has its own unique set of market demands and operating challenges and yet the issues remain essentially the same in every case. Companies in any supply chain must make decisions indivi
Distribution channels marketing management pptGanesh Asokan
Distribution channels - their Nature and importance of channels, Channel behavior & organization, Channel design decisions and Channel Management decisions.
Presentation done by the management students of D.G Vaishnav school of management for marketing internals..
ERP Pre-Implementation TCO Total Cost of Ownership Jyotindra Zaveri
Do your homework before embarking on to the ERP journey
TCO of ERP project is based on many things, and not only on the cost of the ERP software. Use the check-list given in this PowerPoint presentation to ensure that ERP implementation does not experience any hurdles. Prevent ERP failures during ERP implementation by allocating enough budget for the ERP project - Presentation by Jyotindra Zaveri, ERP Consultant with ten years of implementation experience with 50 successful ERP implementation
AWS June Webinar Series - Getting Started: Lowering Total Cost of Ownership w...Amazon Web Services
The objective of this webinar is to help customers understand how AWS can help them save money and resources by reducing Total Cost to Ownership (TCO). Comparing cloud costs and economics to on premises and colocation solutions is not always easy and there are multiple factors to take into consideration. In this webinar we will focus on the components of cloud economics, what to measure and we will cover the fundamentals of cost optimization.
Learning Objectives: • Understand the components of TCO analysis • AWS Pricing Fundamentals • Comparing TCO for cloud services vs. on premises/colocation
Who Should Attend: • IT professionals, CIO, Financial Analysts, Consultants
Total Cost of Ownership, what is it ? and why do we need to know more about it.Ashraf Osman
This is a brief presentation about TCO, a subject that should be addressed by all CIO's. A lot of savings can be realized when one gives TCO a careful look ..
Best Practices and Policies for Improving Total Cost of Ownership of your AWS...Amazon Web Services
Whether you’re just getting started or running a large and complex AWS environment with thousands of EC2 instances or petabytes of object storage, you need to have a rock solid cloud management strategy. As you scale your cloud environment, it’s critical to have an effective cost management process and implement policies that automate infrastructure schedules, rightsize workloads, and manage reservations.
Attend this session to learn the top best practices from some of the industry’s cloud leaders achieving the greatest success with AWS and CloudHealth Technologies.
This session is designed for anyone interested in improving the total cost of ownership through ongoing optimization strategies and automated policies.
Speaker: Joe Kinsella, Chief Technology Officer & Founder, CloudHealth
Cost Reduction Strategies:Focus and TechniquesThomas Tanel
This is a highly concentrated presentation that addresses the differences among price, cost, and TCO; what cost reduction strategies to focus on; and an overview of various techniques, as well as when and where to use them. Faced with excruciating competitive pressures, many senior C-Level executives require maximum effort from every part of their organization to survive. Today, purchasing, acquisition, procurement, contracting, and supply management professionals must be the most progressive cost reduction oriented group in the company.
For many organizations, senior C-Level executives set forth annual purchasing, acquisition, procurement, contracting, and supply management goals that mandate cost reductions. Regardless of the cost savings, avoidances, or containments achieved previously, you are faced with new cost reduction initiatives and objectives.
To make the goal of cost reduction a reality, we cannot focus solely on the price. We must examine the total cost of ownership to your organization, which means moving beyond the organizational environs to include suppliers, internal customers, other allied business functional entities, and external customers. By working both internally and externally with these stakeholders, cost reduction opportunities will become visible.
A typical purchasing, acquisition, procurement, contracting, or supply management professional will help reduce supplier prices and avoid incremental costs. A good purchasing, acquisition, procurement, contracting, or supply management professional will reduce costs by lowering both costs of acquisition and risks of supply. A great purchasing, acquisition, procurement, contracting, or supply management professional will reduce total costs across the board, increase service levels to the internal customer, make a significant contribution to the bottom line, seek value-added opportunities, and help to delight the organization’s customer. This type of professional also balances supply related costs and cycle time for the lowest overall cost, at the best value, while seeking risk optimization rather than risk minimization strategies.
This presentation simplifies the content of a white paper presented by Piyush Kumar regarding the Impact of Performance, Cost and Competitive Considerations on the relationship between Satisfaction and Repurchase Intent in Business Markets.
3. THE PURCHASING DEPARTMENT’S
FUNCTION IS TO:
1. PROVIDE APPROPRIATE LEVELS OF
SUPPLY
2. AT THE APPROPRIATE LEVEL OF
QUALITY
3. FOR THE LOWEST TOTAL COST
3-3
4. Case study: Abilene Heavy Equipment Tires
Abilene Heavy Equipment Tires sells tires for off-road mining and forestry
vehicles and construction equipment. The company also retreads the tires and
provides services at the mine or construction site. Because customers’
equipment is considered production equipment, a flat tire means a loss of
production. Quality service is an important element in Abilene’s business.
Ken Arthur is the manager of Abilene’s service business. His responsibilities
include managing a fleet of 12 heavy-duty pickup trucks that are used to reach
customers’ equipment in the field for service. Ken buys three trucks each
January, retiring each truck after four years of service. For the previous two
years, he purchased Dodge trucks from the Abilene Dodge dealer, dealing
directly with owner Don Tanksley.
Today, December 20, Don stopped by Ken’s office. After saying hello and
asking after the family, Don said, “Come on, Ken, I want to show you something
I have outside in the truck.” As they walked outside, Don continued, “I know you
like to hunt and I thought you might appreciate this little Christmas present.
You’ve been a good customer for nearly 10 years, and I’d like to say thank you
with this.” From the inside of his truck, Don pulled out a new Browning Citori
shotgun.
Ken eyed the new gun with appreciation, knowing that it retailed for at least
$1,200. The custom carving on the stock, with Ken’s initials, probably added
another $500 to the cost of the gun. He held it, admiring the balance, and then
sighted the gun as if about to shoot. He thought about how nice it would be to
use this at the annual dove hunt that Abilene sponsored for its customers.
1. Is there any ethical problem with Ken accepting the gift? Why or why not?
2. What factors could affect your decision? 3-4
5. Case 3.1 Human Performance Systems
Joyce Davis leaned back in her chair and reflected on the sales call she made that
morning. Her company, Human Performance Systems (HPS), provides safety
training in order to bring manufacturers into compliance with OSHA
regulations. She also had the data to prove that the training saved companies
money by reducing the number of manufacturing accidents. What Joyce
couldn’t understand was why Bob Jackson, owner of Jackson Molding, was so
adamant that he couldn’t afford the training.
“Bob, you can’t afford not to do this,” she told him. “You have had three
accidents
this month, losing 23 workdays.” (Three employees missed five days each, and
another missed eight, for a total of 23.)
“I don’t pay them for lost workdays. That makes them more careful.” He stared at
her defiantly. “Therefore, I don’t need training.”
1. What benefits could Human Performance Systems’ training provide Jackson
Molding? Think through the various ways HPS could save Jackson money,
among other benefits.
2. What is important to Bob? Why?
6. Transactional vs. Relational Marketing
Transactional exchange Relationship exchange
Objective To make a sale (sale is end result and To create a customer (sale is
measure of success) beginning and relationship is the
Customer needs satisfaction measure of success)
(customer buys value) Customer integration (interactive
value generation)
Customer Anonymous customer Well-known customer
understan Independent buyer and seller Independent buyer and seller
ding
Market tasks Assessment on the basis of products Assessment on the basis of problem-
and and prices. solving competence
performan Focus on gaining new customers Focus on value enhancing of
ce criteria
existing customers
Core aspects Focus on products Focus on service
of Sales is a conquest Sale as a agreement
exchange Discreet even (episodic perspective) Continuing process (historic holistic
Monologue to be aggregated perspective)
Individualized dialogue
7. Reasons to buy
Factor Percen
t
Product Quality 72.7%
Service 53.4%
Availability of Product 50.8%
Total Purchasing Costs 40.5%
Price of Product 32.2%
Supplier’s supports in urgent situations 26.9%
Ease of Contact with suppliers 18.6%
Technical supports 15.2%
Brand name 11.0%
Source: Calners Advertising Research Reports
8. PURCHASE PRICE Vs. TOTAL COST
• PURCHASE PRICE = THE DOLLAR VALUE
PAID
• TOTAL COST = PURCHASE PRICE +
DELIVERY + STORAGE + SERVICE
3-8
9. METHODS TO EXAMINE
AND COMPARE COSTS
1. TOTAL COST OF OWNERSHIP
2. ECONOMIC ORDER QUANTITY
(EOQ)
3. VALUE ANALYSIS
3-9
10. TOTAL COST OF OWNERSHIP OF A
TANGIBLE PRODUCT
• TOTAL COST OF
OWNERSHIP = PRODUCT PRICE
+ DELIVERY
+ INSTALLATION
+ MAINTENANCE / REPAIR
+ POWER COSTS
+ SUPPLY COSTS
+ OPERATING COSTS
+ FINANCING
3-10
12. USING VALUE ANALYSIS
THE OBJECTIVES OF VALUE ANALYSIS:
• REDUCE COSTS AND/OR
• IMPROVE DESIGN
COMPARE
What is BENEFITS RECEIVED New
Currently FUNCTIONS OF Alternatives
PRODUCT
Being Done Being
COST OF MATERIALS
WORK PROCESS Considered
INVOLVED
OUTCOME: GREATER VALUE FOR LESS COST
3-12
13. STEPS IN THE BUYING PROCESS
Step 8
Step 8
Evaluation of product performance
Evaluation of product performance
Step 7
Step 7
Selection of an order procedure
Selection of an order procedure
Step 6
Step 6
Evaluation of proposals and
Evaluation of proposals and
selection of a supplier
selection of a supplier
Step 5
Step 5
Acquisition and analysis of proposals
Acquisition and analysis of proposals
Step 4
Step 4
Search for qualified suppliers
Search for qualified suppliers
Step 3
Step 3
Development of detailed specifications
Development of detailed specifications
Step 2
Step 2
Definition of the product-type needed
Definition of the product-type needed
Step 11
Step
Recognition of aaneed
Recognition of need
EXHIBIT 3-3
3-13
14. BUY-PHASES
1. NEW TASK
COMPLETE BUYING PROCESS REQUIRED EMPHASIZES
PRODUCT DEFINITION AND SPECIFICAIONS
2. MODIFIED REBUY
EMPHASIZES SUPPLIER SEARCH AND EVALUATION
3. STRAIGHT REBUY
EMPHASIZES NEED RECOGNITION AND PURCHASE
3-14
17. VENDOR ANALYSIS RATINGS
A RATING FORM SHOULD LIST
The most important product attributes
The most important service support attributes
Pricing variables
Delivery variables
Quality variables
Supplier capabilities
3-17
18. PURCHASING PARTNERSHIPS ARE MADE
WITH VENDORS WHO PROVIDE:
HIGH-PURCHASE-VOLUME MATERIALS,
COMPONENTS OR STRATEGIC PRODUCTS
• INFORMATION AND TRAINING FOR EFFECTIVE
PRODUCT USE
• SERVICES REQUIRING SPECIALIZED KNOWLEDGE
FOR COST REDUCTIONS AND/OR PERFORMANCE
• MATERIALS UNAVAILABLE ELSEWHERE
3-18
19. IMPROVE PERFORMANCE:
STAYING AHEAD OF PURCHASING TRENDS
1. REDUCE PURCHASING COSTS
• CUTBACK ON EMPLOYEES
• REDUCE NUMBER OF VENDORS/
TRANSACTIONS
• BUILD RELATIONSHIPS
• CENTRALIZE PURCHASING ACTIVITIES
3-19
21. IMPROVE PERFORMANCE:
STAYING AHEAD OF PURCHASING TRENDS
(continued)
3. CROSS-FUNCTIONAL TEAMS – MADE UP OF
COMPANY DEPARTMENTS, SUPPLIERS,
CUSTOMERS
4. INCREASE PROFESSIONALISM THROUGH
CERTIFICATION PROGRAMS AND
ESTABLISH A CODE OF ETHICS
3-21
22. SALES SURVIVAL QUESTIONS:
CAN YOUR SALESPEOPLE ANSWER
THE FOLLOWING QUESTIONS?
1. WHAT IS A CROSS-FUNCTIONAL TEAM?
2. CAN YOU RECOGNIZE ONE AT YOUR CLIENT’S
ORGANIZATION?
3. DO YOU KNOW HOW TO GET YOUR COMPANY
INCLUDED IN YOUR CLIENT’S CROSS-
FUNCTIONAL TEAM?
4. WILL YOUR COMPANY GIVE YOU THE PEOPLE
RESOURCES TO SUPPORT YOUR CLIENT’S 3-22
23. SUCCESSFUL CROSS-FUNCTIONAL
PURCHASING TEAMS DEPEND ON:
• APPROPRIATE LEADERSHIP
• FACE-TO-FACE COMMUNICATION
• CONTINUITY– IN IT FOR THE LONG TERM
• TOP-LEVEL COMMITMENT to provide for key
individuals’ full participation
• EMBRACING DIVERSITY of experience, backgrounds,
EXHIBIT 3-9
outlooks, and corporate philosophy 3-23
24. Changing company focus: MAKE-OR-BUY?
Purchasing Determines Who Provides Best Value for Lowest Cost
Best-Value Provider
Action In-House Partner
•Training
•Transaction Processing
•Paper Processing
•Product Design
•Product Manufacturing
•Component Part Manufacturing
•R&D
•Marketing
•Sales
•Advertising
•Research
•Support
•Human Resources Administration
3-24
25. MAKE-OR-BUY DECISION ANALYSIS
RISK ASSESSMENT
FINANCIAL RISKS MARKETING RISKS
Resource Allocation Customer Impact
Investment of Resources Supplier Impact
Accurate Cost Analysis
Legal Issues
MANUFACTURING RISKS POLITICAL RISKS
Reliability Management commitment/
Expertise willingness to partner
Equipment Turf Battles
Patent Protection Internal Strife
ACCEPTABLE RISK UNACCEPTABLE RISK
Buy the Products, Retain Production and
Components or Services Provide Services
3-25
26. ETHICAL ISSUES FOR BUYERS
KEY REQUIREMENT: EVERY COMPETITOR
HAS AN EQUAL OPPORTUNITY TO SELL TO
THE BUYER AND HAS EQUAL ACCESS TO
INFORMATION
AS A BUYER, YOU MUST
PROVIDE EQUAL ACCESS TO THE
BUYING OPPORTUNITY
BE TOTALLY RESPONSIBLE TO
YOUR EMPLOYER
3-26