The document discusses the purchasing process and foundations. It outlines key aspects of purchasing including purchase orders, policies, organization, supplier evaluation, quality management, negotiation planning, contract management, price analysis, total cost of ownership, target costing, and performance measurement. Effective purchasing is important as it can account for over half a company's costs and impact quality, costs, and on-time delivery. Supplier selection, management, and development are crucial to ensure strong performance.

1. PURCHASING
FOUNDATIONS
Prepared and Presented By: Aric Smoker

2. The Purchasing Process
■ Purchasing is important to success because of its success, purchasing makes up more
than half of the modern companies costs.

3. Purchase Orders
■ Purchase orders contains the terms and agreements between two firms regarding the
purchasing, i.e. a purchasing contract.

4. Purchasing Policies
■ There are formal company policies that provide the layout for how a company
purchases goods and what the proper steps should be.

5. The Purchasing Organization
■ Purchasing must be organized in order to meet company goals and in order to
maintain efficiency to cut costs.

6. Supplier Evaluation and Selection
■ It is important for a firm to select a supplier with a strong track record of quality and
on-schedule deliveries so that the firm may also stay high quality and on track.

7. Supplier Quality Management
■ You need the suppliers to look as though they are providing a quality product to the
end consumer, and not just your firm.

8. Supplier Management and Development
■ Designing a good supplier management system will help to keep costs low, ensure
quality, and make sure that the goods are delivered on time.

9. World-Wide Sourcing
■ Sourcing world-wide helps to find the cheapest costs, find the latest technology, and
to pass that quality and price onto the consumer.

10. Category Management
■ Category purchases usually involves commodities which have many suppliers, they are
important to companies, and are purchased based on competitive pricing.

11. Negotiation Planning
■ Planning for a negotiation may be the difference between you getting a good deal, or
one that does not completely suite your needs.

12. Contract Management
■ Having well written contracts, and following these contracts, can help a company to
stay out of trouble in the short or long term, ultimately cutting costs.

13. Logical and Ethical Considerations
■ Buyers must be careful about accepting favors from potential suppliers that may land
them in future unethical situations.

14. Price and Cost Analysis
■ Buyers jobs are to find value when spending the companies money which usually
entails finding the most value for the least amount of cost.

15. Should-CostAnalysis
■ Discovering the costs of your suppliers can help buyers to determine what the
reasonable cost of a product should be, and can help them to determine the best deal.

16. Total Cost of Ownership
■ Buyers must consider everything that goes into the total cost of acquiring a product
such as sales tax, delivery charges, customs duties, and other factors that are not a
direct purchase cost.

17. Target Costing
■ Target costing involves finding how much you can spend on making and distributing a
product, while still being able to turn a profit.

18. Learning Curve Analysis
■ The learning curve deals with direct labor costs in production, and allows you to see
the rate of improvement as you increase production.

19. Purchasing Services
■ Services can be a big part of indirect spending and they include, logistics, customer
service, travel, advertising and utilities.

20. E-Sourcing
■ Companies are moving more and more to buying online because of the speed and
efficiency that it provides and the service that it provides to customers.

21. Supply Management Performance
Measurement
■ Measuring performance in suppliers and the company itself is an essential part of
improving and becoming more efficient.