Uploaded byFaHaD .H. NooR
Purchasing Policy and Procedures | Policies provide guidance and direction | Purchasing procedures
The document outlines purchasing policies and procedures, emphasizing the guidance and operational issues related to purchasing practices. It discusses the advantages and disadvantages of policies, effective characteristics of policies, and objectives for purchasing functions, including ethical conduct and buyer-supplier relationships. Additionally, it covers legal contract procedures, including development, execution, and compliance, as well as operational procedures for supplier management.
More Related Content
Similar to Purchasing Policy and Procedures | Policies provide guidance and direction | Purchasing procedures
Purchasing Policy and Procedures | Policies provide guidance and direction | Purchasing procedures
- 1.
- 2. CHAPTER OVERVIEW • POLICYOVERVIEW • POLICIES PROVIDE GUIDANCE AND DIRECTION: • ROLE OF PURCHASING • CONDUCT OF PURCHASING PERSONNEL • SOCIAL AND MINORITY BUSINESS OBJECTIVES • BUYER-SUPPLIER RELATIONSHIPS • OPERATIONAL ISSUES • PURCHASING PROCEDURES Purchasing & Supply Chain Management, 4e 2
- 3. THE TERM “POLICY” •REFERS TO THE SET OF PURPOSES, PRINCIPLES, AND RULES OF ACTION THAT GUIDE AN ORGANIZATION • STANDARD OPERATING PROCEDURES • RULES AND REGULATIONS • FORMAL VS. INFORMAL POLICIES • PART OF ORGANIZATIONAL CULTURE Purchasing & Supply Chain Management, 4e 3
- 4. ADVANTAGES OF USINGPOLICIES • OPPORTUNITY TO DEFINE AND CLARIFY TOP MANAGEMENT PERSPECTIVES • MEANS FOR EXECUTIVES TO COMMUNICATE ITS LEADERSHIP VIEWS AND BELIEFS • PROVIDES A FRAMEWORK FOR CONSISTENT DECISION-MAKING AND ACTION • DEFINES RULES AND PROCEDURES FOR ALL EMPLOYEES Purchasing & Supply Chain Management, 4e 4
- 5. DISADVANTAGES OF USINGPOLICIES • OFTEN DIFFICULT TO COMMUNICATE WITHIN LARGE ORGANIZATIONS • MAY RESTRICT EMPLOYEE INNOVATION AND FLEXIBILITY Purchasing & Supply Chain Management, 4e 5
- 6. EFFECTIVE POLICY CHARACTERISTICS •ACTION-ORIENTED • RELEVANT • CONCISE • UNAMBIGUOUS AND WELL-UNDERSTOOD • TIMELY AND CURRENT • GUIDES PROBLEM-SOLVING AND BEHAVIOR Purchasing & Supply Chain Management, 4e 6
- 7. POLICY CATEGORIES • DEFININGTHE ROLE OF PURCHASING • DEFINING THE CONDUCT OF PURCHASING PERSONNEL • DEFINING SOCIAL AND MINORITY BUSINESS OBJECTIVES • DEFINING BUYER-SUPPLIER RELATIONSHIPS • DEFINING OPERATIONAL ISSUES Purchasing & Supply Chain Management, 4e 7
- 8. PURCHASING AUTHORITY • AUTHORITYTO CONDUCT BUSINESS AND TO REPRESENT ORGANIZATIONAL INTERESTS • CREATED BY EXECUTIVE COMMITTEE • AUTHORITY TO DELEGATE TO OTHER FUNCTIONAL AREAS • DESCRIBES SCOPE OF AND LIMITS TO AUTHORITY Purchasing & Supply Chain Management, 4e 8
- 9. OBJECTIVES OF PURCHASINGFUNCTION • SELECT SUPPLIERS THAT MEET REQUIREMENTS • PURCHASE MATERIALS AND SERVICES THAT COMPLY WITH APPROPRIATE STANDARDS • PROMOTE BUYER-SUPPLIER RELATIONS AND TO ENCOURAGE SUPPLIER CONTRIBUTION • TREAT ALL SUPPLIERS FAIRLY AND ETHICALLY Purchasing & Supply Chain Management, 4e 9
- 10. CONDUCT OF PURCHASINGPERSONNEL • ETHICS POLICY • RECIPROCITY POLICY • CONTACTS AND VISITS TO SUPPLIERS • FORMER EMPLOYEES REPRESENTING SUPPLIERS • REPORTING OF IRREGULAR BUSINESS DEALINGS WITH SUPPLIERS Purchasing & Supply Chain Management, 4e 10
- 11. AVOID THE APPEARANCEOF RECIPROCITY • GIVING PREFERENCE TO SUPPLIERS THAT BUY FROM YOU • EXPECTING SUPPLIERS TO PURCHASE YOUR PRODUCTS AS A CONDITION FOR SECURING A PURCHASE CONTRACT • LOOKING FAVORABLY ON COMPETITIVE BIDS BY SUPPLIERS WHO BUY FROM YOU Purchasing & Supply Chain Management, 4e 11
- 12. EXAMPLES OF IRREGULARDEALINGS • ACCEPTING BRIBES OR KICKBACKS • CRONYISM • ACCEPTING LATE BIDS • OWNING A STAKE IN A SUPPLIER’S COMPANY • OTHER BEHAVIOR NOT CONSIDERED PART OF THE “NORMAL” COURSE OF DOING BUSINESS Purchasing & Supply Chain Management, 4e 12
- 13. SOCIAL AND MINORITYBUSINESS • SUPPORT MULTI-CULTURISM • SUPPORT MINORITY BUSINESSES • CHALLENGES • LACK OF ACCESS TO CAPITAL • SUPPLY BASE OPTIMIZATION • LACK OF ADEQUATE MANAGERIAL AND TECHNICAL BASE • RELATIVELY SMALL SIZE Purchasing & Supply Chain Management, 4e 13
- 14. ENVIRONMENTAL ISSUES • NOWREQUIRED BY LAW AND/OR MAJOR CUSTOMERS • USE OF RECYCLED MATERIALS • STRICT COMPLIANCE WITH APPLICABLE LAWS • PROPER DISPOSAL OF WASTE MATERIALS • HEALTH AND SAFETY ISSUES Purchasing & Supply Chain Management, 4e 14
- 15. BUYER-SUPPLIER RELATIONS • TREATINGSUPPLIERS FAIRLY AND WITH INTEGRITY • SUPPORTING AND DEVELOPING MOTIVATED SUPPLIERS • PROVIDING PROMPT PAYMENT ON INVOICES • ENCOURAGING SUPPLIERS TO SUBMIT INNOVATIVE IDEAS AND JOINTLY SHARING BENEFITS Purchasing & Supply Chain Management, 4e 15
- 16. QUALIFICATION AND SELECTION •PRICE/COST COMPETITIVENESS • PRODUCT QUALITY • DELIVERY • FINANCIAL CONDITION • ENGINEERING AND MANUFACTURING TECHNICAL COMPETENCE • MANAGEMENT OF ITS OWN SUPPLY BASE • MANAGEMENT CAPABILITY • ABILITY TO WORK WITH BUYING ORGANIZATION • POTENTIAL FOR INNOVATION Purchasing & Supply Chain Management, 4e 16
- 17. HAZARDOUS WASTE CONTRACTORS •EVIDENCE OF VALID PERMITS AND LICENSES • SPECIFICATION OF TYPES OF SERVICES IT IS LICENSED TO PERFORM • EVIDENCE OF SAFEGUARDS TO PREVENT ACCIDENTS • EVIDENCE OF CONTINGENCY PLAN IN CASE OF ACCIDENTAL RELEASE OF MATERIALS Purchasing & Supply Chain Management, 4e 17
- 18. LEGAL CONTRACT PROCEDURES •BASIC FEATURES OF THE STANDARD PURCHASE AGREEMENT • BASIC CONTRACT PRINCIPLES • EXECUTION AND ADMINISTRATION OF AGREEMENTS • ESSENTIAL CLAUSES OF THE CONTRACT • COMPLIANCE WITH CONTRACT TERMS AND PERFORMANCE ASSESSMENT Purchasing & Supply Chain Management, 4e 18
- 19. LEGAL CONTRACT PROCEDURES •FORMAL COMPETITIVE CONTRACTING PROCEDURES • CONTRACT DEVELOPMENT PROCESS • EXAMPLES OF SAMPLE AGREEMENTS • LEGAL DEFINITIONS • USE OF FORMAL CONTRACT CLAUSES Purchasing & Supply Chain Management, 4e 19
- 20. PURCHASING FORMS • DESCRIPTIONOF PROPER USE • DETAILED MEANING OF EACH INFORMATION FIELD • DESCRIPTION OF PROPER HANDLING AND STORAGE • WHERE? • HOW LONG? • APPROVAL PROCESS Purchasing & Supply Chain Management, 4e 20
- 21. DEVELOPMENT OF LEGALCONTRACTS • BASIC FEATURES OF THE STANDARD PURCHASE CONTRACT • BASIC CONTRACT PRINCIPLES • EXECUTION AND ADMINISTRATION OF AGREEMENTS • ESSENTIAL ELEMENTS OF THE CONTRACT • CONTRACT COMPLIANCE AND PERFORMANCE ASSESSMENT Purchasing & Supply Chain Management, 4e 21
- 22. DEVELOPMENT OF LEGALCONTRACTS • FORMAL COMPETITIVE CONTRACTING PROCEDURES • CONTRACT DEVELOPMENT PROCESS • EXAMPLES OF SAMPLE AGREEMENTS • LEGAL DEFINITIONS • USE OF FORMAL CONTRACT CLAUSES Purchasing & Supply Chain Management, 4e 22
- 23. OPERATIONAL PROCEDURES • CONTROLOF MATERIAL PROVIDED TO SUPPLIER • STORAGE OF PURCHASING DOCUMENTS • SUPPLIER QUALIFICATION PROCESS • USE OF COMPUTERIZED SYSTEMS • ANALYSIS OF COMPETITIVE QUOTATIONS • USE OF SINGLE SOURCE SELECTION • REQUIREMENTS FOR PRICE ANALYSIS Purchasing & Supply Chain Management, 4e 23