Lecture Purchasing and supply chain management (3rd/e): Chapter 7 - W. C. Benton

Chapter 7 - Purchasing procedures, e-procurement, and systems contracting. This chapter focuses on purchasing procedures, e-purchasing, and systems contracting. Online or e-procurement technology has become an important part of purchasing and supply chain management and the rate of adoption has increased significantly.

Chapter 7: Purchasing Procedures, E­Procurement, and Systems Contracting Purchasing and Supply Chain Management 3rd edition Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            Purchasing and Supply Chain Management, 3rd edition, Copyright 2013, W.  Purchasing Department's Objectives Spend corporate funds wisely Operate in a professional manner Purchase:  • the right materials  • in the right quantities • at the right time and price • from the right source Practice the highest level of ethical standards to ensure  confidence among all parties Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            General Definitions • Purchasing process: • • Buying process: • • Buying goods and services for use by the buying organization Procuring items for resale These terms are sometimes used  interchangeably PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. PurchasingDepartment'sMainFunctions Determinethesupplier Negotiatetheactualprice Determinethedeliverydate. Morethan75%ofafirmsprocurementactivitiesare routine Thus,becomingincreasinglyautomated PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. PurchasingTools Systemscontracting EưProcurement • Reverse auctions • Electronic Data Interchange (EDI) • Radio Frequency Identification (RFID)  Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            Systems Contracting (cont.) • Requirements:  • A negotiated agreement between buyers and sellers including: • Type of material • Scope of contract • Price • Billingpolicy Stockingpolicy Deliveryrequirements PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. PurchasingTools Systemscontracting • E­Procurement  Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            E­procurement • Potential Savings: • • Inventory and purchase costs Detriments: Totalcostofimplementingthesesystems Lackofsavingsduringdevelopmentanddeploymentphases Costoftrainingemployeesandgettingsupplierstoparticipate PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. ReverseAuctions • Characteristics: • The buying firm initializes the auction by submitting a description  of the product or service • Sellers place bids based on their offer to fulfill the buyer’s needs • The competition between the sellers drives the price down,  instead of up • The buyer chooses the winning bidder Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            Purchasing Tools • Electronic Data Interchange (EDI)  • Radio Frequency Identification (RFID)  10 Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            Questions? 11 Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            ... Deliveryrequirements PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. PurchasingTools • Systems contracting • E­Procurement  Purchasing and Supply Chain Management,  3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.           ... Radio Frequency Identification (RFID)  10 Purchasing and Supply Chain Management,  3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            Questions? 11 Purchasing and Supply Chain Management,  3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.           ... Thebuyerchoosesthewinningbidder PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. PurchasingTools ElectronicDataInterchange(EDI) Radio Frequency Identification (RFID)  10 Purchasing and Supply Chain Management,  3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.