W1a Introduction
What is purchasing?
MS6323
Strategic Sourcing and Procurement
KK Lam
Week 1a
Summer 2015
2
What is purchasing?
Or Part of Supply Chain (Manufacturing)
Perspectives on purchasing
1
As a function
– To perform specialised tasks
2
As a process
– To achieve an output
3
As a link in the supply chain
4
As a relationship
5
As a discipline
– Knowledge based
6
As a profession
– Demonstrable skills and knowledge
– With production and warehousing
– Internal and external focus
3
SCM activities and main business processes
(Source: Ernst and Young Consulting)
4
The Role of Purchasing in an
Organization
What is purchasing?
Definitions
The primary goals of purchasing are:
The classic definition
1.
To buy materials of the right quality , in the right quantity, from the right source, delivered to the right place, at the right time at the right price.
2.
3.
To be contrasted with
Ensure uninterrupted flows of supporting goods/raw materials at the lowest total cost,
Improve quality of the service/finished goods produced, and
Optimize customer satisfaction.
Purchasing contributes to these objectives by:
Modern definition
The process undertaken by the organisational unit which, either as a function or a part of an integrated supply chain, is responsible for procuring or assisting users to procure in the most efficient manner required suppliers at the right time, quality, quantity and price and the management of suppliers, thereby contributing to the competitive advantage of the enterprise and the achievement of its corporate strategy.
Actively seeking better goods/materials and reliable suppliers,
Work closely with strategic suppliers to improve quality, and
Involving suppliers and purchasing personnel in new service/product design and development efforts.
5
6
What is purchasing?
What is purchasing?
The evolution of purchasing
Definition of procurement
The Reck and Long model
Stage
1. Product centred
Procurement is the process of
MS6323
Strategic Sourcing and Procurement
KK Lam
Week 1a
Summer 2015
2
What is purchasing?
Or Part of Supply Chain (Manufacturing)
Perspectives on purchasing
1
As a function
– To perform specialised tasks
2
As a process
– To achieve an output
3
As a link in the supply chain
4
As a relationship
5
As a discipline
– Knowledge based
6
As a profession
– Demonstrable skills and knowledge
– With production and warehousing
– Internal and external focus
3
SCM activities and main business processes
(Source: Ernst and Young Consulting)
4
The Role of Purchasing in an
Organization
What is purchasing?
Definitions
The primary goals of purchasing are:
The classic definition
1.
To buy materials of the right quality , in the right quantity, from the right source, delivered to the right place, at the right time at the right price.
2.
3.
To be contrasted with
Ensure uninterrupted flows of supporting goods/raw materials at the lowest total cost,
Improve quality of the service/finished goods produced, and
Optimize customer satisfaction.
Purchasing contributes to these objectives by:
Modern definition
The process undertaken by the organisational unit which, either as a function or a part of an integrated supply chain, is responsible for procuring or assisting users to procure in the most efficient manner required suppliers at the right time, quality, quantity and price and the management of suppliers, thereby contributing to the competitive advantage of the enterprise and the achievement of its corporate strategy.
Actively seeking better goods/materials and reliable suppliers,
Work closely with strategic suppliers to improve quality, and
Involving suppliers and purchasing personnel in new service/product design and development efforts.
5
6
What is purchasing?
What is purchasing?
The evolution of purchasing
Definition of procurement
The Reck and Long model
Stage
1. Product centred
Procurement is the process of