799-301 Chapter 02 - 799:301: Chapter 2 Purchasing...

799:301:
Chapter 2
Purchasing
Procurement

WHAT IS SUPPLY CHAIN MANAGEMENT
•
Management, control, and flow of goods and services
•
From _____ To _____ Inception (
Raw Materials
) to End Customer
•
Involves: Costs, Quality, Timing, Value, Quantity
•
Requires: Visibility, Communication, Trust

REVIEW TERMINOLOGY
•
Purchasing – Product
•
Merchants versus Industrial Buyers
–
Bulk Finished Product Raw Materials
–
Retail / Wholesale Manufacturing / Conversion
Capital Expense
•
Contracting - Services
•
Supply Management - Expanded skills and responsibilities
–
“ identification , acquisition , access, positioning, and management of resources
an organization needs or potentially needs in the attainment of its strategic
objectives .”
•
Negotiations
•
Logistics
• Contract development and administration
• Inventory control and management
•
Supplier management
•
Etc.

Costs of Material as Percent of Shipment
Table 2.1 Extraction
YEAR |Value (Sales) |Cost of |Manufacture |Capital
|Shipments |Material |Costs |Expenditure
|Billions $ |Billions $ % |Billions $ % |Billions $ %
| | | |
2006 | $5015.6 | $2752.9 54.9% | $2285.9 45.6% | $ 135.8 2.7%
| | | |
1996 | $3715.4 | $1975.4 53.2% | $1749.6 47.1% | $ 146.5 3.9%
| | | |
1986 | $2260.3 | $1217.6 53.9% | $1035.4 45.8% | $ 80.8 3.6%
| | | |
1977 | $1358.5 | $ 782.4 57.6% | $ 585.2 43.1% | $ 51.9 3.8%
Wal-Mart Costs of Sales greater than 75% of Net Sales.

GOALS of PURCHASING
•
Ensure uninterrupted flow of materials at the
lowest total cost, to improve the quality of the
finished goods produced and to optimize
customer satisfaction.