Class 18 - Purchasing - Chapter 11

Class 18 - Purchasing - Chapter 11 - BUS 370: Purchasing -...

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BUS 370: Purchasing - Chapter 11 Donavon Favre College of Management North Carolina State University
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Chapter Objectives Be able to: Make a strong case for why purchasing is a critical part of a firm’s supply chain strategy. Identify and describe the various steps of the purchasing process, and discuss how this process will vary according to the type of good or service being purchased. Explain why spend analysis is important and understand a simple spend analysis.
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Introduction Why Purchasing is Critical The Purchasing Process Spend Analysis
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Sourcing decisions – (discussed in Chapter 10) High level, often strategic decisions regarding which products or services will be provided internally and which will be provided by external supply-chain partners Purchasing – The activities associated with identifying needs, locating and selecting suppliers, negotiating terms, and following up to ensure supplier performance Sourcing decisions and purchasing activities serve to link a company with its supply chain partners Focus
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Why Purchasing is Critical To compete globally, you need to purchase globally Global purchasing efforts are supported by advances in information systems The Changing Global Competitive Landscape
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Financial impact – on average, cost of materials consumes over half of a manufacturer’s revenue Industry Cost of Materials Value of Shipments Food 53.5% 45.8% Chemicals 46.2% 49.0% Fabricated metal 45.3% 42.8% Transportation equipment 60.5% All manufacturers 52.5%
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Financial Impact of Purchasing Earnings and Expenses Sales $26,491 COGS $18,465 Pretax earnings $2,359 Selected Balance Sheet Items Merchandise inventory $3,968
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This note was uploaded on 04/21/2009 for the course BUS 370 taught by Professor Favre during the Spring '08 term at N.C. State.

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Class 18 - Purchasing - Chapter 11 - BUS 370: Purchasing -...

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