MKT 423 - Summer - Chapter 5 - Procurement(1).pdf - MKT 423...

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MKT 423 Supply Chain Management Procurement Tim Hawkins, Ph.D. Assistant Professor Western Kentucky University Gordon Ford College of Business
LEARNING OBJECTIVES At the conclusion of this lesson, students will be able to: Identify the role, importance, and goals of purchasing Recognize manifestations of the elevated importance of purchasing in the firm Explain the organizational buying process and what occurs in each step. Explain the utility of spend analysis Segment spend based on criticality and supply complexity Identify various sourcing strategies Supplier optimization Forward buying Volume aggregation Partnering Others Contrast risk allocation associated with FFP and CR contract types Identify criteria for evaluating suppliers Explain total cost of ownership (TCO) 2
Purchasing: The transactional function of buying products and services ….commonly involves the placement and processing of a purchase order or contract Procurement: The process of managing a broad range of processes associated with a firm’s need to acquire goods and services required to manufacture a product (direct) or to operate the organization (indirect). Strategic sourcing: Takes the procurement process further by focusing more on supply chain impacts of purchasing decisions, and works cross-functionally within the business firm to help achieve the organization’s overall business goals. “A systematic process that begins with thorough analysis of spend across an enterprise and then organizes that spend focusing on selected suppliers for best results on cost, product development, quality and services” Purchasing Magazine DEFINITIONS 3
PURCHASINGS ’ ROLES Provide an uninterrupted flow of materials, supplies, and services required to operate the organization Keep inventory investment and loss at a minimum Maintain adequate quality standards Find or develop quality suppliers Standardize items bought Purchase required items and services at lowest total cost Contribute to the organization’s competitive position Manage supply risk