Puchasing Process

8/7/2019 Puchasing Process

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The Purchasing Process

Training Presentation

Joseph Roundy


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Materials Covered

Purchasing Process Defined

Purchasing and Your Organization

The Nuts and Bolts of Purchasing

How the Purchasing Process Works

An Example

An Exercise


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Purchasing Process Defined

Purchasing- the

process of acquiringgoods, services, and

equipment from

another organizationin a legal and ethical

manner.


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Purchasing Process Defined Cont.

The 5 Rights of Purchasing

1. Purchasing the right item or service

2. In the right quantity

3. At the right quality level

4. At the right price5. At the right time


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Purchasing and Your Organization

Brainstorming Activity

Think of all items purchased within the

organization

List them (3 minutes)

Get into small teams and categorize (3 minutes)


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Nuts and Bolts

The nuts and bolts of the purchasing process

include the following

Requirements

Supplier Selection

Purchase orders Performance measures


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Requirements

Requirements are the attributes and

specifications a product or service needs toposses in order to fulfill its specific purpose.


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Supplier Selection

Supplier selection is the process of

identifying potential sources of supply forthe product or service that is to be

purchased.


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The Purchase Order (PO)

The purchase order is

the means by whichproducts and services

are procured.

Pictured at the right is

a generic copy of a

purchase order


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PerformanceMeasures

Performance measures are used to track and

evaluate suppliers.


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The purchasing process consists of six main stages

1. Identify user requirements

2. Evaluate potential suppliers

3. Bid, negotiate and select supplier

4. Purchase approval

5. Release and receive purchase requirements

6. Measure supplier performance

How It Works


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Identifying Requirements

Identify a need (product or service to be

purchased)

Identify needed requirements

For example: size, color, length, thickness etc.


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Evaluating Potential Suppliers

Find Qualified Suppliers

Request Bids/ Quotes

Gather External Data


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Selecting a Supplier

Identify the pros and cons of each suppler

Location, cost, relationship, financial stability

etc.

Rank the suppliers according to their

strengths Choose the best supplier

Negotiate agreements where possible


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Purchase Approval

Purchase Order

Department/ Company Approval

Legal contract


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Release and Receive Requirements

All Requirements need to be accurate and

clearly communicated

Quantity

Quality

Price Delivery and Shipping

Product or Service Specifications


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Measure Supplier Performance

Supplier Scorecard

Relationship Status

Is the supplier meeting our needs?

Is our product or service meeting customer

needs?


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Process Flow Chart


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A Real World Example

Buying A Car ( what is the process?)


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Other Things to Consider

Total Cost of Ownership

Sometimes the cheapest initial option isnt

always the cheapest long term option.


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Scenario

You are a purchaser for your organization. You

were asked to buy a fence. The fence is to beinstalled on the west side of your office building;

periodically the wind can blow hard from that

direction. You have a choice between a wood

fence that costs $1,200, a vinyl fence that costs$3,200, and cinder block fence that costs $5,000.

Which fence would you choose and why?


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Exercise

Pair off into groups of two

Assign each pair to be either a buyer or

supplier

Buyers go through the purchasing process


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Exercise

Switch roles and repeat the exercise (10

minutes)

Report

What went well?

Which parts were difficult?


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Summary

The purchasing process is important to

every organization

Through the purchasing process you can

create value for your organization


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Reading List

Straight to the bottom line- Robert Buzki

Supply Chain Gains- Dan Barnes Managing Purchasing: Making the Supply Team Work-

Kenneth Killen

The Relationship Driven Supply Chain- Emmett Stuart

Business-to-Business Procurement-Richard Pinkerton

Documents

Puchasing Process