CHAPTER 11 Procurement. © 2008 Prentice Hall 11-2 Learning Objectives F To understand the...
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Transcript of CHAPTER 11 Procurement. © 2008 Prentice Hall 11-2 Learning Objectives F To understand the...
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CHAPTER 11
ProcurementProcurement
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© 2008 Prentice Hall 11-2
Learning Objectives
To understand the relationship between supply management and logistics
To understand steps in selecting a supplier
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© 2008 Prentice Hall 11-3
Learning Objectives
To recognize the potential of e-procurement To learn about quality programs
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© 2008 Prentice Hall 11-4
Supply Management
Key Terms
– E-procurement
– Global sourcing
– Import quotas
Key Terms
– ISO 9000
– Make or buy
– Procurement card
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© 2008 Prentice Hall 11-5
Supply Management
Key Terms– Purchase order
– Purchasing ethics
– Request for Proposal (RFP)
Key Terms– Request for
Quotation (RFQ)– Six Sigma– Supplier
development
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© 2008 Prentice Hall 11-6
Supply Management
Supply management is “ the identification, acquisition, access, positioning, and management of resources the organization needs or potentially needs in the attainment of its strategic objectives.” Institute of Supply Management
Similar in meaning to procurement, purchasing
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© 2008 Prentice Hall 11-7
Purchase for Use in Manufacture
Make or buy– Availability of trained labor– Physical capacity
Purchase orders are a commitment to buy– Indicate quantities and qualities desired– Indicate dates by which the materials must be
delivered
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© 2008 Prentice Hall 11-8
Figure 11-1: Use of Bar Codes Throughout a Manufacturing Process
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© 2008 Prentice Hall 11-9
Figure 11-2: Flow of Information, Products, Cash, Orders, etc., within a
Manufacturing Firm
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© 2008 Prentice Hall 11-10
Purchase for Use in Manufacturing
MRP Systems manage production inventory Just-in-Time (JIT) and Kanban were initially
developed to improve quality JIT II ties together information systems and
employees of suppliers and firms Supplier Product Integration refers to the
acquisition of components, rather than individual parts
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© 2008 Prentice Hall 11-11
Purchasing for Resale
Objective is to buy merchandise that can be marked up and resold to others at a profit
Quality of product and timing of arrival are important
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© 2008 Prentice Hall 11-12
Procuring Services
Request for Proposal (RFP) Request for Quotation (RFQ) Examples of procured services
– Legal, accounting, computer and software consultants
– Building maintenance– Printing– Landscape work– Janitorial services
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© 2008 Prentice Hall 11-13
Global Sourcing
Global sourcing applies to buying components and inputs anywhere in the world
Import quotas are absolute numeric limits on the items imported from specific countries within a specific time frame
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© 2008 Prentice Hall 11-14
E-Procurement
E-procurement is the business-to-business purchase of supplies and services via the Internet
Procurement cards
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© 2008 Prentice Hall 11-15
Figure 11-3: A Configuration of Internet Messaging to Provide for Secure
Transmission
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© 2008 Prentice Hall 11-16
Quality Programs
Important to match quality levels of all buyers and sellers in the supply chain
ISO 9000 ISO 14000 Six Sigma
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© 2008 Prentice Hall 11-17
Supplier Selection and Management
Supplier management is charged with keeping existing suppliers happy
Selecting vendors depends on:– Delivery– Facilities and capacity, geographic location– Performance history– Price and quality– Technical capability– Warranties and claim policies
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© 2008 Prentice Hall 11-18
Supplier Development
Supplier development is any effort of a buying firm to increase performance of the supplier
Strategic goals to develop suppliers– Increase supplier financial strength– Improve management and technical capabilities– Improve ability to develop new products
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© 2008 Prentice Hall 11-19
Supplier Development
Performance goals for suppliers include:– Better quality products– Lower prices– Improved delivery performance– Increased overall responsiveness– Maintenance of quality controls in the supplier
organization
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© 2008 Prentice Hall 11-20
Purchasing Ethics
Breaches of purchasing ethics include:– Accepting lavish gifts– Bribes– Kickbacks
Areas of ethical concern:– Handling confidential information– Purchasing for one’s private use– Interfering with a legitimate bidding process– Conflicts of interest