Purchasing 11

8/6/2019 Purchasing 11

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PURCHASINGPURCHASING


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Purchasing ObjectivesPurchasing Objectives

Obtaining goods and services of theObtaining goods and services of therequired quantity and qualityrequired quantity and quality

Obtaining goods and services at theObtaining goods and services at the

lowest costlowest cost Ensuring the best possible service andEnsuring the best possible service and

prompt delivery by the supplierprompt delivery by the supplier

Developing and maintaining good supplierDeveloping and maintaining good supplierrelations and developing potential supplierrelations and developing potential supplier


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To satisfy these objectivesTo satisfy these objectivessome basic functions must besome basic functions must be

performedperformed


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Basic FunctionsBasic Functions

Determining purchasing specifications:Determining purchasing specifications:1.1. Right quantityRight quantity

2.2. Right qualityRight quality

3.3. Right delivery (time and place)Right delivery (time and place)

Selecting SupplierSelecting Supplier (Right source)(Right source)

Negotiating terms and conditions ofNegotiating terms and conditions of

purchasepurchase (Right price)(Right price) Issuing and administration of purchaseIssuing and administration of purchase

ordersorders


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SpecificationsSpecifications

Quantity requirementQuantity requirement

Price requirementPrice requirement

Functional requirementFunctional requirement


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Functional RequirementsFunctional Requirements

Functional SpecificationsFunctional Specifications

1.1. By brandBy brand

2.2. By specification of physical & chemicalBy specification of physical & chemicalcharacteristics, material & method ofcharacteristics, material & method of

manufacture and performancemanufacture and performance3.3. By engineering drawingBy engineering drawing

4.4. Miscellaneous : Sometimes samples areMiscellaneous : Sometimes samples areused for e.g. colour & patternused for e.g. colour & pattern

5.5. The variety of other methods including theThe variety of other methods including thefamous phrasefamous phraseGimme one just like the lastGimme one just like the lastoneone


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ordersorders


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Selecting SuppliersSelecting Suppliers

SourcingSourcing

1.1. Sole sourcingSole sourcing

2.2. Multiple sourcingMultiple sourcing3.3. Single sourcingSingle sourcing

Factors in Selecting SuppliersFactors in Selecting Suppliers


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Factors in selecting SuppliersFactors in selecting Suppliers

Identifying SuppliersIdentifying Suppliers

Technical abilityTechnical ability

Manufacturing capabilityManufacturing capability ReliabilityReliability

AfterAfter--sales servicessales services

Supplier locationSupplier location Other considerationsOther considerations


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ordersorders


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Negotiation : type of productNegotiation : type of product

CommoditiesCommodities

Standard productsStandard products

Items of small valueItems of small value Made to order itemsMade to order items


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Price determinationPrice determination

you only get what you pay foryou only get what you pay for

The trick is to knowThe trick is to knowWhat you want and not pay more thanWhat you want and not pay more than

necessarynecessary


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Basis for pricingBasis for pricing

fair pricefair price

Break even pointBreak even point

SALES VOLUME

Rs

FC

Revenue

TC

BEPL P


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Impact of MRP on PurchasingImpact of MRP on Purchasing

Planner/Buyer conceptPlanner/Buyer concept

Contract buyingContract buying

Close relationship with suppliersClose relationship with suppliers EDIEDI

Vendor managed inventoryVendor managed inventory

InternetInternet


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Decision MakingDecision Making

Decision making has changed fromDecision making has changed from

I say and you doI say and you doToTo

Lets talk about the best way to handle thisLets talk about the best way to handle this

and make a mutually advantageousand make a mutually advantageousdecisiondecision

Purchasing 11

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