Purchasing & Supply Management
The Purchasing Process
Purchasing and supply management is a very important aspect of the business world. It does not matter which career path we choose to take, part of that business consists of purchasing and supply management. "Purchasing, supply management, and procurement are used interchangeably to refer to the integration of related functions to provide effective and efficient materials and services to the organization" (Leenders, Johnson, Flynn, and Fearson, 2006). To be effective in procurement management it is important to be familiar with a few steps that can be applied universally in any organization.
The standard steps in the procurement process are each equally important; it is important that we do not skip any because it could lead to a major hiccup in the project. First, it is important that we are able to determine what we will need to get the job done. There are several methods floating around out there that can guide us through the needs assessment. One method of gathering the needs and expectations of customers and upper management is to attend and take detailed notes during meetings. Pay attention to comments about product expectations and quality standards. In many cases with procurement, we are managing the purchases of many items for the company. If we do not make good decisions, the company will suffer. It is important to be up-to-date with your companies needs and expectations so that you are pleasing the company as well as the customer.
"The supply budgeting process should start with a review of supply goals and objectives followed by a forecast of action and resource needs to meet the goals, and then the development of a budget" (Leenders, Johnson, Flynn, and Fearson, 2006). When determining how much to plan for when creating a budget, it is a good idea to research by reviewing records of spending over the past few years. We also must examine current sales to determine how much the company can spend on certain expenses. We must plan ahead for higher cost of product, increased salaries, and other yearly expenses.
Next, we are charged with the task of locating a good supplier that will not only be affordable, but also dependable, honest, and with quality product. This is a tough job at times and it is important to use your sources and build strong relationships. Strong relationships come in handy when trying to find good suppliers or recommendations.Selecting qualified suppliers can be a tough job in today's marketplace. There are many organizations that make themselves sound appealing who do not produce the agreed upon terms of service. It can be difficult to find a new supplier and it can be a very time consuming task. Having a good database of resources can make life a lot easier with this part of the job. It also helps to plan visits to a few top potential suppliers to see how they operate internally. It is also useful to request product samples to examine and test. Not only that, it is important to check references. This can shed light on things that the company would not disclose such as poor customer service or frequent delayed deliveries.
Once we have our suppliers we must make a selection and begin sorting out the details with contracts, delivery details, and payment arrangements. In most organizations, it is also necessary to see the project through to the finish.
Some of the final duties include "receiving, scheduling, inspection, storage, materials handling, scheduling, in- and outbound traffic, and disposal (Leenders, Johnson, Flynn, and Fearson, 2006). We need to be present to ensure that we are receiving quality product that meets our expectations. If we do not take part in this process we will not know whether or not we have made a good buying decision. “The is not just looking at the cheapest price, quality of products or delivery dates may be more important" (www.credoreference.com). purchasing manager
It is vital to examine different products from a variety of suppliers selecting which supplier that the company will hire to supply the organization with goods or services. As stated above, quality is another important factor. No one wants to be the one to draw up a contract with a company that has crappy product. As a purchasing and supply manager we are responsible for looking at price, quality, and delivery time, as well as, environmental factors. It is very useful to prepare a budget for supplies, in order to make a sound decision that the company will be proud of.
Outsourcing can be a helpful business venture if it has been well thought out. Some of the benefits include increased efficiency, lower overall cost, inventory reduction, or better customer service. There are also some concerns when it comes to outsourcing. "Outsourcing is not simply purchasing services from another group: it involves a considerable degree of two-way information exchange, coordination, and trust (Kourdi, 2009). If this business agreement is not well planed, it could damage the business. Apparently, more and more businesses are looking towards outsourcing as a way to increase profits. The growth patterns of outsourcing are climbing steadily. It is all about having the competitive advantage in business. Sometimes the plan does not work out, but in business today it is vital for us to take some risks in order to stay in line with our competitors.
Some companies have really excelled in purchasing and supply management. I would have to include Wal-Mart on the list of companies who have done an excellent job with their purchasing and supply management. They were once a much smaller department store that has managed to grow to the point where they can offer goods at a much lower price than their competitors. They purchase things in bulk for all of the stores and then distribute it out to each individual store. People work hard trying to determine what products and brands to sell, where in the store to display the product, and how much to order for the different locations. I am sure Wal-Mart employees an extensive team of people who face these challenges.
Purchasing and supply management can be a very fun and rewarding career, however, to succeed it is important to be very detailed, organized, and well planned when leading a project for your organization. We are responsible for making some serious decisions that can affect the success of the company.
Leenders, M., Johnson, P., Flynn, A., & Fearon, H. (2006). Purchasing and Supply Management (13th ed.). Boston: McGraw-Hill Irwin. ISBN: 9780072873795
Purchasing Manager. (2009). In The Hutchinson Unabridged Encyclopedia with Atlas and Weather guide. Retrieved December 20, 2010 from http://www.credoreference.com/entry/heliconhe/purchasing_manager
Kourdi, J.. (2009). Chapter 36 - OUTSOURCING. 100 Great Business Ideas: From Leading Companies Around the World. Retrieved December 20, 2010, from Research Library. (Document ID: 2197584231).
Review the following article from ProQuest: Avery, S. (2009, February). MRO sourcing goes global. Purchasing, 138(2), 48-52. Retrieved January 14, 2010, from ProQuest Database. (Document ID: 1649185141).