Purchasing & SCM. Purchasing “Mustsâ€‌ Right...

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Transcript of Purchasing & SCM. Purchasing “Mustsâ€‌ Right...

  • Slide 1
  • Purchasing & SCM
  • Slide 2
  • Purchasing Musts Right stuff Right price Right quality Right quantity Right time Right place Right source (?)
  • Slide 3
  • The Purchasing Cycle 1. The Identification of a Purchasing Need 2. Potential Supply Source Evaluation 3. Supply Source Selection 4. The Release and Receipt of Material Requirements 5. The Continuous Performance Measurement and Management of Suppliers Note: Material with Established Suppliers Consists of Steps 4&5
  • Slide 4
  • Steps in a Purchase 1. Recognition of need 2. Accurate description of desired commodity or service 3. Selection of possible sources of supply 4. Determination of price and terms 5. Preparation and placement of the purchase order 6. Follow up and/or expedite the order 7. Receipt and inspection of goods 8. Clear the invoice and pay the supplier 9. Maintenance of records
  • Slide 5
  • UsingPurchasingInventoryInspectionReceivingAccountingSupplier StepActivitydepartmentdepartmentcontroldepartmentdepartmentdepartment department 1Using (or control) department issues P.R., MRPS, or B/M 1aCheck to see if material is in stock File 2Investigate and qualify potential sources; negotiate, determining price, terms, and conditions; then select supplier. Issue P.O. (This may involve a sourcing team.) 3Supplier acknowledges order 4Follow up activity (as needed) 5Supplier ships material 6Receiving department checks material against packing slip and P.O., and issues R.R. (This step is omitted in some JIT and partnership purchases.) 7In cases requiring technical inspection, inspection department inspects material and issues I.R. 8Purchasing department closes order 9Supplier issues invoices in multiple copies 10Accounting department checks invoices against P.O., R.R., and I.R. and issues voucher and/or check P.R. = purchase requisition; MRPS = materials requirements planning schedule; B/M = bill of materials; P.O. = purchase order; R.R. = receiving report; I.R. = inspection report P.R. #1 1 1a P.R. #2 P.O. #5 P.O. #1 and acknowledgment form #2 1a P.O. #6 Follow-up inquiry Follow-up response File P.O. #7 & P.R. #1 Material and packing slip Working file Follow-up file P.O. #4 R.R. #1, #2, #3 Acknowledgment form Material 2 P.O. #3 3 4 4 File 5 6 7 Use R.R. #3 and I.R. #3 to using or control dept. File Closed order file 9 10 8 P.R. #1 P.O. #6,#7 Acknowledgement R.R. #1 & I.R. #1 Other Correspondence R.R.#1 & I.R. #1 R.R.#2 & I.R. #2 I.R.#4 Invoice P.O. #3 R.R.#2 I.R. #2 Voucher Typical Purchasing Cycle
  • Slide 6
  • The Purchasing System 1. Need Identification Know individual requirements: what, how much, when needed Supply department responsible for helping to anticipate needs Place forward orders Supplier can contribute more in the need-recognition stage than later in acquisition process Emergency and rush orders
  • Slide 7
  • The Purchasing System 1. Need Identification (continued) Small orders (Paretos law; Transaction costs) Handling Small Orders Standardization Hold until accumulation Establish a requisition calendar Stockless buying/systems contract Procurement credit card Blanket orders
  • Slide 8
  • The Purchasing System Handling Small Orders (continued) 1.Establish electronic linkage 2.Adjust authority levels 3.Use integrated suppliers 4.Low-value order placement is outsourced to 3 rd party 5.Users place orders directly
  • Slide 9
  • The Purchasing System 1. Need Identification (continued); Methods: Purchase Requisition - internal document completed by user that informs purchasing of a specific material need Contains: Description of material Quantity and date required Estimated unit cost Operating account to be charged Date Authorized signature
  • Slide 10
  • The Purchasing System Methods (continued) Traveling Purchase Requisition - Printed card filed for each item controlled in a manually operated system Contains: Description of item List of approved suppliers and addresses Last price paid to suppliers Reorder point Record of usage
  • Slide 11
  • The Purchasing System Methods (continued) Reorder Point System - Uses information regarding quantity and demand forecasts. When inventory is depleted to a given level, the system signals the material control department to request inventory replenishment. Stock Checks - The physical checking of inventory to verify that system records match actual on-hand inventory levels. Cross-Functional Teams - Teams to identify material purchase requirements; often for new products
  • Slide 12
  • The Purchasing System 2. Accurate description of desired commodity or service Information that should be included on the requisition: 1.Date 2.Identification number 3.Originating department 4.Account to be charged 5.Complete description of material desired and quantity 6.Date material needed 7.Any special shipping instructions 8.Signature of authorized requisitioner
  • Slide 13
  • The Purchasing System 2. Accurate Description (continued) Blanket and open-end orders cover a variety of items Stockless Buying or Systems Contracting more sophisticated: oPeriodic billing procedures oAllow non-purchasing personnel to issue order releases oEmploy special catalogues oRequire suppliers to maintain minimum inventory levels oDo not specify volume of contract items oImprove inventory turnover rates Third-party consolidator (e.g., MRO)
  • Slide 14
  • The Purchasing System 3. Selection of Possible Sources of Supply Locating qualified sources Assessing performance before and after sale 4. Determination of Price and Terms Analyze bids, price list, negotiations
  • Slide 15
  • The Purchasing System 5. Preparation and Placement of the Purchase Order (PO) Written order should be made Form of the PO: 1. Contain provisions to guard buyer from damage suits caused by patent infringement 2. Contain provisions concerning price 3. Clause stating no charges allowed for boxing, crating, etc. 4. Acceptance is contingent on inspection and quality
  • Slide 16
  • The Purchasing System Form of the PO (continued): 5. Require in case of rejection that the seller receive a new order before replacement is made 6. Precisely describe quality requirements and method for quality assurance/control 7. Provide for order cancellation if deliveries not received on specified date
  • Slide 17
  • The Purchasing System Form of the PO (continued): 8. Contain conditions that the buyer refuses to accept drafts drawn against the buyer 9. Mention quantity (under and over-shipments) 10. Matters of special interest
  • Slide 18
  • The Purchasing System 6. Follow-Up and/or Expedite the Order Follow-Up - The routine tracking of an order to ensure that the supplier will be able to meet delivery promises; often by phone or computer Expediting - Application of pressure on a supplier to get it either to meet the original delivery promise, deliver ahead of schedule, or speed up delivery of a late order
  • Slide 19
  • The Purchasing System 7. Receipt and Inspection of Goods Receiving - very close to purchasing; may be bypassed for small purchases Purposes of Receiving: 1. Confirm order placed some time ago has arrived 2. Check that shipment has arrived in good condition 3. Ensure correct quantity 4. Forward shipment to next destination 5. Ensure proper documentation is registered and forwarded to appropriate parties
  • Slide 20
  • The Purchasing System 7. Receipt and Inspection of Goods (continued) Reasons to Withhold Payment Until Goods Arrive 1. Invoice does not reach buyer until late in discount period 2. Inspection 3. Date invoices as of date of shipment or receipt of invoice; whichever is later, for discount period Reasons to Process Payment Before the Goods Arrive 1. Financial consideration 2. Credit standing of buyer 3. Relationship with supplier
  • Slide 21
  • The Purchasing System 8. Clear the Invoice and Pay the Supplier Varies according to firm Purchasing or Accounting Why Purchasing - where original agreement was made Accounting - process where invoice mailed to accounts payable, checked, and certified for payment; refer to purchasing department if variance exists
  • Slide 22
  • The Purchasing System 9. Maintenance of Records 1. PO log identifies all POs by number and status 2. PO file, copy of all POs, filed numerically 3. Commodity file; by major commodity 4. Supplier history file
  • Slide 23
  • Purchasing Documents Purchase Requisition Request for Quotation Purchase Order Receiving Report Form Systems Contracting Blanket Purchase Order
  • Slide 24
  • Typical Purchase Requisition Form
  • Slide 25
  • Typical Request for Quotation Form
  • Slide 26
  • Typical Purchase Order Form
  • Slide 27
  • Receiving Report Form