chapter 3 - industrial

7/30/2019 Chapter 3 - Industrial

1/27


2/27


3/27

1. Able to discuss how effective purchasing andmaterials management provide a competitiveadvantage.

2. Illustrate strategies designed to provide the

proper supply and tell why these are used.3. Explain total cost ownership, value analysis,

and other forms of economic purchaseevaluation.

4. Describe the processes that purchasing usesto evaluate vendors and their offerings, aswell as how the process varies depending onthe organizations experience.


4/27

5. Recognize the major ethical issues facing

purchasing agents and how they respond

to those issues.

6. Understand differences in government

purchasing and compare government

needs in industrialized nations with those

of developing countries.


5/27

Delivering morebenefits

Or lowering costs


6/27

1. Provide appropriate levels of supply of theright product or service.

- JIT shipping products such that they arrive atthe customers location exactly when needed.

- Concurrent manufacturing suppliers scheduletheir own manufacturing based on the shipmentneeds of their customers.

- supplier can also keep inventory costs down,because the supplier can engage its own supplies in

JIT systems.

2. At the correct level of quality.

3. For the lowest total cost.


7/27

= effective purchasing


8/27

Determining the price a company pays goesbeyond the peso cost.

TOTAL COST PURCHASE PRICE DELIVERYSTORAGE SERVICE


9/27

Cost of ownership goes beyond the price paidfor a product

TOTAL COST OFOWNERSHIP PRODUCT PRICE

DELIVERY INSTALLATION

MAINTENANCE / REPAIRPOWER COSTS

SUPPLY COSTSOPERATING COSTSFINANCING


10/27

Economic Order Quantity (EOQ) the

quantity minimizes both ordering and

storing costs.

- Any more than that would raise costs

and not be economical.

Forward buying buying in larger quantities

than are currently needed because the

discount is greater than the carrying costs.


11/27

A method of comparing the benefit,

function and cost of materials, components,

and work processes.

Complexity Management the process of

identifying links among the components

that raise costs if any changes are made.


12/27

What is New

Currently AlternativesBeing Done Being

Considered

COMPARE

BENEFITSRECEIVED

FUNCTIONS OFPRODUCT

COST OFMATERIALS

WORK PROCESSINVOLVED

OUTCOME: GREATER VALUE FOR LESS COST


13/27

Adversarial purchasing philosophy to haveseveral vendors for each product.

Partnership purchasing philosophy or preferredsupplier systems seeks to maximize the benefitsof collaboration between the buyer and a few

suppliers. Provides: High purchase-volume materials, components, or products of

strategic importance

Specialized products requiring information and training foreffective use

Services that require specialized knowledge for cost

reductions or performance Materials that no other suppliers can provide

Single sourcing when a company selects onesupplier to satisfy all needs in a given area.


14/27

Buy-Grid Model explaining how

companies make decisions.

Two Parts:

Buy-phase model people go through a series of

steps when making decisions.

Buy-class model refers to the type of buying

decisions: new buys, straight rebuys and

modified rebuys


15/27


16/27

High-purchase-volume materials,components or strategic products

Information and training for effective product

use

Services requiring specialized knowledge forcost reductions and/or performance

Materials unavailable elsewhere


17/27

1. REDUCE PURCHASING COSTS

CUTBACK ON EMPLOYEES

REDUCE NUMBER OF VENDORS/TRANSACTIONS

BUILD RELATIONSHIPS

CENTRALIZE PURCHASING ACTIVITIES

USE THE INTERNET


18/27

2. OUTSOURCE IN-HOUSE ACTIVITIES

TRAINING

MANUFACTURING PROCESSING ACTIVITIES

INVOLVE SUPPLIERS (ESI)


19/27

3. CROSS-FUNCTIONAL TEAMS MADE UPOF COMPANY DEPARTMENTS,SUPPLIERS, CUSTOMERS

4. INCREASE PROFESSIONALISM THROUGHCERTIFICATION PROGRAMS ANDESTABLISH A CODE OF ETHICS


20/27

63% have business degrees 21% are certified purchasing managers

20% have other certifications

67% are male

The average CPM is 45.8 years old with 15years of purchasing experience.

Spends an average of 28.4 million per year

Earns an average 67,000 per year

50% are on product development team

70% are responsible for managing inventory


21/27

1. WHAT IS A CROSS-FUNCTIONAL TEAM?2. CAN YOU RECOGNIZE ONE AT YOUR

CLIENTS ORGANIZATION?

3. DO YOU KNOW HOW TO GET YOURCOMPANY INCLUDED IN YOUR CLIENTSCROSS-FUNCTIONAL TEAM?

4. WILL YOUR COMPANY GIVE YOU THEPEOPLE RESOURCES TO SUPPORT YOUR

CLIENTS NEEDS?


22/27


23/27

Best-Value Provider

Action In-House Partner

Training

Transaction Processing

Paper Processing

Product DesignProduct Manufacturing

Component Part Manufacturing

R&D

Marketing

SalesAdvertising

Research

Support

Human Resources Administration


24/27

ACCEPTABLE RISKBuy the Products,Components or Services

UNACCEPTABLE RISKRetain Production andProvide Services

RISK ASSESSMENT

FINANCIAL RISKSResource Allocation

Investment of Resources

Accurate Cost Analysis

Legal Issues

MARKETING RISKSCustomer Impact

Supplier Impact

MANUFACTURING RISKS

Reliability

Expertise

Equipment

Patent Protection

POLITICAL RISKS

Management commitment/

willingness to partner

Turf Battles

Internal Strife


25/27

Moral codes of conduct, rules for

how someone should operate

that can be followed as situation

demand.

Ethical Issues Facing Purchasing

Receiving giftsAccess to information


26/27


27/27

Case 3.2 Newell Industries (page 92)

chapter 3 - industrial

Documents