Download - Puchasing Process
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The Purchasing Process
Training Presentation
Joseph Roundy
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Materials Covered
Purchasing Process Defined
Purchasing and Your Organization
The Nuts and Bolts of Purchasing
How the Purchasing Process Works
An Example
An Exercise
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Purchasing Process Defined
Purchasing- the
process of acquiringgoods, services, and
equipment from
another organizationin a legal and ethical
manner.
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Purchasing Process Defined Cont.
The 5 Rights of Purchasing
1. Purchasing the right item or service
2. In the right quantity
3. At the right quality level
4. At the right price5. At the right time
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Purchasing and Your Organization
Brainstorming Activity
Think of all items purchased within the
organization
List them (3 minutes)
Get into small teams and categorize (3 minutes)
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Nuts and Bolts
The nuts and bolts of the purchasing process
include the following
Requirements
Supplier Selection
Purchase orders Performance measures
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Requirements
Requirements are the attributes and
specifications a product or service needs toposses in order to fulfill its specific purpose.
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Supplier Selection
Supplier selection is the process of
identifying potential sources of supply forthe product or service that is to be
purchased.
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The Purchase Order (PO)
The purchase order is
the means by whichproducts and services
are procured.
Pictured at the right is
a generic copy of a
purchase order
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PerformanceMeasures
Performance measures are used to track and
evaluate suppliers.
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The purchasing process consists of six main stages
1. Identify user requirements
2. Evaluate potential suppliers
3. Bid, negotiate and select supplier
4. Purchase approval
5. Release and receive purchase requirements
6. Measure supplier performance
How It Works
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Identifying Requirements
Identify a need (product or service to be
purchased)
Identify needed requirements
For example: size, color, length, thickness etc.
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Evaluating Potential Suppliers
Find Qualified Suppliers
Request Bids/ Quotes
Gather External Data
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Selecting a Supplier
Identify the pros and cons of each suppler
Location, cost, relationship, financial stability
etc.
Rank the suppliers according to their
strengths Choose the best supplier
Negotiate agreements where possible
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Purchase Approval
Purchase Order
Department/ Company Approval
Legal contract
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Release and Receive Requirements
All Requirements need to be accurate and
clearly communicated
Quantity
Quality
Price Delivery and Shipping
Product or Service Specifications
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Measure Supplier Performance
Supplier Scorecard
Relationship Status
Is the supplier meeting our needs?
Is our product or service meeting customer
needs?
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Process Flow Chart
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A Real World Example
Buying A Car ( what is the process?)
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Other Things to Consider
Total Cost of Ownership
Sometimes the cheapest initial option isnt
always the cheapest long term option.
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Scenario
You are a purchaser for your organization. You
were asked to buy a fence. The fence is to beinstalled on the west side of your office building;
periodically the wind can blow hard from that
direction. You have a choice between a wood
fence that costs $1,200, a vinyl fence that costs$3,200, and cinder block fence that costs $5,000.
Which fence would you choose and why?
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Exercise
Pair off into groups of two
Assign each pair to be either a buyer or
supplier
Buyers go through the purchasing process
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Exercise
Switch roles and repeat the exercise (10
minutes)
Report
What went well?
Which parts were difficult?
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Summary
The purchasing process is important to
every organization
Through the purchasing process you can
create value for your organization
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Reading List
Straight to the bottom line- Robert Buzki
Supply Chain Gains- Dan Barnes Managing Purchasing: Making the Supply Team Work-
Kenneth Killen
The Relationship Driven Supply Chain- Emmett Stuart
Business-to-Business Procurement-Richard Pinkerton