improving management of the purchasing function

IMPROVING MANAGEMENT OF IMPROVING MANAGEMENT OF THE PURCHASING FUNCTIONTHE PURCHASING FUNCTION

CREATED BY

ABDUL RIZAL

MAGISTER OF INDUSTRIAL ENGINEERING - TRISAKTI UNIVERSITY

LECTURE : DR. DADANG SURJASA, SSi MT

PREFACE

Purchasing is input into the management of the production process organization..

Purchasing function is often considered as part of the most important and influential, one could even say most business processes come from purchasing activities. A very fundamental reason to discuss the purchasing function is because in this field waste easily occur, either due to dysfunctional behavior or lack of knowledge in various aspects of the purchase of materials, facilities, infrastructure and spare parts needed by the company.

.Basically, the role of purchasing function is to provide goods and services required by the company at the time, the right price and quality.y.

Basically, the role of purchasing function is to provide goods and services required by the company at the time, the right price and quality...

The role of Purchasing Manager here to deal effectively with that help the workers achieve the best results. Where a Purchasing Manager to be authoritative, democratic or participatory, according to the needs and circumstances of their subordinates.

So suppliers or supply problems can be overcome by employees who handle the purchase.

1. APPLICATION OF MANAGEMENT PRINCIPLES TO PURCHASING

‘’X ‘’ & ‘’Y ‘’ THEORY

Created by Douglas McGregor, for Managers.

Manager X mode by McGregor is assuming the managers or leaders that its staff are people who do not like the job and try as much as possible to avoid work. Type X believes most people should be forced by the threat of punishment in order to work and meet organizational goals. It's believed that people prefer to be directed and not given too much authority. Employees considered to avoid responsibility, relatively unambitious, and wants job security above all else.

Type Y managers believe workers are basically diligent work. The underlying assumption is considered to be introspective employees and want to move to realize the goals of the organization without the need threatened. Employees are considered to have the commitment to achieve the goals and motivated by the reward associated with achievement. Type Y managers assume employees are happy to accept responsibility. Employees thought to have intellect, imagination, intelligence, and creativity in solving organizational problems.

Z THEORY Theory Z is a management approach based on a combination of

management of American and Japanese management. Management philosophy is characterized, among others, long-term relationship permanent job, consensus decision making and individual responsibility in the context of the group as well as a review of performance on a regular basis and firm, which provides feedback that required most employees.

Theory Z highlight the role and position of employees in the company who can make the worker to be comfortable, at ease, happy and feel an important part of the company. Thus, the employee will work more effectively and efficiently in his work. This theory considers security (security) in particular has an important meaning.

’X ‘’ & ‘’Y ‘’ & ‘’Z‘’ THEORY

Theory X and Y McGregor focused on the management and motivation of managers in the organization's perspective.

While Theory Z put more reliance on attitudes and responsibilities of workers / employees.

2. APPLY SOUND THEORY TO PURCHASING

The point here is that the use of Theory X and Y are indispensable for the Purchasing Manager to its employees in terms of the purchasing of goods.

Where If Theory X Managers apply to the employee that the goods which are sourced or purchased has a low price with the quality of unsightly, so that led to the loss - a big loss if use goods - goods.

If Theory Y Managers apply to employees it will be the opposite of the theory of X, now where to get the goods - goods with high price but the quality is very good, so it does not inhibit the production process or a process - a process to another.

so that the friction sound - sound between Managers and employees can be avoided.

Communication is something that is always needed basis and carried out by every human being, because communication is the basis of human interaction to obtain agreement and understanding are built to achieve a goal that is maximal between both of his. To reach businesses in communicating effectively, then we should have to know the number of the understanding and the problems that occur in the process of communication itself.

Effective personal communication is necessary here between Managers and Employees. Similarly, between Buyers and Suppliers. Company Organization for the purpose is achieved..

3. EFFECTIVE COMMUNICATIONS, BOTH EXTERNAL AND INTERNAL

The primary basis for the manager to perform tasks in carrying out the functions of management in order to achieve objectives. Information should be communicated to staff or subordinates them to know the basis for planning and for the plan - the plan can be implemented effectively and efficiently..

In a briefing Managers must be able to communicate well with subordinates to achieve organizational goals. And in the regulatory process requires communication Managers in ascertaining whether the implementation of the tasks in accordance with the plan.

For Buyers Employees need to connect and communicate with suppliers need to be improved to further streamline costs, and get the best supplier and purchase the best results.

3. EFFECTIVE COMMUNICATIONS, BOTH EXTERNAL AND INTERNAL

3.1 PRODUCTIVE WORK HABITS

Managers are required to employees berkebiasaan work productive.

For that you need to do so that our employees work berkebiasaan productively :

1. Work provides a good environment to do the job.2. Provide adequate training to employees.3. Convincing them that they can do a good job.4. Convincing them that we always support them in doing their jobs.5. Define Objectives and Targets Clear6. Listen to them and do not be stingy to give a compliment.7. Reward if the work is very good.

4. NEED TO SUPPORT EDUCATION AND BUYER DEVELOPMENT

Purchasing Manager to be a good person should have a broad scope of business acumen and understanding that comes from education and experience. Such as negotiation skills and legal aspects of purchasing, supply management professionals.

According to the authors Farney, there are six different areas that the Purchasing Managers should seek to develop and maximize the value:?

1. The ability to understand the total value of the supply chain holistically and set the entire acquisition process.2. Technical know-how, especially in manufacturing-previously-party relations Third, now the team relationship3. Ability to Analytical strategic outlook that focuses on customers and on the process4. Ability to work with the Information Technology that is using Internet to complete the process and workflow to save time and money and avoid their mistakes. 5. A global perspective to understand how cultural differences affect the business relationship6. Skills - Interpersonal ability to sell an idea, to actively, to influence and lead

4. 1 PURSUE BUYER DEVELOPMENT PROGRAMS

The skills of the purchasing managers both mirrors general management skills, as applicable supply managers responsible for the overall business results of the company's suppliers.

Purchase a good employee will develop with proper guidance and training. So that they can be motivated Purchasing Manager.

4. 2 CERTIFIED PURCHASING MANAGER PROGRAM

Since 1974 the existing Purchasing Manager certification whose name Certified Purchasing Manager (C.P.M.) issued by the Institute for Supply Management, Association of Purchasing Managers (NAPM).

Where the CPM has four modules:- Purchase Process,- Environmental Supply,- Value Enhancement Strategies, and management

4.3 ACCREDITED PURCHASING PRACTITIONER PROGRAM

1996, ISM then NAPM implement the program and the Accredited Purchasing Practitioner / Process Accredited Purchasing Practitioner (A.P.P.).

With certificate A.P.P. can be applied to achieve C.P.M.

The requirements for A.P.P. is that the need to pass the exam Module 1 and 2 of A.P.P.

Interest ISM is to increase participation and encourage professionalism in the purchase and supply of the community.

Managers often easier to break down a job into parts of the job done by people - people who are different.

Purchasing Manual serves as a guide to policy documents and procedural reference. Where the Purchasing Manual is an important enterprise for the purchasing department

Manual purchasing system can be applied to companies on manufacture and retail.

The difference lies in how transactions are authorized, ie manufacturing company purchasing raw materials for production and afford decisions authorized by the planning and production control.

While retail companies buy finished goods for resale and the decision to buy authorized by inventory control functions.

5. USE OF JOB DESCRIPTIONS AND A PURCHASING MANUAL

Most Purchasing Manual stored in the form of electronic files, so it can make changes, additions, deletions and timely distribution. So its use can be placed on the company intranet, so it can be used for anyone who needs it..

5.1 DEVELOP AND USE A PURCHASING MANUAL

BELOW IS AN OUTLINE OF SAMPLES THAT MAY BE USEFUL IN CREATING A

USER PURCHASES:

PART 1. RESPONSIBILITIES AND OBJECTIVES OF PURCHASING

MAJOR MAJOR RESPONSIBILITIESRESPONSIBILITIES

PRIMARY PRIMARY OBJECTIVESOBJECTIVES

• Formulate buying policies, plans, and procedures.• Gather and disseminate market intelligence.• Handle procurement and expediting.• Other (e.g., surplus disposal, receiving, traffic).• Exceptions, if any (e.g., buying advertising,

insurance).

PART 1. RESPONSIBILITIES AND OBJECTIVES OF PURCHASING

MAJOR MAJOR RESPONSIBILITIESRESPONSIBILITIES

PRIMARY PRIMARY OBJECTIVESOBJECTIVES

• Serve the company economically and contribute to profits.• Procure materials at the lowest total cost consistent with quality and

service.• Maintain world-class sources of key supplies.• Support lean manufacturing methods and inventory management efforts.• Keep management informed of market conditions and procurement risks.• . Collaborate with other company units to improve internal and supplier

processes• Search for new and improved sources and materials.• Lead six-sigma, value analysisand standardization efforts.• Keep abreast of leading purchasing methods and practices.

A. General policies (Kebijakan umum)• Overall strategies in support of business

strategies. (Strategi keseluruhan dalam mendukung strategi bisnis).

• Determination of need; specifications, quantities. (Penentuan kebutuhan; spesifikasi, kuantitas).

• Standard process workflows. (Proses standart alur kerja).

• Purchase commitments. (Komitmen pembelian).

• Supplier contacts. (Kontak Pemasok)

PART II. POLICIES

C. Pricing and payment

D. Relationships with other departments

E. Supplier relationships

F. Ethics

B. Buying policies

A. General policies

B. Buying policies •Central or local procurement •Selecting sources of supply •Multiple versus single sources •Trade relationships•Buying from stockholders •Consideration of small and disadvantaged business•Negotiation •Competitive bids •Trial orders and samples •Classified purchases •Speculative purchases •Foreign purchases •Interplant buying •Employee purchases




F. Ethics

B. Buying policies

A. General policies

PART II. POLICIES

C. Pricing and payment :

•when it may be used, when preferred, and special conditions.)•Target cost or cost analysis requirement•Unpriced orders•Estimated prices•Escalation•Liquidated damages•Deferred payments•Progress payments•Cash discounts•Use of forward buy or hedging action




F. Ethics

B. Buying policies

A. General policies

PART II. POLICIES


•Collaboration with internal customers •Delegated authority •Emergency orders •Dissemination of price information •Inspection, receiving and traffic•Legal assistance•Credit assistance•Make-or-buy




F. Ethics

B. Buying policies

A. General policies

PART II. POLICIES


•Tracking supplier performance•Supplier relations•Handling complaints and rejections •Visiting suppliers’ •Accepting suggestions from suppliers •Receiving and interviewing sales •Evaluating suppliers’ prospects •Advising unsuccessful •Dealing with cancellations




F. Ethics

B. Buying policies

A. General policies

PART II. POLICIES

F. Ethics

•Courtesy and fairness •Security of confidential information •Entertainment •Gifts and gratuities •Conflict of interest




F. Ethics

B. Buying policies

A. General policies

PART II. POLICIES

PART III. DUTIES AND ORGANIZATION

A. Specific duties of the purchasing

• Select and manage suppliers.• Make purchase commitments.• Track supplier performance.• Expedite open orders.• Audit invoices and payments.• Maintain supplier and order files.• Maintain source information (catalog) files.• Maintain price and cost history information.• Disseminate supplier product offering information.• Report supplier performance and supply risks to management.• Prepare statistical reports to support management needs.

A. Specific duties of the purchasing B. Organization C. Position guides

B. Organization

•Position of the purchasing department in the company•Organization chart





C. Position guides

•Guide for each key position: director of purchasing, purchasing manager,•Buyers or buyer/planners, •Administrators, analysts, and so on.•To whom does the manager report?•Whom does the CPO supervise?•Specific duties of each position•Authority: its limits and extent

A.Buying procedures • Requisitions• Inquiries• Purchase orders• Cash orders• Blanket orders• Invoices• Receiving reports• Change orders• Cancellations

PART IV. PROCEDURES

A. Buying procedures

B. Filing practice

C. Contracts

D. Special procedures

E. Reports

F. Statistics

PART IV. PROCEDURES


B. Filing practice

C. Contracts


E. Reports

F. Statistics

B. Filing practice •Order files•Inquiry files•Catalog files•Price files•Part history files

C. Contracts (This section should describe the various kinds of contracts:•When they should be used; how they should be prepared.)•Subcontracts•Service contracts (outsource agreements)•Construction contracts

PART IV. PROCEDURES


B. Filing practice

C. Contracts


E. Reports

F. Statistics


B. Filing practice

C. Contracts


E. Reports

F. Statistics


•Supplier partnerships and joint improvement efforts•Buying raw materials•Commodity buying•Buying capital equipment•Disposing of scrap and surplus

PART IV. PROCEDURES

PART IV. PROCEDURES


B. Filing practice

C. Contracts


E. Reports

F. Statistics

E. Reports (Define each report: who gets it, what it contains, when it is due.)


B. Filing practice

C. Contracts


E. Reports

F. Statistics

F. Statistics (Explain where to get them, how to organize them, what to do with them.)

PART IV. PROCEDURES

Step - by step that is in this book is very good for the success of a Purchasing Manager.

CONCLUSION

improving management of the purchasing function

Education