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MNP2601 CHAP2
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CHAPTER 2
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CHAPTER 2 THE TASK OF PURCHASING AND SUPPLY MANAGEMENTTHE PURCHASING AND SUPPLY MANAGEMENT AS PART OF BUSINESS
MANAGEMENT
* It should be emphasised from the outset that purchasing and supply management is
executed as an integrated part of the firm's broader management (as part of the logistics
management or supply chain management approach)
*Purchasing and supply PLANNING is part of the firm's general planning, mainly because the
continuous supply of raw materials components & services is of a strategic importance to the
enterprise. The supply market is just as important for the firm's survival continued profitability
as the sales market is the firms own product. Firm's general planning must be integrated.
*The ORGANISATIONAL STRUCTURE of the purchasing and supply function should be
aimed mainly @ linking into the firm's overall structure in the most effective way. The
purchasing and supply function primarily renders a service to the enterprise.
*Purchasing and supply COORDINATION should be aimed @ harmonising and aligning the
activities of the purchasing and supply function with those of the other business functions.
*CONTROL is that element of management which ensures that activities are executed
according to plan and within the allowed parameters.
2.2 PLANNING FOR PURCHASING AND SUPPLY MANAGEMENT
THE NATURE OF PURCHASING AND SUPPLY PLANNING
Planning can be defined as the basic management task that entails a systematic and
intelligent exposition of the direction to be followed to attain predetermined goal
LEVELS OF PURCHASING AND SUPPLY PLANNING AND OBJECTIVES
>TOP MANAGEMENT
Mission and long-term objectives. (Long-term or strategic planning)
>SUPPLY (CHAIN) MANAGEMENT
Intergrated objectives
(Medium-term or integrated functional planning)
>PURCHASING AND OTHER SECTION MANAGEMENT
Operational objectives
(Short-term or tactical planning)
STRATEGIC PURCHASING AND SUPPLY PLANNING
STRATEGIC PURCHASING OBJECTIVES
>To ensure the availability of purchased requirements @ a competitive price
>To develop existing or new suppliers
>To keep investment in inventory as low as possible
TACTICAL SUPPLY OBJECTIVES
>To enter into the long term contracts with reliable suppliers of strategic materials
>To put together a project team responsible for developing suppliers
>To study alternative inventory control systems or the flow of materials to and within the
enterprise
OPERATIONAL PURCHASING OBJECTIVES
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