Class notes
MNB1501
- Institution
- University Of South Africa (Unisa)
Lecture notes of 12 pages for the course MNB 1501-Business Management 1A at Unisa (ALL NEEDED)
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MNB1601/001/4/2017Learning Unit 11
Sourcing activities
INTRODUCTION AND AIM
This learning unit deals with the purchasing and supply process. A number of activities
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are associated with this process:
yy determining quality
yy determining quantity
yy choosing and managing a supplier or suppliers (including the outsourcing decision)
yy making pricing decisions
yy timing purchases
yy doing purchasing and supply research
yy negotiating in purchasing and supply management
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Note that the steps and activities in the purchasing and supply cycle may differ from
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business to business and from purchase to purchase.
STUDY CHAPTER 15 (section 15.4) IN THE PRESCRIBED BOOK
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Contents of this learning unit
−− The purchasing and supply process
−− Quality decisions as a purchasing and supply activity
−− Deciding on purchasing and supply quantities
−− The selection and management of suppliers
−− Pricing decisions
−− Timing of purchases
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116 Learning objectives
After completing this unit, you should be able to
yy demonstrate an understanding of the purchasing and supply function by highlighting
the steps in the purchasing and supply process
yy analyse quality decisions as a purchasing and supply activity by summarising the con-
siderations on which the quality of products and services rests
yy describe the determination of purchasing and supply quantities by highlighting inventory
holding, costs and control systems
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, yy demonstrate an understanding of the selection and management of suppliers by sum-
marising the most important components of the selection, evaluation and development
of suppliers
yy analyse price determination by identifying the methods used to determine the best price
yy put the right time for purchasing in perspective by highlighting the aims, influencing
factors, market structures and policies
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KEY TERMS
sourcing activities pricing decisions
purchasing and supply activities price determination
purchasing and supply process price comparison
quality decisions timing of purchases
purchasing and supply quantities market structures
inventory holding scheduling of purchases
inventory costs purchasing and supply policies
inventory control systems long-term supplier relationships
selection and management of suppliers supplier performance
developing suppliers
Refer to the end of chapter 15 in the prescribed book to familiarise yourself with the key
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terms for this learning unit before continuing.
11.1 THE PURCHASING AND SUPPLY PROCESS
Study section 15.4.1 in ITBM
The purchasing and supply process can be regarded as a “check list” or as steps in execut-
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ing a logical and systematic purchasing transaction. Learners working in a purchasing
and supply division may not even be aware of performing some of these steps during a
transaction; yet developing such a check list can be a tremendous help towards prevent-
ing unsatisfactory purchasing transactions.
The nine steps in the purchasing and supply process have been clearly set out in the
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prescribed book. Note that not all the steps are carried out with each purchase. The
prescribed book points out that some of the steps can be omitted or executed simulta-
neously in certain purchasing situations. For example, if a standardised product needs
to be re-ordered from an existing supplier, it will not be necessary to choose a supplier
and determine the price. If the supplier delivers the goods soon after the order has been
placed, there will be no need to expedite the order. What is important is that each of the
steps should be performed somewhere along the line.
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