!! Terms “Procurement” & “Purchasing” often used interchangeably..but they are different !!
procurement: operational aspect of buying something)
more strategic
“Purchase order”
Supplier Goods 2
Customer
Invoice
SAP SAP
Money $ 3 1
“Sales order”
Procurement Mgt is about ….
1
,The 5R’s of Procurement
• The 5 Rights of Procurement .. - In the Right Place
- At the Right Time.
- In the Right Quantity, • Extensions to 6R, 7R, ….
- At the Right Quality - To Acquire the right material
- At the Right Price - From the Right Supplier
Business Context
• Which Business Context are we in ?
- Which Economic Sector ?
- Which Type of Business : B2B, B2C, .. ?
- Which Company size ?
- What is the Company structure ?
4 Economic Sectors
Primary sector: focuses on cost
Service Industries: focus on adding value
(B2B & B2C doesn’t make much difference from a
procurement POV)
Porter Value Chain model
2
,• A typical company structure..including supporting services
• Supporting activities are working for all departments/primary activites
What’s Procurement’s place in the Value Chain?
• Although Procurement department is typically as ‘supporting service’, it is of strategic
importance
• A well-organized procurement department will be the source of intelligence to know:
- Who you are sourcing and procuring goods/services from?
- How those goods/services are being produced or delivered?
- Why you are procuring from those particular suppliers?
- When to eliminate defective/non-compliant suppliers?
• Purchasing is seen as an area for adding value, not simply reducing costs.
• Reducing price and availability risks in the supply chain
• Awareness that active supplier involvement can increase efficiency and
effectiveness.
• A developing recognition that concern with strategic costs of supply and total cost of
ownership (TCO), rather than short-term price, is important.
TCO= doesn’t only look at initial cost, BUT full cost
Exercise: You are buying a car with a budget of 10.000 $
electric car 59.000 $
Or
Diesel/Gas car 25.000 $
answer: If you only look at the initial price, you will choose for diesel, but if maintenance will
cost you more in the long run.
Procurement Roles/Functions
Function: full time job
Role: temporary thing that you have to execute
• Variations depending on company size
3
, Procurement role : isolated ?
• Not an isolated role/function
• Interaction with many colleagues/departments INSIDE the company
• Interaction with suppliers OUTSIDE the company
Interaction with others
• A procurement role/functions is never working at its own
• Does she/he knows al the details of the goods to be purchased ?
• Typically working for an ”Internal Customer”
- Defining the “needs” & the details (see Specifications”)
• For significant purchases, a DMU (Decision Making Unit) is composed
DMU (Decision Making Unit)
• What ?
- team of individuals who participate in a buyer decision process.
- relates to business or organizational buying decisions.
• Why ?
- Minimalise the risk by involving as many people as possible in the
decision making process.
• Who ?
Typical Roles:
The future of procurement mgt
4
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
√ Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, Bancontact of creditcard voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper irdjanbiserova. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €6,49. Je zit daarna nergens aan vast.