Chapter 7 - Purchasing procedures, e-procurement, and systems contracting. This chapter focuses on purchasing procedures, e-purchasing, and systems contracting. Online or e-procurement technology has become an important part of purchasing and supply chain management and the rate of adoption has increased significantly. | 1 Chapter 7: Purchasing Procedures, E-Procurement, and Systems Contracting Purchasing and Supply Chain Management, 3rd edition, Copyright 2013, W. C. Benton Jr., All rights reserved Purchasing Department's Objectives Spend corporate funds wisely. Operate in a professional manner. Purchase: the right materials in the right quantities at the right time and price from the right source. Practice the highest level of ethical standards to ensure confidence among all parties. 2 General Definitions Purchasing process: Buying goods and services for use by the buying organization Buying process: Procuring items for resale These terms are sometimes used interchangeably. 3 Purchasing Department's Main Functions Determine the supplier. Negotiate the actual price. Determine the delivery date. More than 75 % of a firm’s procurement activities are routine. Thus, becoming increasingly automated. 4 Purchasing Tools Systems contracting E-Procurement Reverse auctions Electronic Data Interchange (EDI) . | 1 Chapter 7: Purchasing Procedures, E-Procurement, and Systems Contracting Purchasing and Supply Chain Management, 3rd edition, Copyright 2013, W. C. Benton Jr., All rights reserved Purchasing Department's Objectives Spend corporate funds wisely. Operate in a professional manner. Purchase: the right materials in the right quantities at the right time and price from the right source. Practice the highest level of ethical standards to ensure confidence among all parties. 2 General Definitions Purchasing process: Buying goods and services for use by the buying organization Buying process: Procuring items for resale These terms are sometimes used interchangeably. 3 Purchasing Department's Main Functions Determine the supplier. Negotiate the actual price. Determine the delivery date. More than 75 % of a firm’s procurement activities are routine. Thus, becoming increasingly automated. 4 Purchasing Tools Systems contracting E-Procurement Reverse auctions Electronic Data Interchange (EDI) Radio Frequency Identification (RFID) 5 Systems Contracting (cont.) Requirements: A negotiated agreement between buyers and sellers including: Type of material Scope of contract Price Billing policy Stocking policy Delivery requirements 6 Purchasing Tools Systems contracting E-Procurement 7 E-procurement Potential Savings: Inventory and purchase costs Detriments: Total cost of implementing these systems Lack of savings during development and deployment phases Cost of training employees and getting suppliers to participate 8 Reverse Auctions Characteristics: The buying firm initializes the auction by submitting a description of the product or service. Sellers place bids based on their offer to fulfill the buyer’s needs. The competition between the sellers drives the price down, instead of up. The buyer chooses the winning bidder. 9 Purchasing Tools Electronic Data Interchange (EDI) Radio Frequency Identification (RFID) 10 Questions? 11
