[completed] 7과 Purchasing

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최종 작성일:23년 3월 6일

 

목표 : 3월 28일에 CPIM Part 1 취득하기

 

Introduction

purchasing is responsible for placing the orders and for ensuring that good arrive on time

the purchasing department has the major responsibility for locating suitable sources of supply and for negotiating prices. purchasing department are in a position to take the lead rold in reducing a company's enviormental impact since they are familiar with all materials purchased and have excellent contracts with suppliers for product information. 

• Purchasing and Profit Leverage
  • on the average, manufacturing firms spend about 50% of their sales dollars in the purchase of raw materials, components, and suppliers. this  gives the purchasing function tremendous potential to reduce costs and increase the profits. according to the text book, a 2% reduction in purchase cost has the same impact on profit as a 10% increase in sales.
• Purchasing Objectives
  • purchasing is responsible for the flow of materials into the firm, following up with the supplier and expediting delivery.
  • the objective of purchasing can be divided into five categories.
    • obtaining goods and services of the required quantity and quality
    • obtaining good and services at the lowest total cost.
    • ensuring the best possible service and prompt deilvery by the supplier.
    • developing and maintaining good supplier relations and developing potential suppliers.
    • selecting products and suppliers that minimize the impact on the enviorment.
  • to satisfy these objectives, some basic function must be performed
    • determining purchasing spcificcations: right quantity, right quality, right delivery
    • selecting supplier(right source)
    • negotiating terms and conditions of purchase (right price)
    • issuing and administration of purchase orders and agreements.
• Outsourcing
  • defines as ' the process of having suppliers provide goods and services that were previously provided internally'.
  • one method of outsourcing is 'offshoring', which defines as ' outsourcing a buisiness function to another company in a different contry than the original compnay's country.'
  • companies are under pressure to reduce costs and to focus on their core competencies, which can turn outsourcing into a competitive advantages.
  • purchasing department have an increasing responsibility with the management of outside operations and the development and administration of contracts.
• Purchasing Cycle
  • cosists of the following steps.
    • receiving and analyzing purchase requisition.
      • start with the department or person who eill be the ultimate user.
      • for items not used in the manufacturing process, such as maintenance,repair and operation(MRO) items, office suppliers, or capital equipment is sent to the purchasing department.
      • at a minimum, the purchase requisition contains the following information;
        • identity of originator, signed approval, and acoount to which cost is assigned
        • material specification
        • quantity and unit of measure
        • required delivery date and place
        • any other supplemental informatio needed
      • electronic requisition systmes are now widely used and are often part of enterprise resource planning
        • the system will forward the requisition for the appropriate approvals with controls in place for account number and spending limits. once all the approvals have been completed, the requisition is sent to the puchasing department to produce the purchase order without reentering all the information.  the benifits of these tools to the company are ease of entry for the requisitioner, reduced papaer work, decreased turnaround time of requisitions, and improced accuracy of information.
    • selecting suppliers, inclduing researching adn finding potential suppliers,  issuing requests for quotations, receiving and analyzing quotation and selecting the right suppliers
      • for high cost items, it is usually desirealbe to issue a request for quote(RFQ). this is written inquiry that is sent to enough suppliers to be sure competitibe and reliable quitations are received.
    • determining the right price
      • purchasing team is responsible for price negotiation and will try to obtain the best price from the suppliers.
    • issuing purchase orders and agreements
      • a purchase order is a legal offer to purchase.
      • once accepted by the supplier, it becomes a legal contract for delivery of the goods.
    • following up to ensure delivery dates are met
    • receiving and accepting goods.
    • approving supplier's invoice for payment.
      • when the supplier's invoice is received, there are three pieces of information that  are matched; the purchase roder, the receiving report, ans the invoice.
      • it is the job for the purchasing department to work with accounts payable to verify these and to resolve any differences. once approved, the invoice is sent to accoutns payable for payment.

Establishing Specifications

when purchasing an item or service from a supplier, several factors must be taken into consideration when specifications are being developed. these can be divided into three broad categories;

• Quantity Requirements
  • the balance of supply and demand determine the quantity needed. the quantity is important because it will be a factor in the way the product is designed, specified, and manufactured.
• Price Requirements
  • the price specification represents the economic value that the buyer puts on the item, and the amount the company is willing to pay. the economic value placed on the item must relate to the use of the item and its anticipated selling price.
• Functional Requirements
  • are concerned with the end use of the item and whta the item is expected to do. by their cery nature, functional specification are the most important of all categories and govern the others. to be successful, they must satisfy the real need or purpose of an item.  in many cases, the real need has both practical and aesthetic elements to it.  the question must be asked of what practical and aesthetic needs a component of a manufactured item is expected to satisfy.
    • functional specifications and qualtiy
      • functional specifications are closely tied to the quality of a product or service. on this basis, it can be that an item has the required qualtiy if it satisfies the needs of the user. 
      • there are four pahses to providing user satisfaction
        • quality and product planning
        • quality and product design
        • quality and manufacturing
        • quality and use
      • fuctional specification should define the quality level needed. they should describe all those characteristics of a product determined by its final user.
      • function, quantity, service and price are interrelated. it is difficult to specify one without consideration of the others. the final specification is compromise of all four, and the successful specification is the best combination. however, functional specification ultimately are the ones that drives the orhters. if the product does not performe adequately for the price, it will not sell.
    • value analysis
      • defines as ' the systematic use of techniques that identify a required fuction, establish a value for that function and finally provide that function at the lowest overall cost'
      • this form of supply chain collaboration duting the design process can be instrumental in reducing the cost and more importantly, improving the overall functionlity of the part. a good example of value analysis is the evolution of the milk bottle as it sent from a heavy glass bottle to a plastic jug.

 

Functional Specification Description

• Description by brand
  • most often used in whosale or retail buisinesses. this is particuarly true under the following circumstances;
    • item are patented, or the process is secret
    • the supplier has special expertise
    • the quantity bougth is so small that it is not worth the buyer's effort to develop specifications.
    • the supplier, through advertising or direct sales effort, has created a perference on the part of the buyer's customers or staffs.
  • consequently, the usual practice is to ask fro the item by brand name or equivalent. in theory theis allows for competition.
• description by specification
  • whatever method is used, description by specification depends on the buyer describing in details exactly what is wanted. one or more of the following is typically used;
    • physical and chemical characteristics
    • material and method of manufacture
    • performance
  • standard specification
    •  have been developed as a result of much study and effort by gonermental and nongovermental agencies. they usually apply to raw or semifinished products, component parts or the composition of material.
    • there are several advantages to using standard specifications
      • they are widely known and accepted and because of this, are readily available from most suppliers.
      • becuase they are widely accepted, manufactued, and sold, they are lower in price than nonstandard item.
      • finally becuase they have been developed with input from a broad range of producers and users, they are usually adaptable to the needs of many purchasers.
• enginerring drawings
  • describe in detail the exact configuration of the parts and the assembly.
  • these drawing are a major method of specifying
• micellaneout attibutes

Selection Suppliers

once the decision is made about what to buy, the selection of the right supplier is the next most important purchasing decision. a good supplier is one that has the technology to make the product to the required quality, has th capacity to make the quantities needed. and can run the business weel enougth to make a profit and still sell a product competitively.

• sourcing
  • there are three type of sourcing
    • sole sourcing : only one supplier is available because of patents, technical specifications, ras materials, location and so forth.
    • multiple sourcing : is the use of more than one supplier for an item. the potential advantage of multiple sourcing are that competition will result in lower price and better service and that there will be a continuity of supply.
    • single sourcing : is planned decision by the organization to select one supplier for an item when several sources are available. 
• factors in selection suppliers
  • these are what the supplier is expected to procide and are the basis for selection adn evaluation. considering this, ther are several factors in selecting a supplier.
    • technical ability
    • manufacturing capability
    • reliabiltiy
    • after sales service
    • lean capabilities
    • ither consideration
    • price
      • the supplier should be able to provide competitive prices.  this does not necessarily mean the lowest price. 
      • landed cost
        • the total landed cost of an item includes the price paid plus all the handling and delivery costs associated with getting the product to the production. the total cost may increase then the costs of storage and inventory are included. considering the total cost of owner-ship to the company, low landed cost may not be a good decision.
  • in today's supply chain enviorment, the type of relation ship between the supplier and the buyer is crucial to both. ideally the relationship will be ongoing with a mutual dependency. thus supplier selection adn supplier relationship are of the utmost importance.
• identifying suppliers
  • a major responsibility of the purchasing department is to continue to research all available cources of supplye
• final selection of supplier
  • crucial factors to select the supplier are 1) quantitative - for example, landed cost 2) qualitative.
  • the challenge is finding some method of combining these two major factors that will enable a buyer to pick the best supplier. one method invovles a supplier ranking method.
  • the normal practice when using the ranking  methof is to eliminate the bottom ranking suppliers from consideration, allowing management to make a simpler decision.
  • the supplier ranking method is an attempt to quantify those things that are not quantified by nature. it attemps to put figures on subjective judgement. it forces the buying company to consider the relative importance of the various factors. 
    • select those factors that must be considered in evaluationg potential suppliers
    • assign a weight to each factor. this weight determine the importance of the factor in relation to the other factors. 
    • rate the suppliers for each factor. suppliers are rated on their ability to meet the requirements of each factor.
    • rank the suppliers.

Price Determination

price is not the only factor but the determining factor it all other things are equal.

• basis for pricing
  • the term 'fair price'
    • the lowest price at which the item can be bought.
    • one definition of a fair price is one that is competitive gives the seller a profit, and allows the buyer ultimately to sell at a profit.
    • price have an upper and a lower limit
      • the market decides the upper limits as what buyer are willing to pay is based on their perception of demand, supply and their needs.
      • the seller sets the lower lemit, and it is determined by the costs of manufacturing and selling the product and profit expectation.
  • the fixed costs ( break even point)
    • one widely used method of analyzing costs is to break them down into fixed and vaiable costs.
      • fixed costs are costs incurred no matter the volume of sales.
      • variable costs are those directly associated with the amount produced or sold.
    • break even point is  revenue equals total costs. and profit is zero.
• competitive bidding
  • occurs when a buyers compares the price of a product from various suppliers and simply chooses the lowest price. competitive bidding also requires that the product be well specified and widely available.
• price negotiation
  • one important factor in the approach to negotiation is the type of product 
    • commodities  : price is set by market supply and demand and can fluctuate widely. negotiation is concerned with contracts for future prices.
    • standard products : provided by many suppliers. prices are determined on the basis of published prices.
    • items of small value: these are item such as maintenance or cleaning suppliers and represent purchases of such small value that price negotiation is of little purpose.  the prime objective oshould be to keep the fost of odering low.
    • made to order item : this category includes items made to specifiation or for which quotation from several souces are received. these can generally be negotiated.

Impact of Material Requirements Planning on Puchasing

purchasing can be seperated into two types of activities; 1) procurement 2) supplier scheduling and folow-up. procurement includes the functions of establishing specifications, selecting suppliers, price determination and negotiation. supplier scheduling and follow up  are concerned with the release of the orders to suppliers, working with suppliers to schedule delivery and follow-up. the goal of supplier scheduling are the same as those of production activity control.

• planner/buyer concept
  • to improve the effectiveness of the planner/buyer activity many companies have combined the two functions of buying and planning into a single job done by one person.
    • determining material requirements
    • developing schedules
    • issuing shop order
    • issuing material releases to suppliers
    • establishing delivery priorities
    • controlling orders in the factory and to suppliers
    • handing all the activities associated with the buying and production schdeuling fucntions.
    • maintaining close contract with supplier personnel.
• contract buying
• supplier responsiveness and reliability
• close relationship with suppliers
• electronic data interchange
• vendor managed inventory(VMI)
  • in this concepts, a supplier maintains an inventory of certain items in the customer's facility. the supplier owns the inventory until the customer actually withdraws it for use, after which the customer pays for the amount  consumed. the customer does not have to order any of the inventory as the supplier is responsible fro maintaing an adqequate supply in the facility for customer use. this approach is most commoly used for lower-value products that have a relatively standard design, such as fastners, although it can be used also fro alrge value items as well. vendor-managed inventory reduced the nedd for many small MRP order releases and increases the collaboration of supply chaon.
• internet

Enviormentally Responsible Purchasing - 3C  Reduce, reuse, recycle

Expansion of Purchasing into Supply Chain Management

ERP  have become more powerful and effiective, inforamtion flows have become easier adn the ability to handle large amounts of data has become more feasible. this condition has allowed companies to expand their planning and control perspectives to include upstream and dow stream entities. this conept of supply chain has four major components that are mangaged;

• the flow of physical material from suppliers
• the flow of money upstream from customers back to the companies and suppliers.
• the flow of inforamtion up and down throught the stream
• the flow of products back from the custoemrs typically for repairs or recycling. this is known as 'reverse logistics'

 

 

Some Organizational Implications of Supply Chain Management

• saving can be substantial

 

Key Terms

Break-even Point

Bullwhip Effect

By-product

Commodities

Contract Buying

Customer Relationship Management(CRM)

Electronic Data Interchange(EDI)

Engeneering drawings

Enterprise Resource Planning

Environmentally Responsible Purchasing

Extranet

Fair Price

Fixed costs

Functional specifications

Internet

Intranet

Landed

Maintenence, Repair, and Operating suppliers (MRO)

Multiple Sourcing

Offshorting

Outsourcing

Planner/buyers

Purchasing Cycle

Purchasing Requisition

Reduce, reues, and recycle

Request for quote (RFQ)

Reverse Logistics

Single Sourcing

Sole Sourcing

Standard Specifications

Supplier Flexibility and Reliability

Supplier Ranking

Supplier Relationship Management(SRM)

Total Cost of Ownership

Value Analysis

Variable Costs

Vendor Manged Inventory(VMI)