PURCHASING
LECTURE 1 INTRODUCTION TO KEY ELEMENTS IN PURCHASING
What is Purchasing?
Describes the operational process of buying
Supply Chain
+ Supply Network
Why is Purchasing important?
Big cost of purchased items in relation to revenue
➔ Take in account: Total cost of ownership
,How can Purchasing contribute?
Purchasing situations:
New task situation
- Completely new product from unknown suppliers
- High uncertainty regarding outcome
Modified Rebuy
- New product from known supplier
- Existing product, new supplier
- Moderate uncertainty regarding outcome
Straight rebuy
- Known product from known supplier
- Low uncertainty regarding outcome
Why does context matter?
Decisions to make about the purchasing function:
- What is the aim of the purchasing function? (Cost, Value, Risk, Sustainability)
- Where to position the purchasing function? (Management, Department, Function)
- What does the purchasing function involve? (Buying, Contracting, Risk/Relationship)
- What skills and competences are needed?
,LECTURE 2 PURCHASING AS A STRATEGIC FUNCTION
Purchasing Maturity
Levels of Purchasing:
- Strategic
- Tactical/Managerial
- Operational
Porter’s Value Chain
Company Strategy
➔ Purchasing Strategy (hierarchical model)
Firm strategy coordinates and integrates activities of functions
, Performance Achievements
- Greater fit between purchasing strategies and business strategies = higher performance
Purchasing (Functional) Strategy
= determine overall purchasing policies and capabilities & guide and enable the entire
firm in its purchasing activities
➔ Formulating a single overall purchasing strategy is difficult, so diverse set of strategies
and tactics for diverse purchases and suppliers
- Fit between purchasing strategy and the organizational structure within the purchasing
function
LECTURE 1 INTRODUCTION TO KEY ELEMENTS IN PURCHASING
What is Purchasing?
Describes the operational process of buying
Supply Chain
+ Supply Network
Why is Purchasing important?
Big cost of purchased items in relation to revenue
➔ Take in account: Total cost of ownership
,How can Purchasing contribute?
Purchasing situations:
New task situation
- Completely new product from unknown suppliers
- High uncertainty regarding outcome
Modified Rebuy
- New product from known supplier
- Existing product, new supplier
- Moderate uncertainty regarding outcome
Straight rebuy
- Known product from known supplier
- Low uncertainty regarding outcome
Why does context matter?
Decisions to make about the purchasing function:
- What is the aim of the purchasing function? (Cost, Value, Risk, Sustainability)
- Where to position the purchasing function? (Management, Department, Function)
- What does the purchasing function involve? (Buying, Contracting, Risk/Relationship)
- What skills and competences are needed?
,LECTURE 2 PURCHASING AS A STRATEGIC FUNCTION
Purchasing Maturity
Levels of Purchasing:
- Strategic
- Tactical/Managerial
- Operational
Porter’s Value Chain
Company Strategy
➔ Purchasing Strategy (hierarchical model)
Firm strategy coordinates and integrates activities of functions
, Performance Achievements
- Greater fit between purchasing strategies and business strategies = higher performance
Purchasing (Functional) Strategy
= determine overall purchasing policies and capabilities & guide and enable the entire
firm in its purchasing activities
➔ Formulating a single overall purchasing strategy is difficult, so diverse set of strategies
and tactics for diverse purchases and suppliers
- Fit between purchasing strategy and the organizational structure within the purchasing
function
