,Only the most important chapters summarized for the exam
Chapter 1 – The role of purchasing in the value chain
Purchasing: the management of the company’s external resources in such way that the
supply of all goods, services, capabilities and knowledge which are necessary for running,
maintaining and managing the company’s primary and support activities is secured under
the most favorable conditions
Purchasing + supply chain management = key business drivers
1. Strategic role:
a. Analyzing the purchasing spend
b. Identify key and commercial suppliers
c. Develop differentiated supplier strategies
2. Tactical role:
a. Standardize purchasing processes
b. Establish effective information links
c. Strive for continuous improvement of supplier performance
3. Operational role:
a. Secure efficient material supply from supplier in time, right quality,
quantity and lowest overall costs
The role of purchasing in the value chain
Primary activities: physical transformation and handling of the final product
• Inbound logistics: receiving, storing and disseminating inputs to production process
o Inbound transportation
o incoming inspection
o materials handling
o warehousing
o inventory control
• operations: transforming input into final product
o machining
o assembly
o packaging
o equipment maintenance
o testing
o printing and facility operations
, • outbound logistics: collecting, storing and physically distributing the final product
to customers
o finished goods warehousing
o materials handling
o outbound transportation
o order processing and scheduling
• marketing and sales
o advertising & promotion
o sales
o distribution
o channel selection
o management of channel relations
o pricing
• Services: providing services to customers to enhance or maintain value of product
o Installation
o repair and maintenance
o parts supply
o product adjustment
Support activities: support primary activities
• Procurement: all activities required to get product to final destination
o consumable items (raw material, supplies)
o assets (machinery, laboratory equipment, office equipment and buildings)
• Technology development: technology embodies in every activity
o Know-how
o Procedures
o Technology embodies on process and design
• Human resource management: active in both primary and support activities
o Recruiting
o Hiring
o Training
o Compensation of all types of personnel
• Firm infrastructure: supports entire set of of company processes
o Management
o Planning
o Finance
o Accounting
o Legal
o Government affairs
o Quality management
o Facilities management (housing and accommodation)
all activities need to be performed in such way that the total value generated by the
company, as perceived by its customers, is more than the sum of its costs
Chapter 1 – The role of purchasing in the value chain
Purchasing: the management of the company’s external resources in such way that the
supply of all goods, services, capabilities and knowledge which are necessary for running,
maintaining and managing the company’s primary and support activities is secured under
the most favorable conditions
Purchasing + supply chain management = key business drivers
1. Strategic role:
a. Analyzing the purchasing spend
b. Identify key and commercial suppliers
c. Develop differentiated supplier strategies
2. Tactical role:
a. Standardize purchasing processes
b. Establish effective information links
c. Strive for continuous improvement of supplier performance
3. Operational role:
a. Secure efficient material supply from supplier in time, right quality,
quantity and lowest overall costs
The role of purchasing in the value chain
Primary activities: physical transformation and handling of the final product
• Inbound logistics: receiving, storing and disseminating inputs to production process
o Inbound transportation
o incoming inspection
o materials handling
o warehousing
o inventory control
• operations: transforming input into final product
o machining
o assembly
o packaging
o equipment maintenance
o testing
o printing and facility operations
, • outbound logistics: collecting, storing and physically distributing the final product
to customers
o finished goods warehousing
o materials handling
o outbound transportation
o order processing and scheduling
• marketing and sales
o advertising & promotion
o sales
o distribution
o channel selection
o management of channel relations
o pricing
• Services: providing services to customers to enhance or maintain value of product
o Installation
o repair and maintenance
o parts supply
o product adjustment
Support activities: support primary activities
• Procurement: all activities required to get product to final destination
o consumable items (raw material, supplies)
o assets (machinery, laboratory equipment, office equipment and buildings)
• Technology development: technology embodies in every activity
o Know-how
o Procedures
o Technology embodies on process and design
• Human resource management: active in both primary and support activities
o Recruiting
o Hiring
o Training
o Compensation of all types of personnel
• Firm infrastructure: supports entire set of of company processes
o Management
o Planning
o Finance
o Accounting
o Legal
o Government affairs
o Quality management
o Facilities management (housing and accommodation)
all activities need to be performed in such way that the total value generated by the
company, as perceived by its customers, is more than the sum of its costs
