Purchasing
Week 1
Lecture
Purchasing describes the
operational process of
buying.
Six phases of purchasing:
1. Define specifications
2. Select supplier
3. Contract agreement
4. Ordering
5. Expediting
6. Evaluating/follow up
Supply chain:
Supply network:
Cost of purchased items in relation to revenue:
The Netherlands is the most expensive in
purchasing, but total cost may still be lower due to,
for example, less transport costs, failure costs, and
coordination costs.
1
,Managing the purchasing agenda: balancing cost-risk-value:
Does context matter?
Context of purchasing changes a lot based on the strategy of the company.
Up to 1990, purchasing was done for cost reduction. After we focused also on value-creation
and service. The context tells you where you are on the triangle.
Purchasing is one of the most core activities for some companies like apple. But this is based
on the company aka the context, it could also be supportive.
Purchasing is generally linked to products, but what about purchasing services? Purchasing is
generally linked to the private sector, but what about public procurement? Purchasing concerns
different buying situations.
Friendshoring (or allyshoring): when countries rely on countries with shared values.
Why does context matter?
Decisions to make about the purchasing function:
o What is the aim of the purchasing function?
o Where to position the purchasing function?
o What does the purchasing function involve?
o What skills and competences are needed?
Purchasing situations:
o New task situation: completely new product from unknown supplier.
High uncertainty regarding the outcome.
2
,o Modified rebuy: new product from known supplier OR existing product from new supplier.
Moderate uncertainty regarding the outcome.
o Straight rebuy: known product from known supplier.
Low uncertainty regarding the outcome.
Literature
Tracing the evolution of purchasing research: future trends and directions for purchasing
practices
Purchasing is increasingly integrated with different business functions, such as strategy,
marketing, decision-making, and SCM. Key trends are sustainable and ethical purchasing,
purchasing in the digital economy, SCM risk management, and public sector purchasing.
These trends suggest both avenues for further research and specific methodologies to pursue
them.
The paper highlights how purchasing transitioned from a single business function to a cross-
functional business process.
Five areas that appear likely to affect the trends and directions of purchasing practices:
1. Sustainable purchasing
2. Ethnical purchasing
3. Purchasing in the digital economy
4. Purchasing and SC risk management
5. Public sector purchasing
Guest lecture
Tender procedures used by (almost) all procurement professionals:
3
, The TCO (Total Cost of Ownership) method entails both the
(visible) direct purchasing costs and the (invisible) costs of the
whole life cycle.
Procurement should create value for both you and your supplier.
Procurement is the process of buying goods, products, and
services against the right conditions and price aimed at realising
the organisational goals.
Basic procurement principles:
Numerous models are used to define a procurement function. Below the 11 building blocks:
Strategy and development
Value based procurement (VBP):
4
Week 1
Lecture
Purchasing describes the
operational process of
buying.
Six phases of purchasing:
1. Define specifications
2. Select supplier
3. Contract agreement
4. Ordering
5. Expediting
6. Evaluating/follow up
Supply chain:
Supply network:
Cost of purchased items in relation to revenue:
The Netherlands is the most expensive in
purchasing, but total cost may still be lower due to,
for example, less transport costs, failure costs, and
coordination costs.
1
,Managing the purchasing agenda: balancing cost-risk-value:
Does context matter?
Context of purchasing changes a lot based on the strategy of the company.
Up to 1990, purchasing was done for cost reduction. After we focused also on value-creation
and service. The context tells you where you are on the triangle.
Purchasing is one of the most core activities for some companies like apple. But this is based
on the company aka the context, it could also be supportive.
Purchasing is generally linked to products, but what about purchasing services? Purchasing is
generally linked to the private sector, but what about public procurement? Purchasing concerns
different buying situations.
Friendshoring (or allyshoring): when countries rely on countries with shared values.
Why does context matter?
Decisions to make about the purchasing function:
o What is the aim of the purchasing function?
o Where to position the purchasing function?
o What does the purchasing function involve?
o What skills and competences are needed?
Purchasing situations:
o New task situation: completely new product from unknown supplier.
High uncertainty regarding the outcome.
2
,o Modified rebuy: new product from known supplier OR existing product from new supplier.
Moderate uncertainty regarding the outcome.
o Straight rebuy: known product from known supplier.
Low uncertainty regarding the outcome.
Literature
Tracing the evolution of purchasing research: future trends and directions for purchasing
practices
Purchasing is increasingly integrated with different business functions, such as strategy,
marketing, decision-making, and SCM. Key trends are sustainable and ethical purchasing,
purchasing in the digital economy, SCM risk management, and public sector purchasing.
These trends suggest both avenues for further research and specific methodologies to pursue
them.
The paper highlights how purchasing transitioned from a single business function to a cross-
functional business process.
Five areas that appear likely to affect the trends and directions of purchasing practices:
1. Sustainable purchasing
2. Ethnical purchasing
3. Purchasing in the digital economy
4. Purchasing and SC risk management
5. Public sector purchasing
Guest lecture
Tender procedures used by (almost) all procurement professionals:
3
, The TCO (Total Cost of Ownership) method entails both the
(visible) direct purchasing costs and the (invisible) costs of the
whole life cycle.
Procurement should create value for both you and your supplier.
Procurement is the process of buying goods, products, and
services against the right conditions and price aimed at realising
the organisational goals.
Basic procurement principles:
Numerous models are used to define a procurement function. Below the 11 building blocks:
Strategy and development
Value based procurement (VBP):
4
