1. Procurement Part One Marketing Logistics

2. Procurement or Purchasing Purchasing: actual buying of materials and services. Procurement: process-oriented and strategic. Purchasing is usually the largest single expense of doing business. More so as outsourcing increases.

3. Procurement or Purchasing

4. Outsourced

5. Purchasing Goals Provided uninterrupted flow of materials. Minimize inventory costs. Maintain, improve quality. Find, develop suppliers. Standardize where possible. Optimize costs. Improve organization’s competitive position. Harmoniously interact with all of organization.

6. Cost trade-offs to Be Considered by the Purchasing Executive Source: Douglas M. Lambert and Jay U. Sterling, “Measuring Purchasing Performance,” Production and Inventory Management Review 4, no.6 (June 1984), p. 52. Reprinted with permission from P&IM Review, June 1984. Copyright 1984 by T.D.A. Publications, Inc., Hollywood, FL.

7. Cost trade-offs to Be Considered by the Purchasing Executive Cost savings associated with volume buying Inventory carrying costs Source: Douglas M. Lambert and Jay U. Sterling, “Measuring Purchasing Performance,” Production and Inventory Management Review 4, no.6 (June 1984), p. 52. Reprinted with permission from P&IM Review, June 1984. Copyright 1984 by T.D.A. Publications, Inc., Hollywood, FL.

8. Cost trade-offs to Be Considered by the Purchasing Executive The savings associated with volume buying include: Lower per-unit purchasing prices Lower transportation costs Lower warehouse handling costs Lower order-processing costs Lower production lot quantity costs Lower stockout costs The costs of carrying inventory include: Capital costs associated with the inventory investment Inventory service costs (insurance and taxes) Storage space costs Inventory risk costs Cost savings associated with volume buying Inventory carrying costs  Source: Douglas M. Lambert and Jay U. Sterling, “Measuring Purchasing Performance,” Production and Inventory Management Review 4, no.6 (June 1984), p. 52. Reprinted with permission from P&IM Review, June 1984. Copyright 1984 by T.D.A. Publications, Inc., Hollywood, FL.

9. Go to Part Two.

10. Procurement Part Two Marketing Logistics

11. Purchasing Decision Variables: How to Rate Suppliers Lead time and lead time variability. On-time rate. Supplier’s inventory. Ordering convenience. Ability to expedite. Downtime risks due to vendor problems. Product reliability, quality, maintenance requirements. Technical specifications. Technical/training services offered. Price competitiveness. Sales representative(s). Past experience with vendor. Reputation of vendor. Financing. Vendor flexibility. Engineering/design capabilities.

12. Supplying a Manufacturer

14. Procurement or Purchasing Warehouse

15. Procurement or Purchasing

17. Lead time and lead time variability.

18. Procurement or Purchasing On-time rate.

19. Procurement or Purchasing Supplier’s inventory.

20. Procurement or Purchasing Ordering convenience

21. Procurement or Purchasing Ability to expedite.

22. Procurement or Purchasing Downtime risks due to vendor problems.

23. Procurement or Purchasing Product reliability, quality, maintenance requirements.

24. Procurement or Purchasing Product reliability, quality, maintenance requirements. 15 pounds 12 inches 10-year service life Technical specifications Engineering/ Design capabilities

25. Supplying a Manufacturer Technical, training services offered.

26. Supplying a Manufacturer Price competitiveness. $ Financing

27. Supplying a Manufacturer Sales representatives. Past experience with vendor. Reputation of vendor. Vendor flexibility.

28. Purchasing Decision Variables: How to Rate Suppliers Lead time and lead time variability. On-time rate. Supplier’s inventory. Ordering convenience. Ability to expedite. Downtime risks due to vendor problems. Product reliability, quality, maintenance requirements. Technical specifications. Technical/training services offered. Price competitiveness. Sales representative(s). Past experience with vendor. Reputation of vendor. Financing. Vendor flexibility. Engineering/design capabilities.

29. Go to Part Three