The main argument for the importance of purchasing is clear, with every organisation needing a supply of materials and services; purchasing is responsible for organizing this supply. Procurement, or purchasing, as a supply chain function has developed significantly over the decades, moving from a purely administrative function to recognition that effective purchasing and supply management can contribute significantly to the success of a modern organisation. Some of the reasons for the increasing importance given to the purchasing include increasing global competition, importance of global sourcing and outsourcing, increasing significance of higher quality, changing needs and wants of customers, growing importance of speed of delivery and adoption of just-in-time production. It is important to employ and develop employees who have the right skills set, allowing them to contribute to the competitive advantage of the organisation.
The module aims to position procurement within the supply chain and show how it can contribute to the organisation’s business strategy and ultimate performance. It will examine the management of the function, and the alignment of a purchasing executive’s educational and skills requirements with the functions development. The module aims to explore key procurement operations and strategies, demonstrating their application within the supply chain, and to develop the key purchasing decisions, implications and frameworks
Purchasing within the Supply Chain: The role of purchasing in the organisation and within the supply chain, development of the purchasing function: adversarial vs partnership approach; contribution of purchasing to effective supply chain Management. Different types of purchasing (components, capital, services, MRO/ consumables and capital services).
Organising and Managing the purchasing function: Aligning purchasing strategies within the organisation, the seven rights and setting objectives, policies and policy manual, ethics, purchasing structure within the organisation. HR in procurement, setting and measuring purchasing metrics, teamwork, communication, id of skills gaps.
Purchasing Operations and Documentation; the purchasing process and IT. Identification and specification of need, supplier sourcing, contract development, management of chosen supplier. Request for information (RFI), request for quotation (RFQ), Purchase order (PO), invoice, goods received note (GRN). International sourcing. Legal issues in the purchasing proces
Vendor Selection and Vendor Management: Tendering and negotiation, The seven rights; the right product (specification and quality), the right price (cost vs. price analysis), the right quantity, the right place, the right time, the right source, with the right service. Contract, agreements, terms and conditions and contract management. Balancing the seven rights. Total cost analysis, weighted point plan, categorical analysis. Developing management metric, supplier development, supplier performance appraisal; establishing supplier performance objectives and measurement criteria; tools and techniques to monitor supplier quality and performance; how measuring quality of services differs from measuring hard goods.
Strategic Procurement: Supply base reduction, supplier development, relationships, outsourcing, globalisation, technology. Purchasings’ role in specification development, value analysis, technology, product development, green issues, integration into the strategic plan, early supplier involvement.
Public Sector Purchasing: government purchasing within the EU – the public sector procurement process; differences from the private sector; procedures; directives and constraints in public procurement.
Information Technology within the purchasing function
Formal lectures are supplemented by structured classroom discussions and a series of ‘problem based learning’ group exercises. These interactive exercises will serve to re-enforce some of the learning on the module. The exercises allow the participants to apply the learning in case-based contexts. Company case histories will be used to illustrate key themes in procurement.
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