Fundamentals of Purchasing
Author:Dr. George L. Harris
Credit: 2.0 CEUs
Testing Format: multiple choice
Your Price: $159.00
ISBN: 9780761214007
Format: Book
Overview
Purchasing has a direct and powerful effect on the organization’s bottom line.
This course is designed for new purchasing professionals. It will ground you in the basics as they are practiced in a contemporary business environment. With a strong emphasis on real-world practices and corporate teamwork, Fundamentals of Purchasing leads you through the six core functions of purchasing: how to gather the necessary information, set a purchase strategy, develop and send your RFQ (request for quotation or proposal), evaluate and choose suppliers, negotiate terms and conditions, and implement the agreement.
At each step, you’ll find work assignments, sample documents, and exercises that are directly relevant to your job. Those involved with global procurement will appreciate the special guidance on the logistics of international purchasing.
Course Objective: Understand the purchasing process and the strategic role of the purchasing professional as it impacts the organization.
Selected Learning Objectives
• Perform all basic purchasing functions
• Establish an effective purchasing system
• Identify the best suppliers
• Implement key purchasing strategies to reduce costs for your company
• Negotiate terms and conditions of purchasing agreements
• Identify how purchasing impacts company profitability
Testing Format
This course contains one multiple choice test valued at two Continuing Education Units (CEUs).
Table of Contents
About This Course
How to Take This Course
Pre-Test
1. Importance of Purchasing Today 1
Purchasing Costs Identified on the Balance Sheet
Cross-Functional Participation
Personnel in Purchasing Add Value to Their Organizations
1. Leveraging Purchases
Exercise: Leveraging
2. Managing the Total Cost of the Supply Chain
3. Conducting Value Analysis
Exercise: Value Analysis
4. Reducing Administrative Processes
5. Selecting the Best Suppliers
6. Certifying Suppliers
Exercise: Supplier Certification
7. Taking Corrective Action
8. Receiving Input and Assistance from Suppliers
The Role of Purchasing
Organization and Job Descriptions
Exercise: Staffing
Recap
Review Questions
2. Purchasing Policies and Procedures 19
Implementing Corporate Strategy
Problems
Documentation
Typical Policies and Procedures
Developing Procedures
Developing Policies
Tie to Business Strategy
Recap
Review Questions
3. The Purchasing Process 33
The Generic Stages of Purchasing
The Standardized Purchasing Process
Step 1. Gather Information and Survey Market
Step 2. Develop a Purchase Strategy
Step 3. Develop and Send the Request for Quotation or Proposal
Step 4. Evaluate and Select Suppliers
Step 5. Negotiate the Terms and Conditions of Purchase
Step 6. Implement the Agreement
Involving Other Functions
Steps Often Overlooked
Negative Consequences
Recap
Review Questions
4. Gather Information and Survey Market 47
Information Needed
Company Data
Market Data
Market Research
Recap
Review Questions
5. Develop a Purchase Strategy 61
Five Key Elements of the Purchase Strategy
#1—What Product/Service Are You Purchasing?
Guidelines for Writing Statements of Work or Specifications
#2—When Do You Require the Product/Service?
#3—What Quantity Should Be Purchased?
Economic Order Quantities
Exercise: Calculating the EOQ
Minimum-Maximum
Exercise: Columbian Packing Company
#4—Selection Criteria for Suppliers
#5—Implementation Date
Recap
Review Questions
6. Develop and Send the Request for Bids or Proposals 79
Solicitation
Definition
Contents of the Solicitation
1. Statement of Work/Specifications
2. Legal Terms and Conditions
3. Business Conditions
4. Due Date and Time for Response
5. Evaluation Criteria
Solicitation Process
Transmitting the Solicitation
Best Practices: Writing Solicitations
Recap
Review Questions
7. Evaluate the Bids/Proposals and Select the Best Suppliers 95
The Evaluation Team
Using the Evaluation Criteria
Evaluating Costs
Price Analysis
Exercise: Price Analysis
Cost Analysis
Total Cost Analysis
Supplier Assessment and Audit
Recap
Review Questions
8. Negotiate the Terms of the Deal 117
Essentials of Contracts
Purchase Orders
Goals of Procurement
The Negotiating Process
Step 1. Describe the Deal
Step 2. Consider the Supplier’s Reaction
Exercise: Cost Calculation
Step 3. Devise a Plan
Step 4. Share Your Goals with the Supplier
Step 5. Attempt to Reach Consensus
Gaining Acceptance
Typical Problems
Trends in Negotiations
Recap
Review Questions
9. Implement the Deal 131
Focus of Supply Management Activities
Existing Supplier/Existing Product or Service
Existing Supplier/New Product or Service
New Supplier/Existing Product or Service
New Supplier/New Product or Service
Supplier Development
Supplier Management Activities
Exercise: Selecting a Supplier for Performance Management
Recap
Review Questions
10. Pulling It All Together to Be an Effective Purchaser 143
Professional Development
Core Competencies
Competency Assessment
Purchasing Products versus Services
Supplier Quality
Work More Effectively with Other Functions
Teamwork
International Purchasing
Processes
Logistics and Distribution
Costs
Recap
Review Questions
Glossary
Recommended Reading List
Post-Test