Table of Contents-Purchasing
Chapter 1 - Overview of Purchasing 1
The Purchasing Function 1
Purchasing within the Organization 2
The Supply Chain 5
Purchasing Planning 6
Reactive Purchasing 6
System-Generated Purchasing 6
Proactive Purchasing 6
Summary of Purchasing Planning 7
Purchasing Positions 7
Purchasing Manager 7
Buyer 8
Supply Chain Inventory Planner 8
Purchasing Department Relations 8
Purchasing Ethics 9
Chapter 2 - Purchasing Processes 13
Purchasing Objectives 13
Purchase Notification Alternatives 14
The Purchase Requisition 15
The Statement of Work 17
Automated Materials Orders 18
Manual Reorder Point Notifications 19
Purchase Order Issuance Procedure 19
Variations on the Purchasing Procedure 23
The Bidding Procedure 24
E-Procurement 26
Chapter 3 - Procurement Cards 29
When and How to Use Procurement Cards 29
Additional Procurement Card Topics 30
Card Issuer Relations 30
Card Rebates 31
Cash Flow Management 31
Card User Relations 31
Departure of Card Users 31
International Purchases 32
Chapter 4 - Supplier Selection 34
Overview of Supplier Selection 34
General Considerations 34
When to Conduct a Supplier Selection 36
Locating Suppliers 36
Supplier Selection Criteria 37
Mandated Suppliers 37
Selection Rigor 37
Selection Criteria 38
Supplier Financial Analysis 38
Supplier Capability Analysis 39
Supplier Responsiveness Analysis 40
Other Analysis Issues 40
Site Visits 41
Supplier Scoring 44
Preferred Suppliers 46
Summary 46
Chapter 5 - Supplier Management 48
Commodity Strategy 48
Supplier Relations 48
Attending to Supplier Needs 49
The Supplier Scorecard 49
Supplier Performance Index 51
Other Supplier Monitoring Systems 52
Supply Chain Improvement 53
Supplier Risk Management 55
The Maverick Supplier 58
Chapter 6 - Competitive Bidding 60
When to Use Competitive Bidding 60
Types of Bidding Requests 60
Third-Party Assistance 61
Contents of a Bid Package 61
Locating Suppliers 62
The Bidding Process Flow 63
Handling Inquiries 64
Handling Complaints 64
Reverse Auctions 64
Unethical Supplier Bidding Practices 65
Chapter 7 - Supplier Negotiations 67
The Need for Negotiations 67
The Negotiation Team 68
Initial Positions 68
Negotiation Tactics 69
Negotiation Sessions 70
Negotiator Characteristics 70
Negotiation Topics 71
Negotiation Considerations 73
Negotiation Failures 73
Negotiation Follow Up 74
Chapter 8 - Contract Management 77
Contract Terms and Conditions 77
Commercial Terms 79
The Employee or Contractor Designation 80
Contract Pricing Arrangements 81
Firm Fixed Price 81
Fixed Price with Adjustments 81
Cost plus Pricing 82
Time and Materials Pricing 83
Summary of Pricing Arrangements 84
Contract Templates 84
Duration-Based Contractual Issues 85
Contract Approval Process 86
Contracts and Purchase Orders 86
Change Order Management 87
Contractual Disputes 87
Document Retention 88
Chapter 9 - Inventory Management Issues 91
Types of Inventory 91
Excessive Inventory Issues 92
Inventory Record Accuracy 95
Operating with Reduced Inventory 96
Basic Inventory Reduction Activities 96
Advanced Inventory Reduction Activities 96
A Reduced-Inventory Environment for Suppliers 97
Bottlenecks in the Supply Chain 98
Reasons to Retain Some Inventory 98
Other Inventory Best Practices for Suppliers 99
Supplier Lead Times 99
The Total Inventory Concept 100
Downstream Postponement 101
Suppliers Own On-Site Inventory 101
Suppliers Pre-Configure Goods 101
Parts Standardization 102
Design for Broad Tolerance 102
Design around Limited Availability Components 102
Design around Lifetime Buy Decisions 102
Advance Material Purchase Issues 103
Obsolete Inventory Disposal 103
Chapter 10 - Logistics 107
Purchasing Responsibilities 107
Free on Board Shipping Terms 108
FOB Destination 108
FOB Shipping Point 108
Creating a Logistics System 109
Transportation Brokers 111
Just-in-Time Deliveries 111
Additional Logistics Topics 112
Chapter 11 - Spend Management 115
The Spend Database 115
Spend Management Activities 116
Spend Compliance 117
Implications of Spend Management 117
Rollout of Spend Management 118
Chapter 12 - Quality Management 120
Quality from a Supplier’s Perspective 120
Quality from the Company’s Perspective 121
Quality Costs 121
Quality Improvement Considerations 122
Six Sigma 122
International Quality Standards 123
The Quality Message to Impart 124
Chapter 13 - Cost Management 127
Types of Analysis 127
Commodity Cost Management 128
Price Analysis 128
Supply and Demand 128
Supplier Pricing Strategies 130
Volume Discounts 132
Contract Duration 133
Materials Sourcing Considerations 134
Unique Product and High Value-Added Cost Management 135
Target Costing 137
The Basic Steps of Target Costing 137
Value Engineering Considerations 138
The Cost Reduction Program 139
The Milestone Review Process 139
Problems with Target Costing 140
The Members of a Design Team 141
Data Sources for Target Costing 141
The Product Life Cycle and Target Costing 142
Target Costing Summary 142
Inter-Entity Price Reductions 142
Maintenance, Repair, and Operations Cost Management 143
Product Recycling 144
Cost Management Failures 145
Chapter 14 - Purchasing Financial Analysis 148
The Lease or Buy Decision 148
Leasing Concerns 150
Leasing Advantages 151
The Lease or Buy Decision 152
The Outsourcing Decision 156
Learning Curve Analysis 157
Quantity Discount Analysis 158
Early Payment Discounting 159
Chapter 15 - Supply Chain Financing 162
Supply Chain Financing 162
Chapter 16 - Purchasing Measurements 165
Overview of Purchasing Measurements 165
Cost Change 166
Proportion of Purchase Orders above Threshold 167
Procurement Card Usage Percentage 168
Proportion of Spend Managed 168
Proportion of Spend with Preferred Suppliers 169
Proportion of Certified Suppliers 170
Supplier Performance Measurements 170
Supplier Fulfillment Rate 170
Supplier Defect Rate 171
Supplier Billed Price Variance 172
Perfect Order Percentage 173
Premium Transportation Charges 173
Proportion of Targeted Inventory Dispositioned 174
General Management Measurements 174
Negative Effects of Measurements 175
Chapter 17 - Applicable Information Technology 177
Enterprise Resource Planning (ERP) 177
Supplier Relationship Management (SRM) 177
Dependent Demand Reordering Systems 178
Warehouse Management System 179
Distribution Requirements Planning 180
Advance Shipping Notices 181
Backflushing 181
Electronic Catalogs 182
Electronic Requisitions 182
Electronic Tools 183
Inventory Data Collection Methods 183
The Customized Systems Conundrum 185
Impact of information Technology on Purchasing 186
Answers to Chapter Questions 188
Glossary 211
Index 214
Exam Score Sheet………………………………………………………………………………………217
CPE Exam………………………………………………………………………………………………218
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