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DQweek3.docxMar 29, 2020Mar 29 at 5:52pm
When thinking of purchasing and buying, one may think that the terms mean the same thing. Purchasing, however, is significantly different from buying in that the process refers to buying specific goods or services that will be used by the organization (Benton, 2014). Conversely, buying refers to “procuring items for resale” (Benton, 2014, p. 141). The typical steps in the purchasing cycle are as followed:
1. Identifying the need
2. Specify how much and when the product is needed by
3. Write the purchase order
4. Obtain financial approval
5. Research suppliers
6. Chose the supplier
7. Establish price and terms
8. Place the order
9. Receive the order
10. Approve and pay
11. Update inventory
(Purchasing & Procurement Center, n.d)
Last year, I was involved in an RFP process to determine a new vendor for our relocation program. Each of the steps listed above were apparent throughout the process. The need for the new vendor came from declining service from our then current vendor. We determined that we wanted the new vendor to start providing service in the first quarter of 2020. Relocation vendors were researched and after presentations, a new vendor was identified. The new vendor then supplied a contract with SLA’s and pricing. Once the contract was approved, the vendor started providing the services.
Through this process, I worked with a procurement manager. She used software called Scout to research vendors, initiate the RFP, and collect responses. The software was helpful in making the process easier and more efficient.
Reference:
Benton, W.C. Jr. (2014). Purchasing and supply chain management (3rd ed.). Retrieved from https://www.redshelf.com (Links to an external site.)
Purchasing & Procurement Center, n.d. Steps to purchasing cycle – standard & tender process. Retrieve from https://www.purchasing-procurement-center.com/purchasing-cycle.html
Mar 30, 2020Mar 30 at 5:15pm
Benton (2014) stated, "A typical purchasing department is responsible for the acquisition of a broad range of materials and supplies. Depending on the sales volume, the number of employees, and the functional sophistication, the purchasing activities can be either complex or simple." (P.139)
The steps in the conventional purchasing cycle are as follows:
· Recognizing the Need
· Specifying the exact need
· Determine Source Options
· Investigating applicable pricing and terms
· Choose the supplier
· Create Purchase Order/ Requisition and send for approval
· Place Order
· Receive and Document the order
· Approve Invoices and Pay
· Verify that PO has been closed in system used (Record Maintenance)
The main difference between buying and purchasing is that buying is considered more of an informal general term. It is most commonly related to everyday goods, services, and commodities. Purchasing is much more formal and process-driven. It is often used to refer to larger products which mostly require contracts and agreements.
From my professional experience, the purchases I make are for Capital Request, and floorcare machinery, these must all go through a more complicated process. Companies are given bidding opportunities to ensure the best price options, agreements are made, and contracts signed. The regular operational items I obtain are more of a buying experience; they occur month to month and are a part of my department's regular functional workday.
A piece of technology my institution has used to streamline the purchasing process is a system called Lawson. This system allows a Procurement Specialist like myself to enter all manual orders and will enable me to buy our weekly supplies. These orders are electronically sent and approved and sent out to the various vendors for processing and delivery. This system also acts as a monitoring and bookkeeping system and can be used to look up any information needed and even run reports to track the usage of products. This system is only used for operational buying; all capital purchases are still produced in paper form.
Benton, W.C. Jr. (2014). Purchasing and supply chain management (3rd ed.). Retrieved from https://www.redshelf.com (Links to an external site.):
Mar 21, 2020Mar 21 at 5:06am
In the world of global marketing, the focus in most firms is to improve how they manage the manufacturing operations. Just in Time (JIT) purchasing process is a cost accounting purchasing strategy in which goods are purchased and delivered to the manufacturer at the very moment of need to meet the customer demand. The process is all about the management of materials and the elimination of all waste and to enhance continuous improvement (Benton, 2014).
Just in Time not only applies manufacturing improvements, but in the purchasing functions as well. Manufacturing firms can reduce order quantities by reducing setup times, simpler product designs, and maintaining less quantities of raw materials. Previously a manufacturing firm would order enough raw materials to suffice for several months of manufacturing, but in JIT they have reduced the need to maintain such large quantities.
Another JIT purchasing benefit is that of high quality of incoming materials. Benton (2014), “In order to eliminate the associated receiving inspection cost, a very high emphasis is placed on the quality of incoming materials under the JIT system” (p. 127). Less time and money is spent on initial inspections of raw materials which also results is less wastes.
Benton (2014) identifies examples such as Dell and Hewlett-Packard who have made JIT time work for them (p. 130). Projects taken on by them is to develop relationships with their suppliers with the emphasis on partnerships rather than impatient demands (Benton, 2014). Keeping and open and honest relationship with suppliers will reduce complications and increase corporation with suppliers. A better relationship fosters improved product quality and costs.
Project managers need the knowledge of JIT because it allows the organization to stand out from the competition by sustaining their competitive edge. Focusing on produce quality is no longer good enough and the customer is becoming more demanding for better customer service and it important to the organization to provide good marketplace timing and superior customer service (Kazak and Choi, 2009).
References
Benton, W.C. Jr. (2014). Purchasing and supply chain management (3rd ed.). Retrieved from https://www.redshelf.com
Kazak, K. and Choi, W. (2009). Improving Customer Service through Just-in-Time Distribution. Baltic Business School at the University of Kalmar. Retrieved from file:///C:/Users/stmcc/AppData/Local/Temp/FULLTEXT01-1.pdf
Mar 25, 2020Mar 25 at 7:26pm
A concept that was born out of Japanese success in innovated manufacturing, the just-in-time (JIT) system is used “to manage the flow of materials, components, tools, and associated information (Benton, 2014, p. 118). JIT is based on the premise of eliminating waste and the pursuit of continuous improvement (Benton, 2014). As global markets continue to grow, JIT has found success in popular manufactures such as Harley-Davidson and Hewlett-Packard (Benton, 2014). When using JIT principles in purchasing, benefits such as reduced inventory levels, decreased cost, and higher customer satisfaction can be realized (Benton, 2104).
Understanding JIT and why it is important to organizations today should be important to a project manager because sound purchasing strategy can significantly contribute to the overall strategy of the success of the business (Benton,2014). Our text provides the example of how Southwest Airlines used JIT to efficiently turn-around their flights by making certain that they use the correct size aircraft and orchestrate a smooth team effort (Benton, 2014). More flights equal more customers, which equals more money to the bottom line of the business.
Resource:
Benton, W.C. Jr. (2014). Purchasing and supply chain management (3rd ed.). Retrieved from https://www.redshelf.com
