04 - Management Of Procurement And Purchasing

Question 0

Explain the Lead-Buyer-Concept and outline an example

Answer 0

• mixed organizational structure to combine advantages of centralized and decentralized procurement
• business units determine lead buyer for one or more specific groups of material
• lead buyer is responsible for management and coordination of strategic procurement activities for all decentralized organizational units within a material group
• the operational processing of the orders is done subsequently by the purchaser of the material group

Example: 3 lead buyers(engine,electronics,plastic parts)
For 3 divisions(cars,truck,bus)

Question 1

Name two advantages and two disadvantages of both centralized and decentralized procurement!

Answer 1

Central:
+ ordering large lot sizes leads to lower prices
+ better overview
- slow decision making
- country-specific circumstances have to be considered

Decentral:
+ quick decision making
+ increased flexibility and adaptability
- majority of daily work involves ordering
- worse purchase conditions

Question 2

Name the steps of the operative procurement process and give a short description!

Answer 2

1) requirement planning
MRP calculates the requirement quantity and date
2) requirement notification
MRP reports determine quantities and dates via purchase requisition to the responsible purchaser
3) consolidation
Purchaser consolidates the requirements of the consumption points
4) supplier selection
Purchasing selects qualified suppliers
5) Inquiry
Purchasing sends inquiries to selected suppliers or proffer their requirements on the Internet
6) Bid comparison
Purchasing department compares the offers according to specific criteria such as price, quality, time
7) offer choice
Best offer/ supplier is determined
8) order
Purchasing triggers an order an suppliers confirm
9) order tracking
Purchasing/MRP monitors the order
10) supplier evaluation
Evaluation of the supplier according to predefined aspects

Question 3

The supplier management can be divided into 3 steps. Name them and describe 2 of them!

Answer 3

1) selection
Targets: security of supply, cost reduction, prevention of dependency, cooperation
2) assessment
Area of assessment: supplier’s deliveries and services, supplier, supplier’s environment
3) integration

Question 4

Explain the ABC-analysis! What targets and goals does it have?

Answer 4

The ABC analysis classified materials regarding to their value-quantity relationship
Targets:
1) reduce inventories and cost of capital employed
2) shorten lead time in production
3) Just-In-Time, selection of suppliers
4) targeted use of framework contracts
5) reduce deployment costs

Question 5

In how many steps is the Operations Research (OR) problem solving process divided? Name all of them and explain 3!

Answer 5

1) identifying and analyzing a problem
2) determine objectives and means of action
3) mathematical model
A mathematical model is formulated based on the descriptive model
4) data collection
Obtain data for the mathematical model with optionally use of prediction methods to obtain data
5) solution identification
6) evaluation of the solution
The resulting solution has to be analyzed and assessed

Question 6

Explain the difference between strategic and operative procurement!

Answer 6

Strategic procurement:

1) long term decisions
2) optimizing the price/performance ratio
3) procurement market research
4) qualified bid comparison
5) contract negotiations

Operative procurement:

1) short-term decisions
2) pure order activity
3) daily business

Question 7

What is the purpose of OR? Describe the OR with the help of a diagram!

Answer 7

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