Chapter 3 Flashcards
Making efficient transactions
Purhcasing
Assist with the identification, selection, and acquisition of required materials and services.
Purchasing
Act of obtaining merchandise; capital equipment; raw materials; services; or maintenance, repair and operating (MRO) supplies in exchange for money or its equivalent.
Purchasing
Purchasing can be classified into two categories
- Merchants
- Industrial Buyes
Wholesalers and retailers who purchase for resale.
Merchants
Purchase raw materials for convention, services, capital equipment and operating supplies.
Industrial Buyers
Seven Benefits of Purchasing
- Increasing value and savings
- Building Relationship and driving innovation
- Improving quality and reputation
- Reducing time to market
- Reducing supplier risk
- Generating economic impact
- Contributing to competitive advantage
It is slow and prone to errors due to duplication of data entries during various stages of the purchasing process.
Manual Purchasing System
Steps of Manual Purchasing
Step 1. Material Requisition/ Purchase Requisition
Step 2. The Request for Quotation (RFQ)
Step 3. The Purchase Order
The product, quantity and delivery due date are clearly describe on the ______________
Material Requisition/Purchase Requisition
Buyer identifies suppliers and issues a request for quotation.
Request for Quotation (RFQ)
Where single purchasing department, usually located at the firm’s corporate office, makes all the purchasing decision, including order quantity, pricing policy, contracting, negotiations, and supplier selection and evaluation.
Centralized Purchasing
The _____________ is the buyer’s offer and becomes a binding contract when accepted by suppliers.
Purchase Order
Purchasing structure can be viewed as a __________, with centralization at one extreme decentralization at the other.
Continuum
It is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.
Decentralized Purchasing
