Purchasing Function Flashcards
What are the purchasing function activities
-procurement of required goods and services
- price negotiation
- compliance with policy (quality, quantity, employment, equity)
- development and maintenance of good relationships with suppliers
- co-ordination and communication with other departments
What are the factors that contribute to the importance of purchasing
-they have to know what products are in demand
- they have to keep their eye on inflation to maintain the value of money
- they must prevent stock shortages as much as possible
- stay up to date with technological developments
-ensure that political risks such as strikes don’t become problematic
-Keep up to date with changes in economic conditions (interest rates petroleum prices, exchange rate etc
-consider stock holding costs
-evaluate the opportunity costs of investing capital into stock
What are the different types of stock
Raw goods, semi finished goods, finished goods perishable stock
Capital goods, maintenance stock. Dangerous material
What are the responsibilities for ordering and receiving goods
-placing the correct quantity and quantity
- department must have expert knowledge of the goods need from other department
Information collected from the market research must be considered to meet customer needs
What sources do buyers collect information from
Supplier catalogues, trade journals, computerised information, sales reps collect vital insight, exhibitions and yellow pages
What sources do buyers collect information from
Supplier catalogues, trade journals, computerised information, sales reps collect vital insight, exhibitions and yellow pages
What happen after the purchasing function places an order
Goods will be packed and dispatched, documents such a invoices and delivery notes must be completed, stock is received and check for quantity and quality, records must be kept of the stock on hand
What are the economies of scale
Buyers try to achieve discounts through buying in bulk
What are economic order quantities
Best quantity to achieve lowest cost taking into account delivery fees and stock holding costs
What is lead time
The Period of time between ordering and delivery
What does EPOSSE stand for
Electronic point of sale scanning equipment
What is the purpose of a EPOSSE
To do a stock count, to avoid stock outs, to introduce stock order systems like the just in time system, to reduce stock holding costs, to prevent losses and order only when stock is needed, to prevent theft, to get rid of obsolete stock
What is quality control
A process through which a business seeks to ensure that product quality is maintained or improved. Requires the business to create an environment in which both management and employees strive for perfection
What are quality control methods
-trade marks
-commercial standards
-market grades
-samples
What are the advantages Of quality control
-increased sales
-reduced wasteages
-improves reputation
-reduced inspection cost
-uniformity in quality
customer relations
