Unit 2: Purchasing Organisations Flashcards
what are the objectives of purchasing management?
contribute to the company’s primary activities
control and reduction of all purchasing related costs
reduce the risk exposure to the supply market
contribute to product and process innovation
The two major elements in total ownership consist of
direct and indirect materials cost
What is the purchasing management process?
analysis
planning
implementation
control and evaluation
what are the 3 levels of task responsibility and authority
strategic
tactical
operational
Decentralized purchasing functions
It is when goods are ordered in small quanity and used only by that plant.
it is usually bought locally to save on freight
Centralised purchasing functions
It is policies and group specifications
Negotiate contracts for common materials
….
What is the 4 stages of purchasing process
determine purchasing order
supplier selection
Purchasing contract
Order and Expedting
What are the 2 major form of purchasing activites
tactical purchasing and strategic purchasing
what are the price agreements
fixed price plus incentive fee
cost-plus contract
cost reimbursable contract
agreement with price adjustments
what do fixed price plus incentives fee do
motivate suppliers by rewarding good performance
cost-plus contract is what
work that cant be specified at the start of the contract
cost reimbursable contract
it is fixed hourly rates for labour and equipment
agreement with price adjustments
it is used for agreements with long term delivery
