PURCHASE AND MATERIALS MANAGEMENT
Week 1: course introduction
P&MM goals benefits
- Goal: enable students to understand the principles, strategy and tactics of purchasing and
material management
- Why: deliver procurement and supply chain practitioners and leaders into the market place
- How: understand principles, learn best practices, develop business cases based on learning
and analysis
- Benefits: enable you to deliver procurement excellence, lower total delivered costs, execute
purchasing, understand the role in context of the organisation
Purchasing needs to balance
- Quality
- Speed
- Cost
Job description of a procurement officer
- Evaluation and recommend to help company meet business needs
- Optimise company’s resource utilisation through more efficient procurement: with
negotiations and better vendor selections
What is purchasing?
Definition of procurement
- Process of acquiring goods, works and services, covering both acquisitions from third parties
and from in-house providers. The process spans the whole life cycle from identification of
needs, through to the end of the useful life of an asset. It involves options appraisal and the
critical ‘make or buy’ decision
Objective of purchasing
- To buy material of the right quality, in the right quantity from the right source delivered to
the right place at the right time and at the right place
What is material management?
- Concerned with the flow of materials to and from production or manufacturing
- Is the planning, organisation and control of all aspects of inventory embracing procurement,
warehousing, work in progress and distribution of finished goods
What is a supply chain?
- Network of organisations that are involved, through upstream and downstream linkages, in
the different processes and activities that produce value in the form of products and services
in the hands of the ultimate customer or consumer
Supply chain process from a purchasing perspective
- Search acquire use maintain dispose
, Supply chain process from a supplier’s perspective
- Research design manufacture or provide sell service
3 flows of supply chain
1. Flow of goods
2. Flow of cash
3. Flow of information
- Forecasting decisions
- Stock deployment decisions
- Purchasing decisions
- Manufacturing decisions
- New product introduction decisions
Scope of purchasing and supply
- Specifying requirements
- Analysing supply markets
- Developing purchasing and supply strategies and plans
- Appraising and short-listing potential suppliers
- Obtaining and selecting offers
- Negotiating and contracting
- Managing supplier relationships
- Managing inbound logistics
- Managing purchasing and supply performance
Specifying requirements
Types of requirements
- Capital requirements
- Goods for sale
- Production requirements: bill of materials
* correctly specifying the requirements is the starting point to obtaining value for money and avoid
misunderstanding with suppliers
The ‘rights’ of purchasing and supply
- Buy materials of the right quality
- In the right quantity
- From the right source
- At the right time
- At the right place
- At the right price
Right quality
- Design, size, colour
- Functionality and ease of use
- Performance and reliability
- Conditions of use
Week 1: course introduction
P&MM goals benefits
- Goal: enable students to understand the principles, strategy and tactics of purchasing and
material management
- Why: deliver procurement and supply chain practitioners and leaders into the market place
- How: understand principles, learn best practices, develop business cases based on learning
and analysis
- Benefits: enable you to deliver procurement excellence, lower total delivered costs, execute
purchasing, understand the role in context of the organisation
Purchasing needs to balance
- Quality
- Speed
- Cost
Job description of a procurement officer
- Evaluation and recommend to help company meet business needs
- Optimise company’s resource utilisation through more efficient procurement: with
negotiations and better vendor selections
What is purchasing?
Definition of procurement
- Process of acquiring goods, works and services, covering both acquisitions from third parties
and from in-house providers. The process spans the whole life cycle from identification of
needs, through to the end of the useful life of an asset. It involves options appraisal and the
critical ‘make or buy’ decision
Objective of purchasing
- To buy material of the right quality, in the right quantity from the right source delivered to
the right place at the right time and at the right place
What is material management?
- Concerned with the flow of materials to and from production or manufacturing
- Is the planning, organisation and control of all aspects of inventory embracing procurement,
warehousing, work in progress and distribution of finished goods
What is a supply chain?
- Network of organisations that are involved, through upstream and downstream linkages, in
the different processes and activities that produce value in the form of products and services
in the hands of the ultimate customer or consumer
Supply chain process from a purchasing perspective
- Search acquire use maintain dispose
, Supply chain process from a supplier’s perspective
- Research design manufacture or provide sell service
3 flows of supply chain
1. Flow of goods
2. Flow of cash
3. Flow of information
- Forecasting decisions
- Stock deployment decisions
- Purchasing decisions
- Manufacturing decisions
- New product introduction decisions
Scope of purchasing and supply
- Specifying requirements
- Analysing supply markets
- Developing purchasing and supply strategies and plans
- Appraising and short-listing potential suppliers
- Obtaining and selecting offers
- Negotiating and contracting
- Managing supplier relationships
- Managing inbound logistics
- Managing purchasing and supply performance
Specifying requirements
Types of requirements
- Capital requirements
- Goods for sale
- Production requirements: bill of materials
* correctly specifying the requirements is the starting point to obtaining value for money and avoid
misunderstanding with suppliers
The ‘rights’ of purchasing and supply
- Buy materials of the right quality
- In the right quantity
- From the right source
- At the right time
- At the right place
- At the right price
Right quality
- Design, size, colour
- Functionality and ease of use
- Performance and reliability
- Conditions of use
