PURCHASING MANAGEMENT STUDY NOTES
CONTENTS
1. Quality assurance …………………………………………………………….. 1
2. Sourcing ……………………………………………………………………………….. 14
3. Supplier market behavior ………………………………………………………. 22
CHAPTER 1
QUALITY ASSURANCE
Definition of terms
Quality
According to ISO 8402 which defines the fundamental terms relating to quality concept – “quality is the totality
of features and characteristics of the product that bears on the ability to satisfy the stated or implied needs”
According to Japan, quality is defined as fitness for use – this implies quality of design, quality of conformance
Availability and adequate field services.
Crosby defines quality as conformity to requirement and not goodness i.e. quality is based on what customer
want.
DIMENSIONS OF QUALITY
1. Performance – This refers to products operating characteristics.
2. Reliability – Is the probability of a product surviving for a specific period of time under stated
conditions of use?
3. Serviceability – This is speed accessibility and ease of repairing the item and having it repaired.
4. Conformance – This measures the meeting of specification with the quality of the product to meet
required specification condition.
5. Durability – This measures the projected use available from the product over its indicated Operating
cycle before it deteriorates.
6. Features – This are secondary characteristics that supplements the product basic function.
7. Aesthetic – refers to personal judgment about how a product looks stands, feels tastes or smells.
8. Perceived quality – This is arising/ identified with the reputation of the producer aid like aesthetic it’s a
personal evaluation.
Quality Control
Quality control is a process through which a business seeks to ensure that product quality is maintained or
improved with either reduced or zero errors. Quality control requires the business to create an environment in
which both management and employees strive for perfection. This is done by training personnel,
creating benchmarks for product quality, and testing products to check for statistically significant variations.
(These include such activities as providing clear decisions and directions, constant supervision by experienced
individuals, immediate review of completed activities for accuracy and completeness, and accurate
documentation of all decisions, assumptions, and recommendations.)
A major aspect of quality control is the establishment of well-defined controls. These controls help standardize
both production and reactions to quality issues. Limiting room for error by specifying which production
activities are to be completed by which personnel reduces the chance that employees will be involved in tasks
for which they do not have adequate training.
Quality Assurance
Quality assurance (QA) is the process of verifying whether a product meets required specifications and
customer expectations. It refers to the certainty that products and services meet the requirements for quality.
The objective of quality assurance is the continual improvement of the total delivery process to enhance
Purchasing Management Notes Prepared by Mr. Antony Ambia Page 1
,quality, productivity, and customer satisfaction. Essentially, quality assurance describes the process of enforcing
quality control standards. When quality assurance is well-implemented, progressive improvement in terms of
both reducing errors and omissions and increasing product usability and performance should be noted. Quality
assurance should function as a "voice" for the customer who expects a certain level of quality to be provided.
QA is a process-driven approach that facilitates and defines goals regarding product design, development and
production. QA's primary goal is tracking and resolving deficiencies prior to product release.
Reasons for Quality Assurance
Certification and accreditation, i.e. checking whether object characteristics conform to formally
established norms and standards
Accountability: quality is made available for inspection to other units and/or the society at large
Organizational learning, when quality assessment is used as a basis for improvement at the same object
level
Aspects in Quality Assurance
Design
In the design phase, designers are supposed to have plans of how to assure the quality and improve the quality
of design. For example, the designers should understand the requirements of standards and specifications of
state, customers and specific demands and the way to have an appropriate budget and scheduling of
construction, which are in the management plan of design phase. The quality metrics describe what is
contained in the design and how to adjust the design when problems appear.
Specification
The process of defining product requirements or specifications is critical because there are often trade-offs that
must be made to ensure quality raw materials are acquired from the supplier and that customer needs are met
effectively and efficiently. Based on the specifications, a manufacturer can be able to define company
acceptance test or inspection procedures to insure that production of the product will continue to meet the
customer’s requirements.
Assessment of supplier
It is critical for an organization to assess a supplier using the appropriate criteria to determine the quality levels
of the supplier’s operations. The criteria followed entails evaluation of their financial capability, production
capacity, quality, performance, information technology e.t.c. The buyer should check critically to establish
whether the supplier embraces some of the fundamental quality attributes e.g. Total quality management
(TQM); International organization for standardization (ISO) etc.
Motivation of workers
Motivation is the will to do something. It is associated with enthusiasm, ambition, initiative, determination and
resilience. Motivation is an essential pillar in building a quality assurance system. Employees who are not
motivated to work are not successful at work, are not interested in the quality of products and services and do
not show interest for organizational values.
Training of staff
Training programs help develop competencies, ensure employees understand their role in creating quality for
the customer, and establish a quality-focused culture. Training provides a common language and helps
employees understand the impact that defects or other setbacks like delays will have on the end customer and
financial benefits.
Feedback communication
An organization should put systems in place to monitor their operations and provide useful data. For example,
feedback systems actively incorporate input from staff, customers, suppliers and others as appropriate. The
system put in place should facilitate timely and efficient feedback communication to allow the organizations
make corrective measures when required.
Certification by International Standards Organization or Kenya Bureau of Standards
When an organization’s operations and products are certified by ISO or KEBS, it communicates a positive
message to staff and customers. For certification to occur, the organization must have reached certain set quality
Purchasing Management Notes Prepared by Mr. Antony Ambia Page 2
, standards and this contributes greatly to quality assurance in the organization. Companies adopt efficient
quality management systems that save time and cost, improve efficiency and ultimately improve customer
relationships.
Importance of Quality Assurance
Defect prevention/ finding defects
Cost prevention
Competitive advantage
Culture of quality
Meeting ISO 9000 Standards
Customer satisfaction
Business growth
Return on investment
Motivation of employees
Role of Kenya Bureau of Standards in Quality Assurance
The KEBS, mandated by the Standards Act to provide Kenya’s quality infrastructure, undertakes many
standardization activities to support industries to comply with international standards so as to enable businesses
access markets, increase productivity, promote environmental wellness and quality of life.
1. To promote standardization in industry and commerce
2. To prepare, frame, modify or amend specifications and codes of practice
3. To encourage or undertake educational work in connection with the standardization
4. To control, in accordance with the provisions of the Standards Act, the use of standardization marks
and distinctive marks.
5. To make arrangements or provide facilities for examination and testing of commodities and any
material or substance from or with which and the manner in which they may be manufactured
produced, processed or treated
6. To provide for cooperation with the government or representatives of any industry or with any local
authority or other public body or any other person, with a view of securing the adoption and practical
application of standards
7. To provide for testing at the request f or minister , and on behalf of the government, of locally
manufactured and imported commodities with a view to determining whether such commodities
comply with the provisions of this act or any other law dealing with standards of quality or description
8. To make arrangements or provide facilities for the testing and calibration for the precision instruments,
gauges and scientific apparatus, for the determination for their degree of accuracy by comparison with
standards approved by minister on the recommendations other council, and for the issue of certificates
in regard to thereto
OR
i. Putting stamp of approval to show the established standards have been made
ii. Making regular inspection to ensure that the standards are adhered to
iii. Persecute those who violate the set standards
iv. Carrying out testing of measuring apparatus to relate them with accuracy level of established standards
Types of Quality Standards
Quality standards are defined as documents that provide requirements, specifications, guidelines, or
characteristics that can be used consistently to ensure that materials, products, processes and services are fit for
their purpose.
Standards provide organizations with the shared vision, understanding, procedures, and vocabulary needed to
meet the expectations of their stakeholders. Because standards present precise descriptions and terminology,
they offer an objective and authoritative basis for organizations and consumers around the world to
Purchasing Management Notes Prepared by Mr. Antony Ambia Page 3
CONTENTS
1. Quality assurance …………………………………………………………….. 1
2. Sourcing ……………………………………………………………………………….. 14
3. Supplier market behavior ………………………………………………………. 22
CHAPTER 1
QUALITY ASSURANCE
Definition of terms
Quality
According to ISO 8402 which defines the fundamental terms relating to quality concept – “quality is the totality
of features and characteristics of the product that bears on the ability to satisfy the stated or implied needs”
According to Japan, quality is defined as fitness for use – this implies quality of design, quality of conformance
Availability and adequate field services.
Crosby defines quality as conformity to requirement and not goodness i.e. quality is based on what customer
want.
DIMENSIONS OF QUALITY
1. Performance – This refers to products operating characteristics.
2. Reliability – Is the probability of a product surviving for a specific period of time under stated
conditions of use?
3. Serviceability – This is speed accessibility and ease of repairing the item and having it repaired.
4. Conformance – This measures the meeting of specification with the quality of the product to meet
required specification condition.
5. Durability – This measures the projected use available from the product over its indicated Operating
cycle before it deteriorates.
6. Features – This are secondary characteristics that supplements the product basic function.
7. Aesthetic – refers to personal judgment about how a product looks stands, feels tastes or smells.
8. Perceived quality – This is arising/ identified with the reputation of the producer aid like aesthetic it’s a
personal evaluation.
Quality Control
Quality control is a process through which a business seeks to ensure that product quality is maintained or
improved with either reduced or zero errors. Quality control requires the business to create an environment in
which both management and employees strive for perfection. This is done by training personnel,
creating benchmarks for product quality, and testing products to check for statistically significant variations.
(These include such activities as providing clear decisions and directions, constant supervision by experienced
individuals, immediate review of completed activities for accuracy and completeness, and accurate
documentation of all decisions, assumptions, and recommendations.)
A major aspect of quality control is the establishment of well-defined controls. These controls help standardize
both production and reactions to quality issues. Limiting room for error by specifying which production
activities are to be completed by which personnel reduces the chance that employees will be involved in tasks
for which they do not have adequate training.
Quality Assurance
Quality assurance (QA) is the process of verifying whether a product meets required specifications and
customer expectations. It refers to the certainty that products and services meet the requirements for quality.
The objective of quality assurance is the continual improvement of the total delivery process to enhance
Purchasing Management Notes Prepared by Mr. Antony Ambia Page 1
,quality, productivity, and customer satisfaction. Essentially, quality assurance describes the process of enforcing
quality control standards. When quality assurance is well-implemented, progressive improvement in terms of
both reducing errors and omissions and increasing product usability and performance should be noted. Quality
assurance should function as a "voice" for the customer who expects a certain level of quality to be provided.
QA is a process-driven approach that facilitates and defines goals regarding product design, development and
production. QA's primary goal is tracking and resolving deficiencies prior to product release.
Reasons for Quality Assurance
Certification and accreditation, i.e. checking whether object characteristics conform to formally
established norms and standards
Accountability: quality is made available for inspection to other units and/or the society at large
Organizational learning, when quality assessment is used as a basis for improvement at the same object
level
Aspects in Quality Assurance
Design
In the design phase, designers are supposed to have plans of how to assure the quality and improve the quality
of design. For example, the designers should understand the requirements of standards and specifications of
state, customers and specific demands and the way to have an appropriate budget and scheduling of
construction, which are in the management plan of design phase. The quality metrics describe what is
contained in the design and how to adjust the design when problems appear.
Specification
The process of defining product requirements or specifications is critical because there are often trade-offs that
must be made to ensure quality raw materials are acquired from the supplier and that customer needs are met
effectively and efficiently. Based on the specifications, a manufacturer can be able to define company
acceptance test or inspection procedures to insure that production of the product will continue to meet the
customer’s requirements.
Assessment of supplier
It is critical for an organization to assess a supplier using the appropriate criteria to determine the quality levels
of the supplier’s operations. The criteria followed entails evaluation of their financial capability, production
capacity, quality, performance, information technology e.t.c. The buyer should check critically to establish
whether the supplier embraces some of the fundamental quality attributes e.g. Total quality management
(TQM); International organization for standardization (ISO) etc.
Motivation of workers
Motivation is the will to do something. It is associated with enthusiasm, ambition, initiative, determination and
resilience. Motivation is an essential pillar in building a quality assurance system. Employees who are not
motivated to work are not successful at work, are not interested in the quality of products and services and do
not show interest for organizational values.
Training of staff
Training programs help develop competencies, ensure employees understand their role in creating quality for
the customer, and establish a quality-focused culture. Training provides a common language and helps
employees understand the impact that defects or other setbacks like delays will have on the end customer and
financial benefits.
Feedback communication
An organization should put systems in place to monitor their operations and provide useful data. For example,
feedback systems actively incorporate input from staff, customers, suppliers and others as appropriate. The
system put in place should facilitate timely and efficient feedback communication to allow the organizations
make corrective measures when required.
Certification by International Standards Organization or Kenya Bureau of Standards
When an organization’s operations and products are certified by ISO or KEBS, it communicates a positive
message to staff and customers. For certification to occur, the organization must have reached certain set quality
Purchasing Management Notes Prepared by Mr. Antony Ambia Page 2
, standards and this contributes greatly to quality assurance in the organization. Companies adopt efficient
quality management systems that save time and cost, improve efficiency and ultimately improve customer
relationships.
Importance of Quality Assurance
Defect prevention/ finding defects
Cost prevention
Competitive advantage
Culture of quality
Meeting ISO 9000 Standards
Customer satisfaction
Business growth
Return on investment
Motivation of employees
Role of Kenya Bureau of Standards in Quality Assurance
The KEBS, mandated by the Standards Act to provide Kenya’s quality infrastructure, undertakes many
standardization activities to support industries to comply with international standards so as to enable businesses
access markets, increase productivity, promote environmental wellness and quality of life.
1. To promote standardization in industry and commerce
2. To prepare, frame, modify or amend specifications and codes of practice
3. To encourage or undertake educational work in connection with the standardization
4. To control, in accordance with the provisions of the Standards Act, the use of standardization marks
and distinctive marks.
5. To make arrangements or provide facilities for examination and testing of commodities and any
material or substance from or with which and the manner in which they may be manufactured
produced, processed or treated
6. To provide for cooperation with the government or representatives of any industry or with any local
authority or other public body or any other person, with a view of securing the adoption and practical
application of standards
7. To provide for testing at the request f or minister , and on behalf of the government, of locally
manufactured and imported commodities with a view to determining whether such commodities
comply with the provisions of this act or any other law dealing with standards of quality or description
8. To make arrangements or provide facilities for the testing and calibration for the precision instruments,
gauges and scientific apparatus, for the determination for their degree of accuracy by comparison with
standards approved by minister on the recommendations other council, and for the issue of certificates
in regard to thereto
OR
i. Putting stamp of approval to show the established standards have been made
ii. Making regular inspection to ensure that the standards are adhered to
iii. Persecute those who violate the set standards
iv. Carrying out testing of measuring apparatus to relate them with accuracy level of established standards
Types of Quality Standards
Quality standards are defined as documents that provide requirements, specifications, guidelines, or
characteristics that can be used consistently to ensure that materials, products, processes and services are fit for
their purpose.
Standards provide organizations with the shared vision, understanding, procedures, and vocabulary needed to
meet the expectations of their stakeholders. Because standards present precise descriptions and terminology,
they offer an objective and authoritative basis for organizations and consumers around the world to
Purchasing Management Notes Prepared by Mr. Antony Ambia Page 3
