Purchasing Systems
Introduction to purchasing
Looking back to the roots of automotive – Purchasing needed? Example Henry Ford, which makes cars and he
owned the whole supply chain. All tires are being produced by himself.
Different drivers force the change of industry & supply chain structure
- Globalization as growth driver of global trade activities
- Reduced transport costs
- Availability and usage of information and communication technologies
- Competition: Concentration on core competences and reduction of depth of value added
Different commercial (contractual) relationships along the Supply Chain
- OEM (original equipment manufacturer
- Tier 1: Systems and/or modules
- Tier 2: Assemblies and/ or components
- Tier 3: Raw material, parts.
With reducing value added – the purchasing spend volumes increase: Purchasing in the focus: Often
more than 60% of the turnover is directly passed through to the suppliers.
Increasing number of patents, technologies
and systems generated by suppliers,
their number is strongly decreasing.
, Introduction into Purchasing
Purchasing is part of the organization.
Not all the company shall purchase (manage external spend), but a specialized team. This is the
institutional perspective of purchasing. Purchasing is part of the company organization.
The purchasing department has own (internal) organization. This could be internally structured by
Central, decentral, hybrid, divisional, projects approaches.
Typical criteria for setup are: Plants, Regions/countries, commodities, brands, and customers.
Driver for central or decentral discussions:
• harmonizing internal needs
• harmonization and standardization of purchased
products?
• fast process flow
• bargaining power
• Situations of stock-out
• Headcount & cost
• respecting special local requirements
• guideline and standards
• global sourcing
• motivation of purchasing team
• will to improvement ("internal competition")
Purchasing is developing towards an extended Supplier Network Management
But Purchasing is also a process as you know from your private activities. What does it comprise?
What are the differences between business purchasing and private purchasing activities?
Parameters in common Parameters that differ
Diversified purchasing policy depending from Variety
product type
- Supplier search – Lock in situation vs. Spot - Segregation & division of workpackages
market
- Inventory management - Long sourcing time
- Criteria: Total costs - Uncertainty of demand
- Make or Buy - reduced value added - Pressure of success
- Compliance and more
Introduction to purchasing
Looking back to the roots of automotive – Purchasing needed? Example Henry Ford, which makes cars and he
owned the whole supply chain. All tires are being produced by himself.
Different drivers force the change of industry & supply chain structure
- Globalization as growth driver of global trade activities
- Reduced transport costs
- Availability and usage of information and communication technologies
- Competition: Concentration on core competences and reduction of depth of value added
Different commercial (contractual) relationships along the Supply Chain
- OEM (original equipment manufacturer
- Tier 1: Systems and/or modules
- Tier 2: Assemblies and/ or components
- Tier 3: Raw material, parts.
With reducing value added – the purchasing spend volumes increase: Purchasing in the focus: Often
more than 60% of the turnover is directly passed through to the suppliers.
Increasing number of patents, technologies
and systems generated by suppliers,
their number is strongly decreasing.
, Introduction into Purchasing
Purchasing is part of the organization.
Not all the company shall purchase (manage external spend), but a specialized team. This is the
institutional perspective of purchasing. Purchasing is part of the company organization.
The purchasing department has own (internal) organization. This could be internally structured by
Central, decentral, hybrid, divisional, projects approaches.
Typical criteria for setup are: Plants, Regions/countries, commodities, brands, and customers.
Driver for central or decentral discussions:
• harmonizing internal needs
• harmonization and standardization of purchased
products?
• fast process flow
• bargaining power
• Situations of stock-out
• Headcount & cost
• respecting special local requirements
• guideline and standards
• global sourcing
• motivation of purchasing team
• will to improvement ("internal competition")
Purchasing is developing towards an extended Supplier Network Management
But Purchasing is also a process as you know from your private activities. What does it comprise?
What are the differences between business purchasing and private purchasing activities?
Parameters in common Parameters that differ
Diversified purchasing policy depending from Variety
product type
- Supplier search – Lock in situation vs. Spot - Segregation & division of workpackages
market
- Inventory management - Long sourcing time
- Criteria: Total costs - Uncertainty of demand
- Make or Buy - reduced value added - Pressure of success
- Compliance and more
