Purchasing

1
Purchasing Warehousing

• Lasitha Cooray
• Yaxin Li
• Alyson Maynard
• Owen Nicholl
• Anne-Marie Siddons

2
Extranet!

• No organization is an island unto itself.

3
Extranet a Definition

• A private Intranet that is accessible to
  authorized users
• Use the accessibility of the Web to create a
  secure flow of information between organizations
• The look and feel is exactly like a web site
• Armed with a login name and password
• Security can be adjusted on a per user basis

4
Advantages

• Reduces costs
• Allows suppliers access configuration, pricing
  and ordering of systems
• Cuts down on redundant ordering processes
• Enables suppliers to track the status of
  inventory
• Keeps suppliers up to date on Materials
• Enables suppliers receive proposals, submit bids,
  provide documents and collect payments

5
Disadvantages

• 2 major challenges
• (1) CHANGE! training people to use a different
  system and coping with the resistance
• (2) Tapping into the corporate culture having
  to share common databases
• High set up costs
• Hardware costs, Software costs, telecommunication
  costs, training costs, maintenance costs

6
Implementation Costs Under Traditional System
3 Months

•   Activities
  Costs ()
• Receiving and Storing
• Receiving (Purchase cost) 760,000
• Warehousing
• (Interest cost) 53,000
• (Pilferage) 7,000
• (Insurance) 9,000
• (Rent - 8000 per month) 24,000
• (Natural spoilage)
  13,200 (Material handling time of
  personnel 36,000
• (2000 hrs _at_ 18/hr)
  _______
• Total costs 902,200

7
Costs After Implementation

• Activities Costs ()
• Receiving and Storing
• Receiving (Purchase cost)
  283,000
• Warehousing
• (Interest cost) 37,000
• (Pilferage) 5,300
• (Insurance) 6,000
• (Rent) (8,000 per month) 24,000
• (Natural spoilage) 6,400
• (Material handling time of
  personnel 15,300
• (850 hrs _at_ 18/hr)
• Extranet costs
• (Hardware) 10,000
• (Software) 4,500
• (Telecommunications) 2,000
• (Training) 20,000
• (Maintenance) 10,000
  
  
  _________
• Total costs
  423,500
  
  
  

8
Before and After Costs
9
Risks We Run

• Opening doors for computer crime
• Hackers, Crackers, Malicious Software
• Dependence and vulnerability
• Downtime/power failure/ISP failure can hinder the
  network

10
Conclusion

• Lets connect 240Co!