Typical Logistics Network

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Chapter 2
The Purchasing ProcessIDIS 424 Spring 2004
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The Purchasing Cycle
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Identify or Anticipate Material and Service Needs

• Purchase requisitions
• Forecasts and customer orders
• Reorder point systems
• Stock checks
• Cross-functional new product development teams

4
Evaluate Suppliers

• Develop list of potential suppliers
• Look at past performance
• Determine important performance criteria
• Visit supplier facilities as required

5
Select Suppliers

• Evaluate past performance or site visit data
• Analyze request for quotations or proposals.
• Negotiate with suppliers as required
• Make selection decision and issue purchase order
  or finalize contract.

6
Release and Receive Purchase Requirements

• Transmit purchase requirements electronically, by
  fax or through the mail.
• Shorten order cycle time through electronic data
  interchange and bar-code technology.

7
Continuously Measure and Manage Supplier
Performance

• Do not assume that purchasing cycle ends with
  receipt of material or service
• Identify improvement opportunities or supplier
  nonperformance

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How Purchasing Communicates with Suppliers

• Traditional
• Point-To-Point

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Traditional Purchasing Communication Model
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Point-To-Point Purchasing Communication Model
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Purchasing Documents

• Purchase Requisition
• Request for Quotation
• Purchase Order
• Blanket Purchase Order
• Purchase Release

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Purchasing Documents

• Raw Materials
• Components
• Semi-finished Products
• Finished Products
• MRO (Maintenance, repair, and operating items)
• Services
• Capital Equipment