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Chapter
Three
Purchasing and
Materials Management

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Key Points

• Importance of Purchasing
• Purchasing Philosophy
• Supplier Evaluation
• Trends in Purchasing
• Purchasing and Government
• Ethics in Purchasing

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Importance of Purchasing

• Provide supply
 JIT, Concurrent, EDI

• Quality
• Lowest total cost
 Total cost of ownership
 Outsourcing
 Economic order quantity
 Forward buying
 Value Analysis
 Complexity Management

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Communication Freq JIT

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Forward Buying

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Purchasing Philosophy

• Adversarial
• Partnership / Preferred supplier
• Single sourcing

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Supplier Evaluation

• Buy-grid model
 Buy-phase model
 Buy-class model
 Out-suppliers
 In-suppliers

• Multiattribute Decision Making

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Trends in Purchasing

• Trimming purchasing costs

 Centralizing

• Using the Web

• Outsourcing
• Stronger Relationship with sellers
 Supply chain management
 Supplier relationship management

• Cross-Functional Teams
• Professionalism

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10

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Purchasing and Government 11

• Political and Social Goals

 Compliance programs
 Minority subcontracting

• Department of Defense
• Nondefense Buying
• Marketing to the Government
 Fixed price
 Cost plus

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Ethics in Purchasing 12

• Moral codes of conduct, rules for

how someone should operate that
can be followed in situations
demand.
• Receiveing Gifts
• Access to Information
 Nondisclosure agreements

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