Purchasing and supply management holds a position of the mortar to hold the bricks together in the business world. Within purchasing and supply management, there are a few steps while creating a project supply, service, and material budget from detailed requirements. Those steps show how to select the most qualified suppliers and strategies for negotiating prices. Along with this, there are also benefits and costs of outsourcing. This includes the growth of outsourcing. Various organizations will be evaluated on their benchmarks in purchasing and supply management, along with their best practices in this. There are specific companies out there that who show market leadership in purchasing and supply management.
In some cases the term, “purchasing,” is often limited to the actual definition listed in text and dictionaries. It is limited to just buying and this refers to the location and selection of suppliers, learning of the need for whatever is needed, price negotiation and any terms of agreement, the payment and finally the delivery. In this particular case the term purchasing is referring to the process of and not the act of. “Purchasing, supply management, and procurement are used interchangeably to refer to the integration of related functions to provide effective and efficient materials and services to the organization. Thus, purchasing or supply management is not only concerned with the standard steps in the procurement process: (1) the recognition of need, (2) the translation of that need into a commercially equivalent description, (3) the search for potential suppliers, (4) the selection of a suitable source, (5) the agreement on order or contract details, (6) the delivery of the products or services, and (7) the payment of suppliers.” (Johnson, P. F., Leenders, M. R., & Flynn, A. E., 2010)
Purchasing and supply management is obviously bigger than the traditional term of just bartering with money or services. There are also responsibilities of purchasing that go much beyond the traditional meaning. These can include receiving, storage, inspection, scheduling, materials handling, inbound/outbound traffic and disposal. It may also have responsibilities for certain other components that are part of the supply chain. These can include customers of the organization, their customers, and the suppliers of their suppliers. This is an extension that actually represents the other portion of the definition, supply chain management. This is “where the focus is on minimizing costs and times across the supply chain to the benefit of the final customer in the chain. The idea that competition may change from the firm level to the supply chain level has been advanced as the next stage of competitive evolution.” (Johnson, P. F., Leenders, M. R., & Flynn, A. E., 2010)
As part of purchasing and supply management, there is the supply process itself. It consists of nine fundamental steps in the purchasing process. These steps are:...