Purshasing process

The purchasing and supply process

Team: One Professor: Hugo Quiñonez Quiñonez

Class / Supply Chain

Tuesday February 20

The process of obtaining and managing of materials, components or services needed to operate a business or other type of firm. "The best way to reduce your supply chain inventory is to sell it."

Dilbert

01. Purchasing process

It implies

What is a purchasing process?

A purchasing process is made up of all the steps required to fulfill payment for any goods/services that have been requested for purchase. This may vary based on company process structures and needs, but steps in this process typically involve:

1. Reviewing and approving purchase requisitions
2. Generating and issuing purchase orders
3. Negotiating prices, contracts, or payment terms
4. Monitoring spending

02. Importance

Involves various stakeholders, including procurement, requesters, approvers, vendors/suppliers, and purchasing and accounts payable departments.

Why is it important?

It provides a structured approach to negotiating and buying the goods or services a business needs to directly or indirectly generate business value. It not only guarantees compliance, but it also prevents procurement bypass and invisible spending due to unregulated spending.

03. Purchasing & categories

How does it work?

The purchasing process begins once a purchase request is submitted for review. Depending on the business and its needs, there are four common types of business purchases:

1. Software (like product licenses or business process automation technology)
2. Services (like facility management or catering services)
3. Goods or products (like office equipment)
4. Raw materials that are needed to create a completed product (like fabric or ingredients)

04. Key cycle steps

Purchasing process

1. Understand business needs.

5. Request for proposals

It is an essential for managing how a business is ending money.

Ensure their products or services are within budget

2. Create a purchase requisition.

6. Negotiate costs and contract terms

When a requester creates and submits a purchase request

There may be cases where all the boxes are checked except for pricing or payment terms.

3. Screen the requests

7. Approval

Ensures that all company purchases are accurate and necessary.

The purchase request is ready for final approval.

4. Search for suppliers

8. Issue a purchase order

A team will work on identifying suppliers that can fulfill the request.

A purchasing team will generate a purchase order based on the approved purchase request details

05. Example

Real life example

This purchasing process involves several steps, from recognizing the need to storing the purchased items, and it's a routine activity for many people.

One common example of a purchasing process is buying at Amazon. Here's a simplified breakdown of the steps involved:

Understand needs

Screen the requests

S3

S1

Upgrade its data centers due to increased demand for cloud services.

Amazon's procurement policies and budgetary constraints.

Purchase requisition

Search for suppliers

S4

S2

The department in charge of IT submits a purchase requisition.

The procurement team conducts market research to identify potential suppliers.

05. Example

Real life example

Request for proposals

Approval

S7

S5

Amazon sends out requests for proposals (RFPs) to the selected suppliers.

The procurement team seeks approval from relevant stakeholders to proceed with the purchase.

Negotiate costs and contract terms

Issue a purchase order

S8

S6

Amazon negotiates with them to obtain the best possible pricing and contract terms while ensuring quality and timely delivery.

Amazon issues a purchase order to the selected supplier, specifying the agreed-upon terms, quantities, and delivery.

01.

Supplyprocess

Key

What is supply chain?

A supply chain is a network of individuals and companies who are involved in creating a product and delivering it to the consumer. Links on the chain begin with the producers of the raw materials and end when the van delivers the finished product to the end user.

The functions of a supply chain include product development, marketing, operations, distribution, finance, and customer service.

02. Supply chain

Supply chain management is a crucial process...

Because an optimized supply chain results in lower costs and a more efficient production cycle. Companies seek to improve their supply chains so they can reduce their costs and remain competitive.

Understanding a Supply Chain

A supply chain includes every step that is involved in getting a finished product or service to the customer. The steps may include sourcing raw materials, moving them to production, then transporting the finished products to a distribution center or retail store where they may be delivered to the consumer.

02. Supply chain

What Are Supply Chain Management Best Practices?

Here are some of the best practices that are seen in successful supply chain management systems:

1. They support continuous improvement.
2. They aim for increased velocity.
3. They encourage collaboration among the individual businesses in the supply chain.
4. They seek new technologies that improve their processes.
5. They have metrics in place that allow employees to measure the success or failure of each step in the supply chain.

03. Steps

And...

2. Manufacturing or sourcing materials needed to create the final product.
3. Assembling parts and testing the product.
4. Packaging the product for shipment or holding in inventory until a later date.
5. Transporting and delivering the finished product to the distributor, retailer, or consumer.
6. Providing customer service support for returned items.

What Are the Steps in a Supply Chain?

The key steps in a supply chain include:

1. Planning the inventory and manufacturing processes to ensure supply and demand are adequately balanced.

04. Example

Smarphone

A common example of a supply chain in real life is the process of producing and delivering a smartphone to a consumer: 1. Raw Material Sourcing. 2. Manufacturing.

3. Distribution. 4. Retail. 5. Sales and Marketing. 6. Customer Service. 7. End-of-Life Management.

09. Conclusion

From understanding business needs to issuing purchase orders.

It's clear that the purchasing and supply process will continue to evolve, driven by advancements in technology, changing consumer preferences, and global economic shifts.

By embracing innovation, fostering strategic partnerships, and prioritizing sustainability and ethical practices, businesses can navigate the complexities of the supply chain landscape and achieve long-term success in today's dynamic business environment.

Thank youfor your attention

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Bibliography

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Online webside

• https://www.pipefy.com/blog/purchasing-process/

• https://www.procurify.com/blog/purchasing-process-all-you-need-to-know/

Online webside

Online webside

• https://www.questionpro.com/blog/purchasing-process/

• https://www.investopedia.com/terms/s/supplychain.asp

Online webside

Online webside

• https://taulia.com/resources/blog/the-supply-chain-process-step-by-step/

• https://blog.hubspot.com/the-hustle/supply-chain-process