The procurement process Purchase Remittance Search Qualify Negotiate Order Invoicing Shipping Payment Catalogs Research Price Order Product Receive Po Enter into Receive Goods Internet Credit History dit Terms Initiate Enter into Shipper's Enter Shipping Salespersons Check with Escrow Purchase Financial Tracking Documents Brochures Competitors Quality Order(PO) System System into Telephon Telephone Timing Enter into Enter into Ship Goods Warehouse Research System Production Deliver Goods System System Enter into Verify and Send Invoice aCKing Correct Match with Po System n Internal Review Resend Invoice Enter into Cut Check Warehouse Add corrected System Invoice to Back Ofice System Figure 12.3, Page 758 Copyright C 2014 Pearson Education, Inc. Publishing as Prentice Hall SIlide12-17
The Procurement Process Figure 12.3, Page 758 Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 12-17
Types of Procurement a Firms purchase two types of goods 6 Direct goods: Integrally involved in production process Indirect goods: All goods not directly involved in production process (maintenance repair and ops mroj goods Firms use two methods to purchase Contract purchasing Involves long-term written agreements to purchase specified products, with agreed-upon terms and quality Spot purchasing a Involves purchase of goods based on immediate needs in larger marketplaces that involve many suppliers Copyright C 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 12-18
Types of Procurement ◼ Firms purchase two types of goods ❖ Direct goods: Integrally involved in production process ❖ Indirect goods: All goods not directly involved in production process (maintenance repair and ops (MRO) goods) ◼ Firms use two methods to purchase ❖ Contract purchasing: ◼ Involves long-term written agreements to purchase specified products, with agreed-upon terms and quality ❖ Spot purchasing: ◼ Involves purchase of goods based on immediate needs in larger marketplaces that involve many suppliers Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 12-18
Types of Procurement(cont. Procurement is highly information intensive and labor intensive Requires managing information among many corporate systems Involves 1.2 million U.S. workers excluding those in transportation, finance insurance, etc a Multi-tier supply chain Complex series of transactions between firm and thousands of suppliers, supplying thousands of goods Copyright C 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 12-19
Types of Procurement (cont.) ◼ Procurement is highly information intensive and labor intensive ❖Requires managing information among many corporate systems ❖Involves 1.2 million U.S. workers excluding those in transportation, finance, insurance, etc ◼ Multi-tier supply chain ❖Complex series of transactions between firm and thousands of suppliers, supplying thousands of goods Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 12-19
The Multi-tier Supply Chain IHU H HIIIEIIEBINS iHh HHH Tier 3 Tier 2 SELLERS BUYER Figure 12. 4, Page 759 Copyright C 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide12-20
The Multi-tier Supply Chain Figure 12.4, Page 759 Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 12-20
The role of Existing Legacy Computer Systems Legacy computer systems &o Generally, older mainframe and minicomputer systems used to manage key business processes within firm Enterprise systems %o Corporate-wide Support/control all aspects of production, including Procurement Finance Human resources Copyright C 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide12-21
The Role of Existing Legacy Computer Systems ◼ Legacy computer systems ❖ Generally, older mainframe and minicomputer systems used to manage key business processes within firm ◼ Enterprise systems ❖ Corporate-wide ❖ Support/control all aspects of production, including ◼ Procurement ◼ Finance ◼ Human resources Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 12-21