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Chapter 3

Chapter 3 . Purchasing Policies and Procedures. Introduction to Policies and Procedures. Policies state management’s position on topics and issues important to the corporation Procedures are methods to accomplish objectives Advantages to a PPM. I. Policies Overview . . .

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Chapter 3

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  1. Chapter 3 Purchasing Policies and Procedures

  2. Introduction to Policies and Procedures • Policies state management’s position on topics and issues important to the corporation • Procedures are methods to accomplish objectives • Advantages to a PPM

  3. I. Policies Overview . . . Well developed purchasing policies help purchasing managers define: • ۰The role of purchasing • ۰The conduct of purchasing personnel • ۰Social and minority business objectives • ۰Buyer-seller relationships • ۰Operational Issues

  4. Policies Defining theRole of Purchasing • Purchasing has authority to conduct and to delegate and to exercise control • Objectives of the purchasing function • Organizational issues • “Four Rights of Purchasing”

  5. “Four Rights of Purchasing” • The right to challenge specifications • The right to choose the method of placement • The right to select the supplier • The right to control contacts with suppliers In the PPM as Corporate Policy!

  6. Policies Defining theConduct of Purchasing Personnel • Ethics • Illegal • Unethical • Sharp practices • Reciprocity • Follow-on Employment • Whistle-blowing

  7. Policies Defining Social and Minority Business Issues • Local Suppliers

  8. Policies Defining Social and Minority Business Issues • Local Suppliers • Women and Minority Business Enterprises (MBE) • Right thing • Smart thing (?)

  9. Policies Defining Social and Minority Business Issues • Local Suppliers • Women and Minority Business Enterprises (MBE) • Right thing • Smart thing (?) • Sustainability: a new name and expanded concept for “Corporate Social Responsibility”

  10. Sustainability: The triple bottom line • The integration of social, environmental, and economic objectives • The dimensions of sustainability include • Environment • Community • Employment diversity • Supplier diversity • Human rights • Safety • Financial responsibility

  11. Sustainability: The triple bottom line • “Sustainability” formal definition: “The ability to meet current needs without hindering the ability to meet the needs of future generations in terms of social, environmental, and economic challenges.” • The basic building block to sustainability is ethics.

  12. Policies Defining Buyer-Seller Relationships • Equitable treatment of suppliers • ESI, associated financial obligations, and non-disclosure agreements • Supplier Development • Supplier Evaluation • Supplier Recognition Programs • Cross-cultural issues in international sourcing

  13. Policies Defining Operational Issues • EPI and CFTs • Rush Orders • Maverick Buying • Disposal of Hazardous Waste

  14. II. Procedures • The Purchasing Process • Proper Use of Forms • Record Keeping • Source selection process • Competitive Bidding Process • Auditing and control of delegated purchasing systems • Supplier Certification • EPI and ESI • Establishing lead times • Contract types and legal contract development • Establishing CFTs • E-procurement • Salesperson interviews • Invoice clearance and payment

  15. Let’s move on

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