33:799:301 Lecture Notes - Lecture 4: Vertical Integration, Outsourcing, Vendor-Managed Inventory

• School: Rutgers University
• Department: Supply Chain Management
• Course: 33:799:301
• Professor: Klepacki

Document Summary

Goals of purchasing: uninterrupted supply of materials and services at lowest cost, high quality, maximize customer satisfaction. Can do all this with good supplier relations and working closely with suppliers. Profit-leverage effect: decrease in purchasing directly increases profits before taxes. Purchasing process (manual) : purchase requisition, the rfq/rfp (going out for bids) if product isn"t readily available, the purchase order (po) authorization to spend company money. (contract) E-procurement process: internal user puts purchase requisition, requisition submitted, analyst assigns qualified suppliers to bid, analyst reviews closed bid and selects best supplier. Advantages of e-procurement: quicker, accurate, trackability, real time, and cost savings. Small purchase orders: minimized with : procurement cards, blanket or open-ended purchase orders, stockless buying or vendor managed inventory, outsource procurement to 3rd party vendor. Make or buy decision: outsourcing: get from suppliers not make, backward vertical integration: acquiring sources of supply, forward vertical integration: direct control over distribution of stock.