Purchasing Management


Purchasing Management (Purchasing Management) plans to issue purchase orders generated purchase order execution, the arrival to receive, test storage, collection of the purchase invoice to the procurement activities of the procurement settled the whole process, all aspects of the state of logistics movement in the procurement process closely tracking, monitoring, scientific management of the implementation process of the enterprise procurement activities. Procurement management, including procurement plan, order management and invoice verification three components. Otherwise, the eponymous book procurement management. "

Three components

Procurement plan
Procurement plan for management of the procurement plan formulation and management, providing timely and accurate procurement plans and the implementation of the road. Procurement plan, including regular procurement plan (such as weeks, monthly, quarterly, annual), regularly purchases Task Scheduler (such as sales and production requirements). The preparation of procurement plans for multi-object multi-element decomposition, the procurement requirements into direct procurement task, the system supports enterprises to sell order to sell production quotas, production ordered a variety of procurement application mode, supports multi- kinds of flexible purchase order generation process.

Purchase Order
Purchase Order Management to purchase a single source to confirm the orders, shipments from suppliers, arrival, accurate tracking, testing, storage and purchase orders transfer of all aspects of the whole process of management. Through process configuration, select a variety of procurement processes, such as orders directly storage, or test storage after the arrival of Quality link in the whole process, you can achieve the planned purchase of inventories, orders in transit to monitoring and management of the goods to be seized state. Purchase orders can be sent through e-commerce system to the corresponding suppliers to make online purchases.

Invoice Verification
Invoice management is an important element in the purchase settlement management. Procurement of goods provisional estimate of labor procurement processing, non-inventory consumption procurement processing, direct shipping procurement operations Consignment business, etc. In this treatment. Through the configuration process, allowing the user to change various business processing rules also define new business processing rules to adapt to the ongoing restructuring of corporate business, the need for optimization of the process.

Three levels

Transaction management (Transaction)
More junior procurement management, implementation and monitoring of all transactions. Wherein:
· Around the purchase order (PO Purchase Order);
· Easier with suppliers bargaining;
· Only emphasis on general business conditions such as price, payment terms, specific delivery date;
Passive implementation of the formulation and technical standards.

Purchasing Management (Purchasing)
Purchase their orders for the supplier. With the increased experience and summary of the early large number of orders, and management skills, management realized the importance of supplier management; Meanwhile, according to their volume of business analysis (ABC), the entire logistics system, rational allocation of their own the resources to carry out a number of project management. This stage is characterized by:
· Around procurement contracts for a certain period of time, trying to build long-term relationships with suppliers;
· Strengthening the attention of the other conditions of the supplier, such as the the order procurement cycle (Lead Time) delivery, economic lot size, the minimum order quantity and order completion rate;
· Emphasis on the cost of the supplier;
· Start with a tender means;
• To strengthen the awareness of risk prevention.

Strategic Procurement
Supply Chain Management (Strategic Sourcing-Supply Chain Management)
Relatively new concept in strategic sourcing, characterized by:
· Strategic partnerships with suppliers;
· Pay more attention to the cost and efficiency of the entire supply chain management;
· Work with suppliers to develop products and its impact on consumers;
· To seek new technologies and materials alternatives to OEM mode operation;
· Take full advantage of such cross-regional, cross-country company (factory) the strength of the Group centralized purchasing;
· More complex, a wide range of applications means of tender.

Among them, the centralized procurement means being more and more companies adopt. Centralized concept is in fact contains two meanings: the centralized Group Branch / plant purchases; procurement concentrated to a small number of suppliers, in order to obtain economies of scale savings. Further work is to minimize the specifications or standards of materials from suppliers, in order to bring savings in the procurement of raw materials and production and processing income.

Three functions

Security of supply
The most important functions of the procurement management is to achieve material supply of the entire enterprise, to ensure normal production and life. Production requires raw materials, spare parts, machinery and tools, production lines running, these things must be in place in everything, the lack of any production line will start up.

Supply Chain Management
In fact, competition between the increasingly fierce market competition in today's society, business is competition between supply chains. In order to effectively carry out production and sales, the generous help and support of a large number of supplier companies, the best coordination with each other. On the one hand, only the supplier organizations, and to establish a supply chain system, to be able to form a friendly coordination of the procurement environment, to ensure efficient procurement and supply work carried out smoothly; On the other hand, procurement management in the enterprise sector with the most the opportunity to deal with suppliers, only their most likely through their own patient and meticulous work, communicate with suppliers, coordination and procurement and supply operations, in order to establish a friendly and coordination of supplier relationships, in order to establish the supply chain, and operation and management of the supply chain.

Information management
Enterprises, procurement administration every day, and to deal with the resource market, in addition to the enterprise market supplies and resources outside of the input window, but also the enterprise resource market information interface. Procurement management in addition to protect the supply of materials, and establish a friendly supplier relationships, but also to keep abreast of the resource market information, and feedback to the management of the enterprise to provide timely and effective support for enterprise business decision-making.

Management Mistakes
Procurement, outsourcing work in the business operations is very important, its impact is often the most direct, most clearly reflected in the cost, quality, procurement, outsourcing, engineering companies, trade companies and other enterprises than the major procurement management The significance is even more significant. However, according to several different types, different types of enterprises, research and management consulting, procurement of many companies there are management of errors, some almost become a common problem.
Procurement on the line as long as the "shop around"
Many business managers think the tube procurement as long as the "shop around" on the line, usually require staff responsible for procurement reporting procurement programs must provide at least three quotations, managers approval to see if there are three parity, then select a suitable price (most of the time the election the lowest price of one). The solution is simple, procurement management, this procurement is called "purchase inquiry" or "buy". Management problem? , But many problems still exist. In fact, many managers are likely to "shop around" methods often fail: 3 elected? The middle agents count does not count? The same category of procurement of the approval of the three and the last three are not the same three? Will there be reporting through the manipulation of the pricing information may affect the approval decision-making? To guard against this possibility, we often also requested procurement engineer only objective quotations can not have any subjective evaluation results top the problem persists, the shield may be useful information for decision support, eliminating the reporting of responsibility.
Why "shop around" is not effective? This is not a "purchase inquiry" approach itself. The fundamental cause of the problem is not qualified for the supporting management mechanisms. In this case, the purchasing managers eventually signed to select suppliers on the surface, has the absolute decision-making power, but because of procurement staff are free to inquiry, which has the actual decision-making power. This management model does not change, no matter how "shop around" futile.
The key to solving this problem is to give the the procurement staff Inquiry activities delineation of a range, which is "qualified supplier assessment. Qualified supply-side review of the quality management concept from a broader and practical point of view, is the manager in accordance with the standards of a quality, cost and other aspects, to designate a range. This range can be determined directly by business executives, can also be determined by a committee. In short, purchasing executives alone can not decide on a range, we can not jump out of the range of activities, and be responsible for each procurement activity within the decision-making support information.

Tender "a move on the soul"
Tender procurement method gives an objective, fair and transparent impression, many managers believe that to tender, the introduction of competition, lower costs, and also the end of the story. But sometimes tender is not "a move of the Spirit". Why tender? The tender under what circumstances? What can be more appropriate procurement method? This relates to the question of choice of the procurement method. Currently, common procurement. Commonly used are: bidding, competitive negotiation, procurement, single-source procurement.
Tender: In addition to the end-users and regulatory requirements must be implemented tender, the cost of purchasing content information, technical mastery is not enough, the best tender, one of the purposes is to obtain cost information, technical information.
Competitive negotiation: the tender, we may encounter such a situation: insufficient number of bidders or bidders prices, capacity is not ideal, sometimes repeated tender or not, whether to continue bidding, it is troubling - Offering is not, nor is it does not move. In fact, this time there is no need to look for the tender is not available, they can take a "competitive negotiation". Very close to competitive negotiation and tender similar role, but the program more flexible and efficient manner, can be used as a supplement of the bidding.

Inquiry Purchasing (optional): We have a very good grasp of cost and technical information on the procurement of goods (including goods or services), and there are a number of suppliers compete, we can pre-selected qualified for the range, qualified for the range to "shop around" price inquiry.
Single-source procurement: If we have full control of the cost of procurement of goods and technical information, or only one or two suppliers can supply, the company should try to establish long-term cooperative relations, cooperation for stable, long-term price and quality assurance, On this basis, can be used single-source procurement.
Rational use of multiple purchases, you can also achieve the dynamic management of the team of subcontractors and optimization. For example, the initial procurement cost information, technical information, know enough about, can obtain information through the tender expand subcontractors alternative range. Wait until the cost, technology and subcontractors have enough to switch procurement, and do not have to re-tender. Wait until conditions are ripe for this procurement of goods can be fixed one or two long-term cooperation between manufacturers. Conversely, if not satisfied with the long-term cooperation between manufacturers, by expanding the scope or tender of Inquiry to be adjusted to optimize supplier or put pressure on the manufacturers of cooperation.

Archives, purchasing information to stay
Research and consultation process, many managers have long realized procurement management problems, but suffer from the inability to improve or too late to improve, then asked the relevant personnel and procurement records, documents all files to be qualified when analyzing information, and improve their work. But in fact, from the well-preserved procurement files, often still not sufficient useful information? Even never be able to get a lot of necessary information. In large part is due to the procurement process is not up to standard. For example, the specification of procurement management requirements in the inquiry suppliers respond to different specifications of the equipment to be quoted separately procurement staff tend to the packaging of the different specifications of the equipment, and sometimes even different types of devices packaged inquiry, each packaged and quantity are not the same. As a previous inquiry can not be implemented to the specific product, no comparison, when the managers decision-making is still unable to determine the purchase price is high or low.
Visible improvement of the procurement process management and procurement information collected affect each other, or as soon as possible to improve procurement management, want to pre-existing data down to wait for conditional talk about improvements, often to think of improving procurement management, the lack of information has been very serious.

The importance of management
Procurement occupies a very important position in the enterprise, because the purchase of spare parts and auxiliary materials generally account for 40% of the sales value of the end product to 60%. This means that access to materials made bit by bit cost savings on profits generated is greater than the cost of the enterprise - the same number in the area of ​​sales savings impact to the profit. Procurement goals:
² to provide uninterrupted material flow and material flow in order to protect the organization operates;
² inventory investment and loss is kept to a minimum;
² maintain and improve quality;
² the development of competitive suppliers;
² when conditions allow, shopping material standardization;
² the lowest total cost of the goods and services required;
² improve the company's competitive position;
² coordinating the internal cooperation between the various functional departments;
² completion of the procurement objectives at the lowest management costs;

Management features
The main features of the traditional procurement model in the following aspects:
The purpose of purchasing inventory and procurement, procurement focus
Quality control ex post facto control, lack of effective assessment and management of suppliers
Lack of communication and cooperation between the supply and demand sides, short-term, unstable relations of cooperation
Lack of rapid response to changes in market demand, low procurement efficiency, high cost
Purchasing department and other departments are independent of each other, separated affect the operation process of coordination

Management Platform
Internet procurement management platform co-founded in 2001, the former Zhejiang Province Electric Equipment Tendering Secretary for of Mr. Wu Shugui and former assistant to the general manager of Zhejiang International Tech Equipment Tendering Co., Ltd. Mr. Luo Qing; created in 2002 Shanghai will; 2009 Innovation Award was awarded a 10-year e-commerce model. The basic functions of procurement management platform in the industry including:
Buyers purchasing management platform
Price management: the process to determine the purchase price, unified price system for setting up and managing the procurement of goods, to regulate the implementation of the purchase price range, pricing, will be associated procurement network for user enterprises to build a comprehensive price management system .
Procurement plan: by the enterprises according to the production plan to develop and import will be associated procurement network, support for multiple formats file import, import production plan can be viewed, modified according to the different planning stage. The system provides data validation mechanisms, materials procurement network in the procurement catalog and plan check, automatically filter out unqualified data, effectively ensuring the accuracy of the data plan.
· Purchase Pricing: enterprise based on business need to select multiple purchases: tender bid quote. Give full play to the market leverage, lower material costs and the cost of the procurement process of purchasing goods, improve procurement efficiency, so as to reduce procurement costs purpose.
· Contract, the management of the agreement: the manifestation of the results of the procurement pricing, procurement is also the basis for the implementation, including procurement prices of goods, delivery terms, payment method information. Can manually input the contract, based on the successful results of the purchase price projects directly generate contract.
· Orders collaboration: companies need a complete supply chain management, in order to dynamically respond to customer needs quickly. Join procurement network to provide the coordination function of a set of orders, including orders, receiving, returns process.
· Procurement Statistics: main set of statistical inquiry, is divided into two kinds of the project procurement statistics and statistics at the purchase price, history quotes from suppliers, order response, timely delivery rate, the goods pass rate, transaction data Automatic statistics, provide a strong support for purchasing decisions.
Supplier management and assessment: suppliers through online registration, apply to become a supplier enterprise, supplier registration information proofreading after-Link procurement network, verified, suppliers really register as a procurement network suppliers; buyers suppliers certification, making it their own potential suppliers; supplier qualified suppliers known as the official supplier; buyers can assess the official supplier to elect qualified suppliers.
· Purchasing directory maintenance: the procurement catalog is the foundation and bedrock of the entire procurement system, it has a harmonized classification, the characteristics of the Uniform Code, the various buyers maintained according to the characteristics and needs of their own enterprises.

Suppliers supply management platform
· Customer Management: management of the state of the current user transaction field, can apply to enter the new trading courses according to their needs;
Transaction management: to view and manipulate the procurement project under different conditions, the entire management of procurement transactions;
· Order collaborative: will procurement network, the coordination function of a set of orders, including orders, receiving, returns process.
· Contract Management: Contract is a manifestation of the results of the procurement pricing, procurement is also the basis for the implementation, including procurement prices of goods, delivery terms, payment method information. Manual entry contract, can also be based on the successful results of the purchase price projects directly online interaction and determine the contract.
· Supply management: the establishment of the association between the supply of products and customers, ensure Products qualifications; same time, two-way with buyers to view and manage the content of the agreement.

Management principles
Must first establish a sound supplier assessment system: specific supplier qualification, assessment procedures, evaluation methods should be clearly defined.
(2) the establishment of the procurement process, the price review process and acceptance process, payment settlement process.
3 perfect the buyer training system to ensure the effective implementation of the procurement process.
The assessment should be made of the price the corresponding procedural requirements by the relevant person in charge of such signed into law, put an end to the dark compartment operation.
Specification sample confirmation system, diversify the powers of the Purchasing Department.
6. Irregular supervision, standardize purchasing behavior.
7 create a system of incentives to cut prices after the response to the buyer reward.
8. Strengthen development capacity, low-cost substitutes.

Management elements
First, to determine the qualification of suppliers. Suppliers to ensure a good supply capacity. This is especially important for large-scale manufacturing enterprises, stable supply capacity because suppliers have a key role for the stable production, these companies have a list of qualified suppliers, purchases can only be limited to the suppliers within the directory and approved by the company's technology and standardization department this directory.
Second, the purchase price formation mechanism. For effective management of the purchase price, usually need to have a price group approved the procurement of goods price caps, the members of this group should be composed of executives, finance and procurement departments, so as to prevent procurement operations staff and suppliers on price self-serving behavior.
Third, the method of payment OK. This is the actual interests, shall make its best efforts to strive for good payment method.
Fourth, the number of inspectors. After the arrival of the suppliers of goods, it should be by the inspection department to verify the number of arrival.
Fifth, the quality checks. Requirements for quality goods, inspection of the quality inspection departments.

Industry differences
When we think about how to improve our procurement management and reduce the total cost of procurement, we first need to understand what is the difference of the Purchasing Management industry? So that we can understand and use different methods to manage all walks of life and different procurement work. Continuity and personalized according to each industry procurement, procurement management into four categories:
The first category
Production and procurement
Is that we purchase the items directly to the company required to operate. Production and procurement is divided into two categories:
Type 1 is the procurement of raw materials (MRP materials procurement). Procurement of such materials are the products produced by enterprises of components or intermediate products;
Type 2 is the procurement of spare parts (MRO procurement, is the repair, maintenance, repair, operation), these parts are normal production and operation maintenance, replacement of parts in order to protect the machine.
Different nature of these two types of procurement of goods, works, and the angle of approach is also different.

The second category
Commerce procurement
Retailers like Wal-Mart, their procurement does not belong to the procurement of production, is a commerce procurement-commerce procurement and production procurement biggest difference is? Wholesalers, retailers in the procurement of goods (things) like Wal-Mart procurement, purchasing what product is not very important, it is important to purchase something must be guaranteed to make money, the pen had to make money, not to make money there is no need to procurement of goods. Watermelon do not make money, you can purchase Apple. But in terms of production and procurement costs, this product we only use this raw material, I made biscuits, only to buy flour, can not say the flour too expensive do not buy, do not buy discontinued production does not guarantee that each purchase to make money, and the profitability of the purchase can not be directly reflected. We give a simple example: a very competent production Purchasing Manager, If switched to wholesalers, retailers do procurement management, perhaps after six months can not be fired, why? Because procurement management point of view is not the same. Management methods are also very different.

The third category
The general day-to-day supplies procurement
Like procurement of office supplies, as well as administrative procurement. Which is characterized by complex procurement category, but a small amount of purchases. Its purchase of the articles are mainly used in the normal course of the administration office of the security company.

The fourth category
Project procurement
Sometimes, our procurement is the procurement of the project, for example, to buy equipment, build a workshop. The main features of the project procurement is a one-off. There is little repetitive purchases. This means that each procurement process had to start again, past experience and relationships rarely can.

Solution
Procurement is an important link in the supply chain, enterprise management success has a huge impact. On any production enterprises, the right raw materials and semi-finished products at the right price, the right quality at the right time to the right place is crucial.
In actual operation, it is necessary to purchase as part of the supply chain management, in order to be properly managed, need to pay attention to the following aspects:
1, procurement plans, including procurement commodity prices, payment terms, quality, origin of the goods delivery and transportation methods.
2, select the appropriate suppliers and to determine the manner of their co-operation.
3, to determine the number of purchases and batch prevent causing unnecessary inventory and increased transportation costs.

Sourcing Category
The procurement of industrial enterprises, the enterprises to purchase production or support the production of materials required. In general, corporate procurement process, including a clear procurement requirements, selection of suppliers, determine the purchase price to determine the delivery time, place, signed a contract as required receipt of payment procedures.
Procurement according to different criteria can be divided into different types, by region can be divided into domestic procurement and procurement abroad; procurement methods can be divided into direct procurement, commissioned by the procurement and allocation of purchase; procurement policy can be divided into centralized procurement and decentralized procurement ; by nature can be divided into general procurement and project procurement; procurement body can be divided into government procurement and collective procurement; The following enterprises centralized procurement and decentralized procurement on behalf of the new trend of corporate procurement operations on time procurement to give a brief account.

1, centralized purchasing
Centralized procurement refers to all procurement tasks by a specific department responsible for specific measures together the various departments of the enterprise demand for raw materials by issuing Order Inquiry centralized purchasing department to the supplier. Centralized procurement corporate purchasing departments with a larger purchase volume as weight, get better suppliers at discounted prices, thereby reducing the cost of raw materials, at the same time reduce the cost of procurement operations to reduce the amount of the corporate procurement.

2, decentralized procurement
Decentralized procurement refers to procurement job dispersed in various user departments, each department or independent units to meet their own procurement needs. Decentralized procurement faster than the centralized purchasing to meet the needs of the use of the unit; If you use the unit location is extremely fragmented, decentralized procurement but also through local purchase to save on shipping costs.

3, on-time procurement
Time purchase, also known as the JIT (Justintime) Procurement Law, is an advanced procurement model represents a new direction of development of corporate purchasing.
Timely procurement and traditional procurement there are many differences, mainly in the following aspects:
First, a small number of suppliers, or even single-source supply.
Second, the supplier selection criteria.
Third, on time delivery requirements.
Fourth, the exchange of information between different needs.
Fifth, the development strategy of the procurement volume.