Chapter 1

Slide 1.
What is purchasing?
Perspectives on purchasing
1
As a function
To perform specialised tasks
As a process
To achieve an output
As a link in the supply chain
As a relationship
As a discipline
Knowledge based
As a profession
Demonstrable skills and knowledge
With production and warehousing

Internal and external focus
Lysons & Farrington, Purchasing and Supply Chain Management

PowerPoints on the Web, 8th edition Pearson Education Limited 2012
Slide 1.2
What is purchasing?
Definitions
The classic definition
To buy materials of the right quality , in the right quantity,
from the right source, delivered to the right place, at the
right time at the right price.
To be contrasted with
Modern definition
The process undertaken by the organisational unit which, either as a
function or a part of an integrated supply chain, is responsible for
procuring or assisting users to procure in the most efficient manner
required suppliers at the right time, quality, quantity and price and
the management of suppliers, thereby contributing to the competitive
advantage of the enterprise and the achievement of its corporate strategy.
Slide 1.3
What is purchasing?
Definition of procurement
Procurement is the process of acquiring goods, works and services,

covering both acquisition from third parties and from in-house providers.
The process spans the whole life cycle from identification of needs,
through to the end of the useful life of an asset. It involves options
appraisal and the critical make or buy decision.

Slide 1.4
What is purchasing?
The evolution of purchasing
The Reck and Long model
Stage
1. Product centred
2. Process centred
Characteristics
Concerned with the five rights which concentrate
exclusively upon the purchasing of tangible products and
outcome dimensions.
Moves beyond a concern with outcomes and begins to
measure the process through which the outcome is
delivered.
3. Relational
Process and relationally focused, expanded to include

purchasing supplier relationships.
4. Performance
centred
Focused on best product management methods. Employs

an integrated methodology to manage relationships,
processes and outcomes.
Slide 1.5
What is purchasing?
The evolution of purchasing
Period 1
The early years (18501900)
Period 2
Growth of fundamentals (19001939)
Period 3
The war years (19401949)
Period 4
The quiet years (1947mid 1960s)
Period 5
Materials management comes of age (mid-1960slate 1970s)
Period 6
The global era (late 1970s1999)
Period 7
Integrated supply chain management (beyond 2000)

Slide 1.6
What is purchasing?
Purchasing and change
Information
technology
impact
Globalisation impact
Transgression
of
national boundaries
Advantage
of cost
Chasing production &

management
philosophies impact
Slicker
transactions
Competitive
Quality
of management
Outsourcing
advantage
data
Supply
Specialised
labour skills
Strategic
link with
chain
management
suppliers
Emerging
economies
Paperless
environment

Slide 1.7
What is purchasing?
Purchasing in the future
Increase in strategic importance
Automated tactical activities
Master contracts
Electronic purchasing
Strategic purchasing competency centres
Shared supply chain resources
Profit contribution
Changed emphasis on individual skills
Slide 1.8
What is purchasing?
World-class purchasing
Must accommodate
TQM
JIT
Total cycle time reduction
Long range planning
Supplier relationship engineering

Strategic cost management
Performance accountability
Professional flexibility and development
Service excellence
Corporate social responsibility
Slide 1.9
What is purchasing?
The status of purchasing and supply management
Status Influenced by:
Leverage
Focus
Professionalism
Power
Is
of purchasing to enhance profitability
it transactional, commercial or strategic?
Perception
of influencers
Academic activity
Depth of knowledge and skill
Future focus?

Chapter 1

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Slide 1.

To perform specialised tasks

As a link in the supply chain

Demonstrable skills and knowledge

With production and warehousing

Lysons & Farrington, Purchasing and Supply Chain Management

Procurement is the process of acquiring goods, works and services,

Lysons & Farrington, Purchasing and Supply Chain Management

Process and relationally focused, expanded to include

Focused on best product management methods. Employs

The early years (18501900)

Growth of fundamentals (19001939)

The war years (19401949)

The quiet years (1947mid 1960s)

Materials management comes of age (mid-1960slate 1970s)

The global era (late 1970s1999)

Integrated supply chain management (beyond 2000)

Lysons & Farrington, Purchasing and Supply Chain Management

Chasing production &

Lysons & Farrington, Purchasing and Supply Chain Management

Supplier relationship engineering

of purchasing to enhance profitability

it transactional, commercial or strategic?

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