GMS 401 Lecture Notes - Lecture 7: Spend Analysis, Value Engineering, Order Picking

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 401
• Professor: Fatemeh Firouzi

Document Summary

Purchasing selects suppliers, negoiates contracts, helps establish partnerships, and acts as liaison between suppliers and various internal departments. Organizaions are outsourcing and buying more of their noncore services and parts. The purchasing cycle starts with a purchase requisiion and ends with paying the invoice. Value analysis is used to provide the basic funcion of a part/product at minimum cost. Prices for many products are determined using compeiive bidding and negoiaion. Muliplant organizaions use a hybrid system where common material and services are centralized and small purchases are bought locally. Spend analysis examines the purchases in order to group them by items families and suppliers, so that price discounts can be obtained and purchases from unapproved suppliers are minimized. Ethics in purchasing is important because of the amount of money involved and because buyers may be eniced by salespeople to favour their company. Controlling ethical treatment of workers by overseas suppliers is part of ethical purchasing.