33:799:301 Chapter Notes - Chapter 2: Carrying Cost, Local Purchasing, E-Procurement

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

Document Summary

Purchasing act of obtaining merchandise, capital equipment, raw materials, services or mro supplies in exchange for $ or its equivalent. Purchasing is the crucial link between the sources of supply and the organization itself. Profit leverage effect of purchasing measures the impact of change in purchase spend on a firm"s profit before taxes, assuming gross sales and other expenses remain unchanged show that: $ decrease in purchase spend = increase in profit before taxes. Inventory turnover how many times a firm"s inventory is utilized & replaced over an accounting period [ex: 1 year] System must have adequate operational/internal control to prevent abuse of purchasing funds. Firms focus more on core competencies and outsource noncore activities to suppliers. E-procurement system allows users to submit their purchase requisitions to the purchasing department electronically and enables buyers to transmit purchase orders to suppliers over the internet, fax or mail. Chapter 2: access to more buyers, ability to instantly adjust to market conditions.