Purchasing

The term purchase was referring in the context of business administration originally on the operational activities of a company to supply goods and services needed to carry out the production process and are not produced by that undertaking itself. With the increasing importance of corporate function Shopping and strategic tasks are propagated together under this term.

• 5.1 Internal organization
• 5.2 Shopping in business organization

Conceptual delimitation

Due to the rather late used discussion of business management research with the company's Purchasing function, there is still no final agreement on the precise definition of the concepts of material management, procurement and purchasing. The prevailing view in the economic literature see shopping as a branch of procurement, which in turn is a branch of materials management. However, this concept hierarchy is not reflected in business organization in general.

Subfunctions

Corporate Purchasing function includes - depending on the severity in the individual companies - among others the following sub-functions:

• Strategic Purchasing Planning and control of material cost development
• Procurement market research
• Analysis of purchasing behavior of competitors
• Shaping the procurement strategy ( number of suppliers, procurement strategies, make- or-buy, dual sourcing, etc.)
• Coordination of different parts of the company to the pooling of purchasing power
• Standardization ( standardization of components ) for volume bundling
• Influencing technology decisions from a cost perspective
• Supplier development
• Supplier Evaluation
• Negotiation of prices and payment terms with suppliers

• Operational Procurement Management of prices and conditions
• Tenders for new awards
• Examination and comparison of bids
• Structure and conclusion of contracts with suppliers.

Instruments of purchasing

For the fulfillment of the tasks the shopping through various tools available. A few examples:

• Different allocation methods (eg, auction, reverse (reverse ) auction, expressive bidding, Competition )
• Linear performance pricing ( LPP)
• Regression analysis of cost drivers and prices
• Cost analyzes
• Evaluation of indicators Shopping
• Considerations of the total cost of ownership
• Specification analysis and adjustments
• Risk Management
• Strategic partnerships with suppliers
• Shopping Communities
• Value chain management
• Demand Management
• Benchmarking
• Cost Planning
• Value analysis
• ABC analysis
• XYZ analysis

What levers are used, depends on the individual supplier-customer relationship. Even the modern shopping here follows the classical approach of supply and demand. According to the power supply of the supplier and the buying power of the customer the balance of power allowed different purchasing leverage. For example, you can work with target prices at low power supply and high demand power, while in the reverse situation, the aim will be to change the nature of demand, for example through changes in specification or targeted innovations.

Shopping strategies

Determining the number of suppliers

Depending on the strategic situation, the level of fixed costs and number of the award to more than one supplier can be useful. The advantage of a multi- supplier strategy is that the buyers at differences with the supplier, for example, with respect to future pricing, keeps open the option of short volume to shift to other suppliers. The disadvantage to a Einlieferanten strategy is the multiple seizures of fixed cost items (eg development or tooling costs ).

Linking various agenda items

In many cases, various agenda items, such as allocation of new product projects and price movements in the Altgeschäftes, combine in a negotiation. To this end, all possible claims against the supplier are researched and compiled prior to a hearing. Here is a close cooperation between the different parts of the purchasing organization is necessary, especially in large and globally organized groups.

Buying Lead

With increasing size of the company to take the strategic options of purchasing. Thus, better bargaining positions against often also global suppliers are established by centralized cooperation between different parts of the company ( Buying Lead ).

Organization

Internal organization

The purchase can be (eg plants) organized internally by supplier, product classes (even groups of materials, commodities) or internal customers. In some companies, a breakdown in project procurement and serial purchase is made ​​, ie there are different organizational units for new awards and ongoing series business. In smaller companies, purchasing and scheduling are summarized sometimes organizationally.

Shopping in business organization

The classification of purchasing in business organization depends on the size and structure of the company and of the importance of purchasing for the company, which is measurable to total sales, for example, the ratio of the purchasing volume. In manufacturing companies, the share of externally purchased goods and services is regularly more than 50 percent of the total cost. This meaning is not always found in practice, however, in the design of the purchasing organization again.

With global company with high purchasing volume (eg in the automotive industry) shopping is usually an organized under the CPO ( Chief Procurement Officer ) Division, the Central buys the pooling of purchasing power for all plants or offices of the company ( central purchasing ). The CPO is not always a member of the Board, he is then regularly to the COO or CEO, sometimes also the head of production. For companies with less importance of purchasing individual plants or branches can also use them directly associated with purchasing departments have ( decentralized procurement ). The current trend in the industry is the centralization of purchasing.

As part of the centralization of compliance with purchasing policies is an important aspect to promote the standardization of purchasing processes and their control. Fully automated approval processes ensure today that a commercial license be granted, particularly in large companies before the actual order process a professional permit and before placing the order. So the shopping though centralized, but the necessary competence decisions can be decentralized. The necessary business processes and rules are defined centrally and can be rolled out globally.