Purchasing Fundamentals for Today's Buyer

Preface v
Introduction to Purchasing for Business 1
Salaries of Purchasing Occupations 3
Similarities and Differences in Buying 6
Techniques How the Size of the Organization Affects 7
Purchasing Methods How New Businesses and Entrepreneurs Buy 11
Some More Words About Titles 11
Summary 12
Establishing Proper Purchasing Objectives 13
The Importance of Objectives 15
The Difference Between Price and Cost 16
Planning to Eliminate Stock Shortages and 17
Obtain Material When Needed
Establishing Leadtimes 18
Ensuring Prompt Delivery 20
Obtaining or Preparing Proper Specifications 21
Buying the Right Item for the Job 23
Authority to Establish Specifications 24
Problem Specifications and How to Avoid Them 25
Evaluating Time and the Cost of Money 26
Planning and Setting Objectives Properly 28
Summary 29
Different Types of Organizations and Buying 31
Systems
Advantages and Disadvantages of Different 33
Organizational Structures
Comparing Organization Types, Sizes, and 34
Structures
Problem Created by Company Growth 38
Forms Used in Most Formal Purchasing 39
Activities
The Purchasing Process 48
Summary 52
Keeping Transactions Legal 53
Understanding Business Law 55
Understanding and Making Contracts 58
Provisions of the UCC Affecting Purchasing 59
Activities
Documenting the Contract in Writing 60
Different Types of Warranties 63
The Place and Time Where the Buyer Takes 66
Ownership Agency: Who Has the Authority to Buy or 67
Sell? Obligations of the Agent and the Principal 68
Antitrust and Unfair Trade Practices by 69
Buyer or Seller Patent Infringement or Unauthorized Use of 70
Trademarks
Legal Differences in International Trade 72
The High Risk of Consequential Damages 72
Other Statutes Affecting Purchasing 73
Operations
Ways to Avoid Legal Problems 73
Compensation for Supplier Failure 75
Summary 75
Buying for a New or Small Company 77
Establishing Priorities and Implementing 79
Purchasing
Obtaining Needed Materials and Service 80
Beginning Cost-Cutting Efforts 80
Concentrating Efforts on Big-Dollar Items 81
Concentrating Efforts on Major Suppliers 83
Asking for Concessions and Being Prepared 84
to Compromise
Qualifying New Suppliers 85
Conducting the Investigation of Suppliers 85
Establishing Objectives by Understanding 86
the Business
Finding the Appropriate Source 87
Qualifying Suppliers in Other Ways 87
Different Types of Suppliers 88
Finding the Right Type of Supplier 89
Making the Initial Contact 89
Establishing Close Relationships 90
Obtaining Financing or Credit 91
Finding Enough Time 94
Summary 96
Obtaining the Best Possible Agreement 99
Communicating and Selling the Seller 101
Using the RFQ System 102
What If You Don't Receive an Answer to an 105
RFQ?
How to Analyze the Bids 107
Bargaining with a New Supplier 109
Gathering Preliminary Supplier Information 109
Obtaining In-Depth Supplier Information 111
Negotiating Method 115
Summary 121
Using the Computer for Better Purchasing 123
Purchasing Applications Using the Computer 126
Supplier Directories on Line 133
Price Indexes and Economic Information 134
What is Needed 136
When to Upgrade 138
How Computers Will Change Purchasing in the 138
Future
Summary 139
Purchasing Management Concerns 141
Different Methods for Organizations of 143
Different Sizes
How Large Purchasing Organizations are Run 143
Purchasing in Top Management Discussions 153
and Decisions
Using Supply Chain Management 154
Does Size Difference Really Matter? 155
Back-Door Selling 155
Preparing and Using Budgets 156
Matching Proper Staffing to Workloads 157
Using Benchmarking 158
Honesty and Ethical Conduct Concerns 158
Disclosure of Confidential Information 160
Summary 161
Buying the Quality Needed 163
Quality Defined 165
The Customer's Definition of Quality May 166
Differ
Measuring the Quality of Proprietary 167
Products
Where Quality Begins 169
Areas of Quality Concern 170
Establishing the Quality Level 171
How Quality is Measured 173
Measuring and Quality Control Tools for 175
Testing
Obtaining Quality Internationally 176
Solving the International Inspection Problem 177
What You Need to Know About ISO 178
Maintaining Adequate Quality Records 180
Solving Quality Problems with the Supplier 180
Summary 182
Methods of Cost Minimization 186
Reducing MRO Expenses 188
Controlling the Cost of Capital Equipment 192
Controlling the Cost of Raw Material, 194
Components for Production, and Finished
Goods for Resale
Take Preventative Action to Avoid Price 195
Increases
Break out Component Costs 195
Postpone Price Increases 197
Write Escalator Clauses with Care 198
Buying Legal, Accounting, and Other Services 198
Consider Unusual Channels of Supply 199
Summary 202
Business Functions Related to Buying 203
Using Value Analysis to Slash Costs 206
Sale of Scrap, Surplus, and Obsolete 207
Material
Maintaining the Proper Level of Inventory 208
The Type of Products Affects Control of 210
Inventory
Organization Size Affects the Inventory 212
System
The Type of Business Influences Inventory 212
Methods
Calculating Proper Inventory Levels 214
Providing Information for Accounting and 215
Management
Traffic Management Duties of Purchasing 216
Personnel
Effective Warehousing and Receiving Makes 217
Buying Easier
Buyers Help Develop Suppliers 218
Outsourcing or Make-Buy Analysis 218
Report Preparation 219
Summary 221
Bibliography 223
Appendices
A: 15 Things You Shouldn't Tell a Supplier 229
B: 12 Things You Should Tell a Supplier 235
C: How to Improve Communications 239
D: Nine Things You Can Do to Communicate Better 243
E: 21 Ways to Get a Price Reduction 247
F: How to Measure Purchasing Savings 253
G: 12 Common Purchasing Myths 259
H: How Close to Suppliers is Too Close? 267
I: The Hidden Meaning Behind Questions 273
J: Tips for Buyers 283
K: Sample Job Description 289
L: Managing Time 295
M: What to Do if a Supplier is Failing or Going 299
Out of Business
N: Questions to Ask Candidates for a Buyer's Job 303
O: Articles 1 and 2 of the Uniform Commercial 307
Code
Glossary 375
Index 395