Purchasing Management

Purchasing & Resourcing

Management
Organization Responsibilities and
Job Structures
Lecture 7 Chapter 4
Iba Almajzoub
ibaa99@hotmail.com
www.almajzoub.net
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Alternative Organizational Structures

 Entrepreneurial (star) where all personnel report to
one manager or leader, suited to small centralized
purchasing operations.
 Bureaucratic is a hierarchic or vertical reporting

line, suitable for large complex purchasing

organization.
 Matrix (network) allow for contact and

involvement between all personnel with in the

purchasing department.
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Purchasing Management

Purchasing as a Top Management

Function
 There are two types of directors:
 Board directors who are concerned about shareholders
 Other directors who are not on the company board and
occupies the head of key functions within the business.
 The head of purchasing report directly to the
managing director. Managing
Director

Company Financial
Secretary Controller

Production H/R Marketing Director Technical

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Director Director Director Of Supplies Director

Purchasing as a Middle Management

Function
 Since purchasing is considered as a service and
spending department then it should be under
control and report to financial manager.

Production Materials Inventory Commercial Financial

Manager Manager Manager Manager Manager

Purchasing
Manager

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Purchasing Management

Purchasing as a Routine
Administrative Function
 In small business and when purchasing has
relatively low risk buyers report directly to
owner/manager.
Centralized and Decentralized
 When a business is located at a single site all
buying is centralized.
 When a business is located at multi sites then it

must be decided between

 Maintaining control from business centre.
 Purchasing delegated at site level
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Centralized Operation
 Purchasing function is carried out at head office, it avoids
duplication of managerial and specialized functions, but
has a decision delays.
 Purchasing strategy/policy formulation.
 Development of systems and procedures.
 Purchasing research into market conditions.
 Preparing a standardized materials specifications.
 Sourcing primary materials and supplies.
 Deciding a share of orders between suppliers.
 Negotiation on price, quality, and delivery.
 Purchasing economic order quantities EOQ.
 Monitoring and controlling inventory levels.
 Purchasing staff training and development.
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Purchasing Management

Decentralized Operation
 When individual sites producing dissimilar
products and when sites are expected to operate as
separate business.
 The first three functions from the previous slide

remain at head office level.

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Organizational Strength and

Weaknesses
 Perform a SWOT analysis (Strengths, Weaknesses,
Opportunities, and threats) by a senior level. Then
an action plan should be developed to implement
the needed changes.

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Purchasing Management

Vertical Organizational Structures

 Contains several layers between seniors and
personnel, decision need to go through layers
causing delay Purchasing
Manager

Senior Stock
Buyer Controller

Materials Buyer Parts Buyer Head Storeman Stock Analyst

Asst Buyer Storeman Stock Checkers

Order Clerks
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Horizontal Organizational Structures

 Flatter and leaner also known as delayered.

Purchasing Manager
& Stock Controller

Storeman
Material Parts Order Stock Store-
Driver
Buyer Buyer Clerks Analysis keeper
Checkers

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Purchasing Management

Organization and Job Structures

 Management may initiate organizational changes.
 Job Changes, by introducing new jobs, adding/subtracting
duties and responsibilities
 Job Mergers by combining two or more jobs
 Job Rotation by prescribing alternative jobs for personnel,
occupy two or more alternative roles based on operation
needs and team work.
 Vertical Job changes enriching jobs through increasing
task complexity and responsibility.
 Horizontal Job Changes enlarging by taking new duties
providing no need for new skills.
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Job Analysis and Specification in

Purchasing
 Job analysis is important prior to organizational changes.
 Job specifications is a complete analysis of the role of
particular job.
 Performance indicators for purchasing officer
 Ability to determine the most economic buying, and carry out
effective negotiations for the best price quality and delivery, and
maintain good level of motivation.
 Personnel qualities needed by purchasing officer
 General appearance, physical health, ability to handle stress,
verbal expression, maturity, mental ability, persuasiveness, and
personal motivations.

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Purchasing Management

Coordination with Related Functions

 Constant communication and exchange of
information between the organization’ s different
functions in a formal (meetings, reports) and
informal is an important for the its survival.
Demand Forecast, Customer, Technical,
Stock & order analysis, Production & Transport
Purchasing Liaison
Logistics
Planning

Stock Checking,
Inspection, Movements,
Dispatching
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