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4TPM7071 Week 7& 8 Unit 4 Purchasing and Supplier Selection
4TPM7071 Week 7& 8 Unit 4 Purchasing and Supplier Selection
4TPM7071 Week 7& 8 Unit 4 Purchasing and Supplier Selection
6
Fig. 4.1: Operational purchasing activities (adopted from Slack,
11/15/2021
Logistics and Fr. Mgt. (TPM7071).
Prepared and presented by Dr. Belew
1998) D. AA, Oct.2021- Feb 2022
4.3. Purchasing Portfolio
• The innovations we make on a daily basis can
have a profound effect on making the world a
better place for people, business and society.
7
11/15/2021 Fig.4.2: Kraljic purchasing portfolio matrix
Logistics and Fr. Mgt. (TPM7071).
Prepared and presented by Dr. Belew
D. AA, Oct.2021- Feb 2022
Cont…
1). Leverage Products
– Are those products that have significant impact on
the finance, but relatively easy to buy from the
supply market (low market risk).
2). Routine Products
– Are those products that have very little financial
impact and are also plenty to choose from the market
place.
– They don’t cost much in comparison to the total cost
of your own products.
– The market availability for those product is very high
and there is no risk of supply.
ECSU Department of UITM, Transport
Logistics and Fr. Mgt. (TPM7071).
8 11/15/2021
Prepared and presented by Dr. Belew
D. AA, Oct.2021- Feb 2022
Cont…
3). Strategic Products
– Are those products that have high level of financial
impact to your final product and are not usually
available in the market place, thus high supply risk.
– They are very expansive to develop and manufacture,
and often involve high technology contents.
4). Bottleneck products
– Are those products that may or may not cost too
much in comparison with the total material cost, but
they must have them and they are very difficult to get
hold of.
– The supply risk for those components is high, and the
availability of thEeCLSogUcisDotiecspm p
artm eo
nt on
f Ue
ITn
M,tTs
raniss
and Fr. Mgt. (TPM7071).
porn
t ot guaranteed.
11/15/2021 9
Prepared and presented by Dr. Belew
D. AA, Oct.2021- Feb 2022
4.4. Supplier Selection
• One of the critical tasks of purchasing function is to
identify and select the suppliers.
• The quality of the suppliers and the righteousness of
their selection will have direct implications on the
supply chain’s long-term competitiveness.
• The processes of going about selecting suppliers can be
suggested as follows, but by no means comprehensive
and universal.