Purchasing System and

Vendor Management
For Beginners
 FLOWCHART OF THE E- PROCUREMENT
SYSTEM
Purchasing
Material User Department /Buyer Supplier

Buyer
Prepares Materials
Requisition –inputs reviews MR
information into in-house
computer system Extract&merges MR data
from in-house system into
B2B
Assigns Suppliers to requisition on
B2B system for bidding and specifics
Purchase Order
closing date and other conditions
(electronic or hard
copy)
Collects and reviews bids submitted
by suppliers through internet based
Materials B2B system or fax
Requisition is
Selects a supplier based on quality
printed out
cost and delivery performance
then issues a Purchase Order

Purchase Order (electronic or

hard copy)
The Corporate Purchasing Process For
Contracts
Corporate Purchasing

Goal of Purchasing Synergy

Develop Corporate Contracts

Better Conditions – 100% Operating

Companies

Bonuses / Incentives

Average of 0.5% to Remainder is returned

cover the cost of to Operating
Corporate Purchasing Companies
 Functions of Corporate Purchasing
 Coordinates the common purchasing interests of the operating
companies.
 Advises and supports the operating companies on its purchasing
policies, processes, and conditions.
 Develops and updates corporate contracts and improves
accessibility for the operating companies.
 Performs overall purchasing market research and commodity and
sector analyses.
 Coordinates global sourcing activities and selects major
suppliers.
 Initiates, promotes, and organizes purchasing, training and
education programs, e.g., purchasing action plans and suppliers’
quality management.
Source of Information on
Suppliers
 Trade Directories
 Trade Journals
 Telephone Directories
 Supplier’s Catalogues
 Trade Exhibition and fairs
 Salesmen
 Company Personnel
 Purchase departments of other companies
Supplier Evaluation
 Quality
 Delivery Times
 Flexibility
 Pricing
 Internal Facilities
 Internal Systems
 Method of Supplier Evaluation
(Weighted Point Method)
 Quality:
No. of Lots accepted/No. of lots received ×
50

 Delivery Rating:

No. of Lots delivered on time/No. of lots delivered × 30

 Pricing:

Least offer received/Supplier’s offer × 20

Variables Breakdown
 Price variables: Price, Financing terms etc.
 Delivery Variables: Total Transit Time,
Reliability
 Quality Variables: Overall Supplier
Reputation, Product Reliability, Technical
Specifications
 Service Variables: Ease of operations,
maintenance, reliability of service, sales
service, supplier flexibility, training offered,
ordering convenience etc.