Basics of Supply Chain Management

Chapter 9

Purchasing Management

9.1 Introduction

Typically, a manufacturing firm spends about 50% of its sales dollars in its procurement of raw materials, components, subassemblies, and supplies. This gives the purchasing function tremendous responsibility for saving costs and increasing profitability in an organization. Contrary to the common perception that purchasing is the process of buying, the purchasing function involves the process of procuring the right quantities of the right raw materials and components at the right price from reliable sources with the right delivery time and place, in order to facilitate the production or assembly of the right quantity of the end products according to the master production schedule or the final ...