Chapter 5 - Purchasing Management

Flashcards covering key concepts of Purchasing Management for exam preparation.

Procurement

The process of selecting and vetting suppliers, negotiating contracts, establishing payment terms, and purchasing goods and services.

Purchasing

Obtaining goods and services from an external supplier in exchange for money or its equivalent.

Supply Management

The identification, acquisition, and management of resources an organization needs to meet its strategic objectives.

Purchase Requisition

An internal document used to define the need for specific goods or services.

Purchase Order (PO)

An official offer issued by a buyer to a supplier to acquire goods or services.

E-procurement

The business-to-business purchase and sale of supplies and services over the internet.

Request for Information (RFI)

A process used to collect written information about the capabilities of potential suppliers.

Request for Proposal (RFP)

A document used to evaluate a supplier's capability to provide a product or service.

Request for Quote (RFQ)

A document used to solicit price and delivery bids from suppliers.

Inventory Turnover

The number of times inventory is sold and replaced over a specific period.

Profit Leverage Effect

A decrease in purchasing costs directly increases profit.

Total Cost of Ownership (TCO)

The sum of all costs associated with acquiring, using, and maintaining a product.

Make vs Buy Decision

The choice between producing a product internally or purchasing it from an external supplier.

Outsourcing

Purchasing goods or services from an external supplier.

Insourcing

The process of bringing production back in-house.

Co-sourcing

A strategy utilizing a combination of internal resources and external providers.

Qualitative Factors (Make vs Buy)

Control, quality, supplier reliability, and strategic considerations.

Quantitative Factors (Make vs Buy)

Costs such as labor, materials, capacity, and overhead.