P320 Class 2

Lead time

When a purchase order is approved by a supplier, this is when the ___ ___ starts and you are officially in a binding contract with your supplier.

To increase profit

What is the purpose of business?

Maintenance, Repair, and Operating Supplies (MRO)

A type of purchasing that is production support items, so containers and packaging for example.

Request For Information (RFI)

The first step in the quoting process, it’s used to screen for new suppliers and is a request for suppliers to describe their business.

Request for Proposal (RFP)

The second step in the quoting process, requesting for supplier to provide an estimate of how and price.

Request for Quote (RFQ)

The third step in the quoting process, request for supplier to provide firm pricing and delivery dates, and is used as the basis for creating a PO.

Long Term Agreements (LTA)

With the cost and time of processing orders through an ERP system, firms are using these to procure, as they are typically 3-5 year commitments.

Manual Statement of Work (SOW)

A way of telling a buyer when to initiate a PO, specifically for services.

Purchase Orders (PO)

The contract that is originated from the buyer to the supplier.

Proof of Delivery (POD)

A Bill of Lading is generated and delivered by the transportation provider in order for…

Decrease costs

In order to increase profit, you must _____ ____, which you can do through reducing the cost of employees, reducing the cost of process and waste, and then reduce the cost of goods and services.

Bill of Materials

All the raw materials, parts, and components needed to make one finished product, including the quantity of each item required.

Increase revenue

To increase profit, you must _____ ______, which you can do by raising prices and increasing volume.

Price

It is in the contract and is indisputable. It’s cost it takes to buy the product from the supplier, and is something you cannot argue.

Cost

Much more qualitative than the price. It is composed of many components like the actual price, quality, lead time, and delivery.

Price, quality, and delivery

What are the 3 items traditional buyers stress, as customers want these right?

Procure to pay (P2P)

The entire process a company follows from identifying a need to purchase something to paying the supplier for it.

Vendor Managed Inventory (VMI)

A former order trigger where the supplier monitors the customer’s inventory and decides when and how much to replenish based on inventory levels and demand information.

E-procurement

Suite of IT tools “electronic” to achieve efficiency in purchasing transactions and documentation.

Back-Door (Maverick) Buying

When an employee buys something for their company without following the company’s official purchasing process.

Spot buy

Unplanned purchases in the market

Reverse Auction

Multiple suppliers compete in Open Electronic Bidding

Blanket Purchase Order

An agreement between a company and a supplier that pre-approves purchases up to a certain dollar amount over a set period of time, without specifying every individual item in advance.

Quality

What is the most important of the 3 items traditional buyers stress?

Service

An honorary fourth item that buyers are stressing, apart of cost.