Lgmt 536 - Purchasing Policy and Procedures

Discussion Questions 2.3

Heather Ramirez

LGMT 536

August 25, 2013

Mohammed Arif

Discussion Questions 2.3

• Chapter 3: Purchasing Policy and Procedures
• Questions 2, 5, 7, and 8

Chapter 3

2. Discuss the concept of the internal customer. Who are purchasing’s internal customers?

“Supply managers must be responsive to the materials and support needs of their internal users (sometimes also called internal customers). Failing to respond to the needs of internal customers will diminish the confidence these users have in purchasing, and they may try to negotiate contracts themselves (a practice known as backdoor buying)”  (Monczka, Handfield, Giunipero,  & Patterson, pg. 42, 2011). Ultimately, the supply managers must be interactive with the internal customers or they may end up losing a contract altogether. For this reason, supply managers must help the internal customers to negotiate a contract that is best suitable for both. “It is important to retain this right to avoid maverick buying and selling—a situation that occurs when sellers contact and attempt to sell directly to end users (purchasing’s internal customers). Instead, purchasing should work with stakeholders and include them on the category team, to ensure that they have input into category strategies to evaluate and select suppliers in coordination with stakeholders” (Monczka, Handfield, Giunipero, & Patterson, pg. 47, 2011).

“During the 1990s, the need for closer relationships between functions became clear. Purchasing must communicate closely with other functional groups, which are purchasing’s internal customers. These are sometimes called stakeholders, in that they have a significant stake in the effectiveness of purchasing performance” (Monczka, Handfield, Giunipero, & Patterson, 2011). Internal Customers are those who are the people who basically started the business who are the ones who have a stake in the direction to which the company is coming from or going to. They are also the ones who make the big choices to what is going on within the company and to which direction that the company wants to go.

5. Describe how purchasing becomes aware of purchase requirements.

“The purchasing process is used to identify user requirements, evaluate the user needs effectively and efficiently, identify suppliers who can meet that need, develop agreements with those suppliers, develop the ordering mechanism, ensure payment occurs promptly, ascertain that the need was effectively met, and drive continuous improvement. In every step of this process, managers are challenged to ensure that internal users are satisfied with both the process and the outcome” (Monczka, Handfield, Giunipero, & Patterson, pg. 41, 2011). These purchasing requirements are stipulated within the contract to ensure everyone involved is happy with the end result.