Purchasing management discussion questions

Questions you absolutely must consider include: Buy Considerations when outsourcing to reduce cost The decision to outsource a part or assembly is often based on lack of internal resources, refocus of core competencies, or cost reduction.

Purchasing management discussion questions

Purchasing consortium go by many names, including purchasing groups, group purchasing organizations, federal organizations of purchasing, and international purchasing organizations.

However, they all have the same goals, and their differences are mainly in their structure, vertical focus, and modus operandi. In the next section we will discuss some methods of classification.

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Purchasing consortia are important because, when properly managed, they work. According to Corporate Purchasing SolutionsFortune companies have reported that purchasing through their consortiums saved them approximately That's significant - and proof that purchasing consortiums are not just for libraries, health care, or small government agencies.

Consortium Classifications Purchasing consortiums, regardless of the name used to describe them, have a long legacy of serving industry micro-segments.

Modern consortia can take on any form - industry-specific or not - and often go beyond just leveraging group buying power to drive negotiated prices.

Many offer technology, reporting and other benefits to their participants as well. They can play an important role in the sourcing of non-strategic and non-core categories where it does not make sense to develop or maintain the expertise in house.

Cooperative purchasing is distinguished by the potentially large number of members, the potentially significant dissimilarities between group members, different cooperative product and service groups and related life cycles, and specific purchasing perspectives, among other factors.

This section attempts to classify the many forms that a purchasing organization can take. Types There are various different approaches to quantifying consortium types in the literature, but this wiki is going to use the classifications outlined by Mary M.

Aylesworth in Purchasing Consortia in the Public Sector: Models and Methods for Success as it appears to be one of Purchasing management discussion questions most complete classifications that can be found in the literature, even though it was written primarily for the public sector.

The reference paper discusses five structural models of purchasing collaboration, ranging from loosely structured relationships under the control of institutional purchasing managers to highly structured business models with complete autonomy.

Loose Collectives In a loose collective, also known as a local network, one or more institutions join together to obtain better pricing, share information, and, in some cases, resources in a relatively informal relationship. There is no formal structure to the organization, which is usually not a separate entity.

Voluntary Confederations In a voluntary confederation, or voluntary cooperative, purchasing managers carry out competitive sourcing based on needs defined by the participating institutions.

These cooperatives range from relatively informal committees to highly structured groups. Regional Purchasing Agencies A regional purchasing agency is a centralized authority that provides services to government bodies where the government retains a degree of control and where institutions may or may not be compelled to use centrally negotiated agreements.

Member-Owned Service Bureaus In a member-owned service bureau, two or more institutions create a separate entity to provide services to participating organizations.

The board consists of representatives from member organizations and the model provides the benefits of outsourcing without giving up control of policy and direction. For-Profit Enterprises And, the category that needs no explanation, a for-profit enterprise is an entity in the business of selling its purchasing clout and expertise.

Typically, for-profit consortiums come in one of two varieties.


In the first model, the enterprise purchases goods based on the aggregate demand of its clients and then resells the goods at cost plus a profit margin. In the second model, the firm acts as an agent for its clients by negotiating price and services based on the same aggregate demand and charges a commission for its services.

SubTypes Although the classification of types discussed in the last section is a good start, it doesn't truly cover the degree to which each of the purchasing consortiums can be customized.

Purchasing management discussion questions

For each type, there are, in reality, one or more subtypes that differentiate one consortium from another. This section discusses those subtypes using the classification of Fredo Schotanus and Jan Telgen in Implications of a Classification of Forms of Cooperative Purchasing which uses a "highway matrix" with consortium intensity on one axis and consortium activity on the other axis, where intensity is dependent on whether or not it is tactically or strategically focused and where activity is dependent on the degree of member interaction and the number of projects the consortium undertakes.

Hitchhiking Under the "highway-matrix" classification, Hitchhiker-friendly consortiums are low in intensiveness and low in activity. Hitchhiking usually involves a large organization that establishes a contract and allows other smaller organizations to use the contract.

Sometimes hitchhiking relationships are restricted to purchasing related information. Hitchhiking consortiums are usually loose collectives or voluntary confederations. Bus Rides Bus Ride consortiums display low intensiveness but high activity under the "highway" matrix classification.

Bus rides mostly involve long term hitchhiking made possible by public or private external parties or central authorities. The bidding process is based on the expected aggregate procurement volume and is carried out with the specific purchasing expertise of the external party.

Members do not have to communicate with each other and the external party carries out most of the procurement activities.European Corn Borer - Ecology and Management and Association with other Corn Pests.

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Agriculture in North America has been dramatically influenced by crops and pests carried by humans, either intentionally or accidentally into the region. •Please read Chapter 12 from Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Fourth Edition, Project Management Institute, Inc., (pages ).

•The study notes explain topics that are important for PMP® exam preparation, and you can expect several questions from these topics. The Purchasing Chessboard is inspired by the logic of supply power and demand power. Since the first edition in , it has proven to work in any industry, for any category, anywhere in the world.

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Definition and Terminology. A purchasing consortium can be defined as two or more independent organizations that join together, either formally or informally, or through an independent third party, for the purpose of combining their individual requirements for purchased materials, services, and capital goods to leverage more value-added pricing, service, and technology from their external.

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