March 10, 2017

Purchasing

Im writing my paper on purchasing on how it plays a role in everyday life

inside a corporation. I picked Home Depot because its a company that has variety

of areas that can be touch up on, in the areas of purchasing! There are different

aspects in the company purchasing plays in sale the product to the consumer. This

are the different topics I will touch up on and how the process work in the

corporation:

Purchasing and profit leverage

Purchasing objectives
Basis for pricing
Selecting Suppliers
Price Negotiation

Purchasing can simply be considered the process of buying. Many assume

purchasing is solely the responsibility of the purchasing department however,

the function is much broader and, if carried out effectively, all departments in

the company may be involved obtaining the right material, in the right

quantities, with the right delivery (time and place), from the right delivery

(time and place), from the right source, and at the right price are all

purchasing functions.

Choosing the right material requires input from the marketing,

engineering, manufacturing, and purchasing departments. Quantities and

delivery of finished goods are established by the needs of the market place.

However, manufacturing planning and control must decide when to order

which raw materials so that marketplace demands can be satisfied.

Purchasing is then responsible for placing the orders and for ensuring that the

goods arrive on time. (Introduction to materials management) Eighth

Edition. By Stephen N. Chapman, J.R. Tony Arnold, Ann k. Gate wood, Lloyd M.

Clive.

Purchasing objective has the responsibility of keeping flow, in order for

the company to stay up float, accounting for every material the company has

in inventory. For example Home Depot has 30 bags of fertilizer and the

consumer purchases 5 cases which leave 25 case left. In other words, Home

Depot needs to order 5 more cases to replace, by not keeping track of

inventory Home Depot misses out on profit.

The objectives of purchasing can be divided into five categories:

Obtaining goods and services at the lowest total cost.

Obtaining goods and services at the lowest total cost.
Ensuring the best possible service and prompt delivery by the

supplier.
Developing and maintaining good suppliers that minimize the

impact on the environment.

To satisfy these objectives, some basic functions must be

performed:

Determining purchasing specifications right quality, right

quantity, and right delivery (time and place).

Select supplier (right source).
Negotiating terms and conditions of purchase (right price)
 Issuing and administration of purchase orders and

agreements (Introduction to Materials Management) by

Stephen N. Chapman, J.R. Tony Arnold, Ann K. Gate wood,

Lloyd M. Clive.

The things I have mention above is called purchasing objectives, responsible

for flow of materials into firm following up with the supplier, and expediting

delivery. Missed deliveries can create havoc for manufacturing and sales, and

purchasing can be divided. Into five categories:

Obtaining goods and services of the required quantities and

quality.
Obtaining goods and services at the lowest total cost.
Ensuring the best possible services and prompt delivery by the

supplier
Developing, and maintaining good supplier relations and

developing potential suppliers.

Home Depot is running and successful company, in 2005 sales totaled up to

be US $ 91.8billion (US$77.0 billion in retail sales). Despite the 10% increase

in revenue, Home Depot dropped three spots to NO.17 one of the sources.

Home Depot have to compete against other arrivals such as Lowes. Lowes

prices are compatible and a lot cheaper to the consumer. For example a pack

of Clorox would cost $8.50 at Lowes compared to Home Depot it would cost $

12.50. This is category as (selecting suppliers), under Multiple Sourcing: Its

the use of more than one supplier for an item. The potential advantages of

multiple sourcing are that competition will result in lower price and better

services and that there will be a continuity of supply. Other words both

company share common good satisfying the consumer.

 Home Depot stores average 105,000ft2 (9,755m2) in size and an

organized warehouse style, having a large amount of supplies. They have

other locations in New Jersey, which encompasses 217,000ft 2 of space and in

Anaheim Hills, California where it encompasses 204,000ft 2 when receiving an

item, Home Depot chooses the top of the line product, fertilizer, soil

machinery such as lawn Moyer, Janitor supply, flower pot and even down to

kitchen supplies. The quality of the items last long and will satisfy the

consumer needs.

Home Depot can do delivery as well. Its a company that strives at its

full potential and stretches out in different areas. For example, if a customer

needs help fixing his or her house and looking for contractors, Home Depot is

a company that will provide delivery. It depends on the individual and what

needs fixing, the stairs, front porch including the deck. The company will

provide plie wood, even the paint and measurements. And the calculations.

Its known for excellent price and good quality. A bucket of paint BEHR

MARQUEE # N230-3 Armadillo will cost you around $45 98 - $22000., the

customer will have a choice of having Price Negotiation. Weather shield 2in.

x6in X 16ft #2 prime Grand contact southern Pine Pressure- treated lumber

run in the range of $1088, depending on the type of wood. On page 171,

material management The Purchasing department is responsible for

ensuring that suppliers deliver the items ordered on time. If there is doubt

that delivery dates can be met, purchasing must be notified in time to take

corrective action. This might involve expediting transportation, alternate

sources of supply, working with the supplier to solve its problems, or

rescheduling production.
 What I like about Home Depot is the fact that you can negotiate your

price, its a company that you and I can come to agreement on certain items.

Lets say I brought a house and the deck needed to be replace. I take the

measurements of the area; the price is determining by square ft., the cost

range for Weather Shield 2in. x6in. X 16ft #2 Prime Ground Contact Southern

pine pressure- treated lumber $1137 square ft. depending on the brand of

carpet. Lowes, Home Depot competitor can do the same thing the only

difference is Lowes is cheaper. A bucket of paint name brand for example

Olympic White Latex interior paint and primer in one can cost up to $17 98 -

$2178, and a Valspar Ultra 4000 high hide white Latex interior paint (actual

$6826 -$8536. You see theres a big difference in between companies.

Page 171 Following up and delivery It discusses the purchasing

department is responsible for ensuring that suppliers deliver the items

ordered on time. If there is doubt that delivery dates can be met, purchasing

must be notified in time to take corrective action. This might involve

expediting transportation, alternate sources of supply, working with the

supplier to solve its problems, or rescheduling production.

Purchasing cycle follow underneath the same category, the example I

provided follow underneath purchasing cycle consists of the following steps:

Selecting supplier, including researching and finding potential suppliers

issuing requests for quotations, and selecting the right suppliers ex.

I hope that my project paper touch up on the main point of purchase.

inside a company. And how the suppliers interact with the consumers and

other suppliers inside the corporation. I chose Home Depot for a reason, its a
company that has lots of varieties in areas to choose from. Down to house

supplies, gardens and contractors. Home Depot deals with price negotiations

down to basis of prices.

References: Chapman, Stephen N., J.R. Tony Arnold, Ann K. Gatewood, and Lloyd M.

Clive. Eighth Edition ed. N.p.: n.p., n.d. Print. Copyright 2017, 2012,2008,2004,2001 by

Pearson Education, Inc.

"Home Depot." Https://en.wikipedia.org/wiki/The_Home_Depot. N.P., n.d. Web.

Http://www.homedepot.com/. N.P., n.d. Web.