Institute of Commercial Management | Qualification Subject

Purchasing Management

Main Topics of Study

What is Purchasing?

  • Definition
  • Organisational buyers
  • Purchasing, profitability and added value
  • The evolution of purchasing
  • Purchasing and change
  • The status of purchasing

Purchasing Strategy

  • Definition
  • Levels of strategy
  • The strategic planning process
  • Purchasing strategy
  • Environmental scanning
  • Strategy formulation
  • Strategy implementation
  • Strategy evaluation and control
  • Strategic options

Purchasing Organisation

  • Organisational design and structure
  • Approaches to organisation structures
  • Centralised purchasing
  • Purchasing and its functional interfaces
  • The internal organisation of purchasing departments
  • Purchasing and supply in group undertakings
  • Horizontal organisations
  • Supply chain management
  • Materials management
  • Logistics management
  • The contribution of purchasing to supply chain management

Purchasing Procedures

  • Introduction
  • Traditional purchasing procedures
  • The inefficiencies of traditional procedures
  • Legal aspects of ordering procedures
  • The ‘battle of the forms’
  • Purchasing records
  • Small orders
  • Purchasing manuals

Purchasing and IT

  • Introduction
  • Management Information Systems (MIS)
  • Information Technology (IT)
  • IT and competitive advantage
  • Computer systems
  • Computer operation
  • A typical computerised purchasing application
  • Flowcharts
  • Essential features of a computerised supplies system
  • Some computer applications relevant to purchasing
  • Some advantages of computerised purchasing
  • Telecommunications and networks
  • Electronic commerce
  • Electronic data interchange
  • Electronic Funds Transfer (EFT)
  • Electonic mail
  • Smart cards
  • Bar coding
  • Electronic catalogues
  • Security and legal issues
  • The impact of IT on purchasing and supply

Human Resources in the Supply Chain

  • Introduction
  • Human resource planning
  • Job analysis
  • Recruitment and selection
  • Performance appraisal
  • Training and development
  • Purchasing and pay
  • Motivation, communication and commitment
  • Communication
  • The management of change
  • Teamwork and multinational teams
  • Management styles and leadership
  • Strategic aspects of HRM applied to purchasing

Specifying and Assuring the Quality of Suppliers

  • Introduction
  • What is quality?
  • The importance of TQM
  • The specification of quality
  • Product and production design and re-design specifications
  • Standardisation
  • Value analysis and engineering
  • The implementation of quality
  • Quality control and assurance
  • Quality systems
  • Independent quality assurance and certification
  • Tools for quality and reliability
  • Failure Mode and Effects Analysis (FMEA)
  • Quality circle and task teams
  • The cost of quality
  • Purchasing and quality

Matching Supply with Demand

  • Definitions
  • Inventory classifications
  • The aims of inventory management
  • The right quantity
  • Demand
  • The economics of stock management
  • ABC analysis
  • Variety reduction
  • Economic order quantities (EOQs)
  • The quantity discount model
  • Lead times
  • Forecasting demand
  • Fixed order and period review systems
  • Materials Requirements Planning (MRP)
  • Distribution Requirement Planning (DRP)
  • Just-In-Time purchasing (JIT)
  • Optimised Production Technology (OPT)
  • Lot sizing
  • Safety stocks and service levels
  • Special inventory factors

Sourcing

  • Sourcing levels
  • Sourcing information
  • Analysis of market conditions
  • Directives
  • Sources of supply
  • Suppliers assessment and appraisal
  • Supplier performance rating
  • The supplier base
  • Make or buy strategies and tactics
  • Outsourcing
  • Outsourcing purchasing
  • Tiering
  • International sourcing
  • Partnership sourcing
  • Forming successful partnerships
  • Reciprocal trade
  • Countertrade
  • Intra-company trading
  • Subcontracting
  • Local suppliers
  • Small or large suppliers
  • Sourcing decisions
  • Factors in deciding where to buy

Contrasting Approaches to Supply

  • Introduction
  • Industrial products
  • Capital investment items
  • Buying used equipment
  • Evaluating capital investments
  • Selecting suppliers of capital items
  • Leasing
  • The buyer and capital investment purchases
  • Production materials
  • Raw materials
  • Futures dealings
  • Methods of commodity dealings
  • Component parts and assemblies
  • Production materials and bills of materials
  • Consumables
  • Construction supplies and bills of quantities
  • Goods for resale in wholesaling and retailing

Storing Supplies

  • Storage and supplies
  • Type, location and siting of storage facilities
  • Storage and materials handling equipment
  • Assessment of storage requirements
  • Stores layout
  • Identification of stock items
  • Surplus

Controlling Prices and Costs

  • Price
  • The conditions for perfect competition
  • Imperfect competition and monopoly
  • UK competition legislation
  • Price information
  • Pricing agreements
  • Variations to firm and cost price agreements
  • Price analysis
  • Price variation and adjustment
  • Currency management
  • Incoterms

Support Tools

  • Tendering
  • Debriefing
  • Post-Tender Negotiation (PTN)
  • Forecasting techniques
  • Techniques of investment appraisal
  • Application of costing techniques
  • Life cycle costing
  • Target costing
  • Absorption costing
  • Activity-Based Costing (ABC) and management
  • Standard costing
  • Budgets and budgetary control
  • Learning curves
  • Project management
  • Scheduling
  • Models and simulation approaches

Negotiation

  • Introduction
  • Definitions
  • Approaches to negotiation
  • The content of negotiation
  • What is an effective negotiation?
  • Factors in negotiation
  • The process of negotiation
  • Pre-negotiation
  • The actual negotiation
  • Post-negotiation
  • Global negotiation

Purchasing Research, Performance and Ethics

  • Purchasing research
  • Purchasing performance and control
  • The aims of performance measures
  • The prevalence of purchasing performance measures
  • Principles of performance measures
  • Methods of evaluating purchasing performance
  • Accounting approaches
  • Comparative approaches
  • The purchasing management audit approach
  • Management by Objectives (MBO)
  • Purchasing and fraud
  • Whistle-blowing
  • Purchasing ethics

Example Candidate Response Booklet

Example Candidate Response (ECR) Booklets are a source of crucial information for Centres and Candidates as they use real candidate responses. We ask Senior Examiners to comment on five or more responses in terms of why the mark was awarded with commentary about how to improve the answer (if necessary).

Recommended Reading

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Purchasing & Supply Chain Management – Lysons & Farrington (FT Prentice Hall)

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