Purchasing Policy and Procedures | Policies provide guidance and direction | Role of purchasing Conduct of purchasing personnel Social and minority business objectives Buyer-supplier relationships Operational issues | Purchasing procedures |

1. PURCHASING POLICY
AND PROCEDURES

2. CHAPTER OVERVIEW
• POLICY OVERVIEW
• POLICIES PROVIDE GUIDANCE AND DIRECTION:
• ROLE OF PURCHASING
• CONDUCT OF PURCHASING PERSONNEL
• SOCIAL AND MINORITY BUSINESS OBJECTIVES
• BUYER-SUPPLIER RELATIONSHIPS
• OPERATIONAL ISSUES
• PURCHASING PROCEDURES
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3. THE TERM “POLICY”
• REFERS TO THE SET OF PURPOSES, PRINCIPLES, AND RULES OF ACTION THAT
GUIDE AN ORGANIZATION
• STANDARD OPERATING PROCEDURES
• RULES AND REGULATIONS
• FORMAL VS. INFORMAL POLICIES
• PART OF ORGANIZATIONAL CULTURE
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4. ADVANTAGES OF USING POLICIES
• OPPORTUNITY TO DEFINE AND CLARIFY TOP MANAGEMENT
PERSPECTIVES
• MEANS FOR EXECUTIVES TO COMMUNICATE ITS LEADERSHIP VIEWS AND
BELIEFS
• PROVIDES A FRAMEWORK FOR CONSISTENT DECISION-MAKING AND
ACTION
• DEFINES RULES AND PROCEDURES FOR ALL EMPLOYEES
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5. DISADVANTAGES OF USING POLICIES
• OFTEN DIFFICULT TO COMMUNICATE WITHIN LARGE ORGANIZATIONS
• MAY RESTRICT EMPLOYEE INNOVATION AND FLEXIBILITY
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6. EFFECTIVE POLICY CHARACTERISTICS
• ACTION-ORIENTED
• RELEVANT
• CONCISE
• UNAMBIGUOUS AND WELL-UNDERSTOOD
• TIMELY AND CURRENT
• GUIDES PROBLEM-SOLVING AND BEHAVIOR
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7. POLICY CATEGORIES
• DEFINING THE ROLE OF PURCHASING
• DEFINING THE CONDUCT OF PURCHASING PERSONNEL
• DEFINING SOCIAL AND MINORITY BUSINESS OBJECTIVES
• DEFINING BUYER-SUPPLIER RELATIONSHIPS
• DEFINING OPERATIONAL ISSUES
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8. PURCHASING AUTHORITY
• AUTHORITY TO CONDUCT BUSINESS AND TO REPRESENT
ORGANIZATIONAL INTERESTS
• CREATED BY EXECUTIVE COMMITTEE
• AUTHORITY TO DELEGATE TO OTHER FUNCTIONAL AREAS
• DESCRIBES SCOPE OF AND LIMITS TO AUTHORITY
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9. OBJECTIVES OF PURCHASING FUNCTION
• SELECT SUPPLIERS THAT MEET REQUIREMENTS
• PURCHASE MATERIALS AND SERVICES THAT COMPLY WITH
APPROPRIATE STANDARDS
• PROMOTE BUYER-SUPPLIER RELATIONS AND TO ENCOURAGE
SUPPLIER CONTRIBUTION
• TREAT ALL SUPPLIERS FAIRLY AND ETHICALLY
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10. CONDUCT OF PURCHASING PERSONNEL
• ETHICS POLICY
• RECIPROCITY POLICY
• CONTACTS AND VISITS TO SUPPLIERS
• FORMER EMPLOYEES REPRESENTING SUPPLIERS
• REPORTING OF IRREGULAR BUSINESS DEALINGS WITH SUPPLIERS
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11. AVOID THE APPEARANCE OF RECIPROCITY
• GIVING PREFERENCE TO SUPPLIERS THAT BUY FROM YOU
• EXPECTING SUPPLIERS TO PURCHASE YOUR PRODUCTS AS A
CONDITION FOR SECURING A PURCHASE CONTRACT
• LOOKING FAVORABLY ON COMPETITIVE BIDS BY SUPPLIERS WHO BUY
FROM YOU
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12. EXAMPLES OF IRREGULAR DEALINGS
• ACCEPTING BRIBES OR KICKBACKS
• CRONYISM
• ACCEPTING LATE BIDS
• OWNING A STAKE IN A SUPPLIER’S COMPANY
• OTHER BEHAVIOR NOT CONSIDERED PART OF THE “NORMAL” COURSE
OF DOING BUSINESS
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13. SOCIAL AND MINORITY BUSINESS
• SUPPORT MULTI-CULTURISM
• SUPPORT MINORITY BUSINESSES
• CHALLENGES
• LACK OF ACCESS TO CAPITAL
• SUPPLY BASE OPTIMIZATION
• LACK OF ADEQUATE MANAGERIAL AND TECHNICAL BASE
• RELATIVELY SMALL SIZE
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14. ENVIRONMENTAL ISSUES
• NOW REQUIRED BY LAW AND/OR MAJOR CUSTOMERS
• USE OF RECYCLED MATERIALS
• STRICT COMPLIANCE WITH APPLICABLE LAWS
• PROPER DISPOSAL OF WASTE MATERIALS
• HEALTH AND SAFETY ISSUES
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15. BUYER-SUPPLIER RELATIONS
• TREATING SUPPLIERS FAIRLY AND WITH INTEGRITY
• SUPPORTING AND DEVELOPING MOTIVATED SUPPLIERS
• PROVIDING PROMPT PAYMENT ON INVOICES
• ENCOURAGING SUPPLIERS TO SUBMIT INNOVATIVE IDEAS AND JOINTLY
SHARING BENEFITS
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16. QUALIFICATION AND SELECTION
• PRICE/COST COMPETITIVENESS
• PRODUCT QUALITY
• DELIVERY
• FINANCIAL CONDITION
• ENGINEERING AND
MANUFACTURING TECHNICAL
COMPETENCE
• MANAGEMENT OF ITS OWN SUPPLY
BASE
• MANAGEMENT CAPABILITY
• ABILITY TO WORK WITH BUYING
ORGANIZATION
• POTENTIAL FOR INNOVATION
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17. HAZARDOUS WASTE CONTRACTORS
• EVIDENCE OF VALID PERMITS AND LICENSES
• SPECIFICATION OF TYPES OF SERVICES IT IS LICENSED TO
PERFORM
• EVIDENCE OF SAFEGUARDS TO PREVENT ACCIDENTS
• EVIDENCE OF CONTINGENCY PLAN IN CASE OF
ACCIDENTAL RELEASE OF MATERIALS
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18. LEGAL CONTRACT PROCEDURES
• BASIC FEATURES OF THE STANDARD PURCHASE AGREEMENT
• BASIC CONTRACT PRINCIPLES
• EXECUTION AND ADMINISTRATION OF AGREEMENTS
• ESSENTIAL CLAUSES OF THE CONTRACT
• COMPLIANCE WITH CONTRACT TERMS AND PERFORMANCE
ASSESSMENT
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19. LEGAL CONTRACT PROCEDURES
• FORMAL COMPETITIVE CONTRACTING PROCEDURES
• CONTRACT DEVELOPMENT PROCESS
• EXAMPLES OF SAMPLE AGREEMENTS
• LEGAL DEFINITIONS
• USE OF FORMAL CONTRACT CLAUSES
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20. PURCHASING FORMS
• DESCRIPTION OF PROPER USE
• DETAILED MEANING OF EACH INFORMATION FIELD
• DESCRIPTION OF PROPER HANDLING AND STORAGE
• WHERE?
• HOW LONG?
• APPROVAL PROCESS
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21. DEVELOPMENT OF LEGAL CONTRACTS
• BASIC FEATURES OF THE STANDARD PURCHASE CONTRACT
• BASIC CONTRACT PRINCIPLES
• EXECUTION AND ADMINISTRATION OF AGREEMENTS
• ESSENTIAL ELEMENTS OF THE CONTRACT
• CONTRACT COMPLIANCE AND PERFORMANCE ASSESSMENT
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22. DEVELOPMENT OF LEGAL CONTRACTS
• FORMAL COMPETITIVE CONTRACTING PROCEDURES
• CONTRACT DEVELOPMENT PROCESS
• EXAMPLES OF SAMPLE AGREEMENTS
• LEGAL DEFINITIONS
• USE OF FORMAL CONTRACT CLAUSES
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23. OPERATIONAL PROCEDURES
• CONTROL OF MATERIAL PROVIDED TO SUPPLIER
• STORAGE OF PURCHASING DOCUMENTS
• SUPPLIER QUALIFICATION PROCESS
• USE OF COMPUTERIZED SYSTEMS
• ANALYSIS OF COMPETITIVE QUOTATIONS
• USE OF SINGLE SOURCE SELECTION
• REQUIREMENTS FOR PRICE ANALYSIS
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