PURCHASING PRINCIPLES AND LAWS

Purchasing Principles and Laws

[Name of the Author]

Executive Summary

Purchasing items from single supplier has certain benefits such as; it will ensure to build long term relationship, depending on single supplier will lead to build trust and strong relationship as both parties will believe that there is nothing to hide in between them. Supplier try to maintain its quality in order to provide same quality material. Supplier make sure that he will provide the consignment on timely basis. Moreover, supplier provide benefit to the purchaser as he sees that the party trust on him so he provide various benefits such as, discounts, promotional products, reduce transportation cost.The specific purchasing strategy chosen provides a base for marketers to use in segmenting the market, selecting target markets, and developing marketing strategies. Some industrial purchasers support multiple sourcing because they believe it creates a more competitive environment and thus reduces the likelihood of supply disruption or price escalation. Purchasers supporting single sourcing feel that the chance of supply disruption is reduced by strengthening of the buyer seller relationship. Competition from foreign sources and an increased emphasis on zero inventories and quality issues have some U.S. firms reevaluating their traditional purchasing policies. The quality experts contend that a "good" single supplier will provide improved quality. On the competition issue, the proponents of single sourcing insist that better prices will come from the higher volume savings achieved through economies of scale. They also assert that interruption of supply is less likely because of a strong buyer-seller relationship

TABLE OF CONTENTS

EXECUTIVE SUMMARY2

INTRODUCTION4

DISCUSSION4

1.Views of Purchasing4

1.1 Traditional Purchasing View of Purchasing4

1.2 Contemporary Purchasing View of Purchasing5

1.3 Marketing View of Purchasing6

1.4 Uncertainty View of Purchasing7

1.5 The Uncertainty Concept Development8

2.Single Sourcing Strategy9

2.1 The evolution of single sourcing11

2.2 Pros and Cons of Single Sourcing11

2.3 The attributes of single source qualification12

2.4 Is single sourcing realistic?13

3.Evaluation of negotiation strategies14

4.Types of negotiation16

4.1 The first type - the negotiations without end16

4.2 The second type - a zero-sum negotiations16

4.3 The third type - a compromise17

4.4 The fourth type of negotiations - "win - win"17

5.Relationship Management18

6.Smart Negotiating18

CONCLUSION20

REFERENCES21

Purchasing Principles and Laws

Introduction

The specific purchasing strategy chosen provides a base for marketers to use in segmenting the market, selecting target markets, and developing marketing strategies. Some industrial purchasers support multiple sourcing because they believe it creates a more competitive environment and thus reduces the likelihood of supply disruption or price escalation. Purchasers supporting single sourcing feel that the chance of supply disruption is reduced by strengthening of the buyer seller relationship (Woodside et. al, 1987, pp. 43-56).

Discussion

Views of Purchasing

1.1 Traditional Purchasing View of Purchasing

Traditional organizational purchasing practices were based on the development of a large industrial supplier base. The standard for many large U.S. firms was to have their annual purchasing requirements for a specific good or service spread across two or more suppliers. This practice was supported by both operations strategy experts and quality experts, Even when an organization did not have an established policy in this regard, many purchasers indicated that they considered multiple sourcing important in securing the "right" purchase (Hakansson et. al, 1976, pp. 319-332).

The two reasons most frequently mentioned for using multiple suppliers ...