Purchasing Best Practices Definitions
PurchTips edition #22
By Charles Dominick, SPSM, SPSM2, SPSM3
What Are They Talking About?
Many organizations are paying hundreds of thousands of dollars to consultants to implement purchasing best practices. These consultants impress executives with their knowledge of the purchasing profession and their use of terms such as "commodity teams," "process mapping," and "total cost of ownership." Many of these terms are simple names for principles that we apply daily. Here are a few terms and their definitions:
Benchmarking: The comparison of one organization's purchasing performance indicators or processes with those of other purchasing departments or external sources.
Buying Plan: A document prepared annually that summarizes the purchasing department's approach to acquiring each major group of products and services. The buying plan usually includes a forecast of demand, an estimate of spending, and the actions taken by the purchasing department to prudently manage the purchase of each group of products and services.
Commodity Team: A group of individuals representing various departments who are responsible for making key decisions relative to the purchase of a product or service.
Process Mapping: The act of creating a diagram that illustrates all tasks and decisions associated with a process.
Stakeholders: Individuals within an organization who have a vested interest in a specific product or service to be acquired.
Strategic Plan: A document that outlines a long-range approach to purchasing and is closely associated with organizational strategy.
Total Cost of Ownership: An estimate of all costs associated with the acquisition, use, and disposal of a product or service.
Do You Want a More Rewarding Procurement Career?
Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.
Earning your SPSM® Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM® Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!
Need Better Performance From Your Procurement Team?
Are you a procurement leader whose team isn't achieving the results you know are possible? Maybe it's not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.
You need a performance improvement plan that's easy to implement and quick to produce results. The NLPA can help.
Download our whitepaper "The Procurement Leader's Guide To A More Successful Team." You'll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.
Are You Getting The Most Out of Your NLPA Membership?
Members of the NLPA get more than just articles like this by email. As a member, you also get access to:
- The Procurement Training & Certification Starter Kit
- The latest Purchasing & Supply Management Salaries Report
- Leading-Edge Supply Management™ magazine
- Members-only webinars 10x per year
- And more!
If you haven't been taking advantage of these benefits, why not log in and start now?
Copyright 2003. This article is the property of Next Level Purchasing and may not be copied or republished in any form without the express written consent of Next Level Purchasing.
Click here to request republishing permission.
This is the Web-based version of this article. Click here for the printer-friendly version.
Other Editions of PurchTips:
|« 21 Purchasing Best Practice # 3: Managing Supplier Performance||23 Purchasing Goals: The Good, The Bad, & The Ugly »|