University of South Africa  MNP 2601 Study guide

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University of South Africa MNP 2601 Study guide CONTENTS TOPIC 1: THE PURCHASING FUNCTION: AN OVERVIEW 1 Study unit 1: The purchasing function in perspective 3 Study unit 2: The task of purchasi... ng and supply management 18 Study unit 3: Purchasing processes and procedures 34 TOPIC 2: MANAGING THE SUPPLY BASE 43 Study unit 4: Purchasing and supply strategies and policies 45 Study unit 5: Evaluation and selection of suppliers 64 TOPIC 3: KEY PERFORMANCE INDICATORS 73 Study unit 6: Sustainable purchasing and supply management 76 Study unit 7: The management of quality in purchasing and supply 88 Study unit 8: Purchasing price determination and cost analysis 100 Study unit 9: Purchasing quantity and inventory management 111 TOPIC 4: APPLICATION FIELDS IN PURCHASING AND SUPPLY MANAGEMENT 121 Study unit 10: Purchasing capital equipment 123 Study unit 11: Purchasing services 134 Study unit 12: Purchasing from small businesses: a focus on black economic empowerment 144 MODULE AIM 2The aim of the module is to introduce you to purchasing management in the broader context of strategic supply management, in order for you to understand the tasks and processes of the purchasing function within organisations and some of the key performance indicators thereof. MODULE OUTCOMES After studying this topic you should be able to
put the purchasing function in perspective
fully explain all the supply management approaches
list and clarify purchasing management tasks
illustrate and explain the purchasing process
discuss purchasing and supply strategy
compile purchasing and supply policies
participate in the process of the selection and performance evaluation of suppliers
discuss sustainable purchasing and supply management
discuss purchasing price determination and cost analysis
fully explain the management of quality in purchasing and supply
clarify purchasing quantity and inventory management THE MODULE 3Welcome to the module Purchasing Management (MNP2601). This module focuses on purchasing management within the organisation as part of a broader strategic supply management approach. Over the past few years, research has proven that purchasing management is most effective when it is seen not as a purely tactical function of an organisation, but as a strategic asset used to impact the bottom line of an organisation under the direction of cross-functional teams. You should therefore keep in mind that the purchasing function does not operate as a separate entity, but is in constant interaction with the other stakeholders, both within and beyond the borders of the organisation. The right interaction with suppliers leads to the delivery of efficient and effective goods or services from suppliers to the correct processes within the organisation, which will optimally satisfy customer expectations. 4Over time this interaction has changed and is recognised through management concepts that have developed, such as strategic sourcing and supply chain management. These concepts are explained in this module. (v) MNP2601/1 5This module gives you an opportunity to look closely at an area which will undoubtedly play an increasingly important role in the prosperity of commercial enterprises and noncommercial institutions, such as government departments and NGOs. The module should therefore be regarded as a snapshot of the broad and dynamic phenomenon of purchasing and supply management in organisations. You will also be introduced to certain fields of application such as purchasing capital equipment, purchasing from small businesses and purchasing services. PURPOSE OF THE STUDY GUIDE 6The purpose of the study guide is to lead you through your study of the prescribed book. Since the prescribed book is your primary source of study material it is crucial for you to buy it. The prescribed book for this paper is: 7Hugo, WMJ & Badenhorst-Weiss, JA. 2011. Purchasing and supply management. 6th edition. Pretoria: Van Schaik. 8The study guide divides the syllabus into topics, which in turn are divided into study units. Each study unit contains aims and outcomes, as well as activities that you can do to test your knowledge of and insight into small sections of the study material that you have studied. At the end of each study unit are assessment questions. We have also included examples and appropriate, interesting articles, mainly from websites. The purpose of these articles and examples is to make the study guide more interesting and practical. You do not have to study them, but they might contribute to the learning process. EXPLANATION OF CONCEPTS 9TOPIC: This is a section of the work which contains a major component of the tutorial matter for the course. Each topic comprises one or more study units. 10STUDY UNIT: This represents an identifiable portion of a topic. A study unit is based on one chapter in the textbook. Each study unit has a broad aim and learning outcomes which indicate what you should have learned when you have completed the unit. THE SYLLABUS 11The syllabus for the module in Purchasing Management is divided into four topics and 12 study units. Each study unit covers one of the chapters in the prescribed book. 12Topic 1 consists of an overview of the purchasing management function. It puts the purchasing function and other supply approaches in perspective; investigates the essentials of the management task of purchasing and supply management (including purchasing planning, coordination and performance evaluation of the purchasing function); and examines the activities (including documentation and stakeholders) involved in purchasing transactions – differentiating between manual and automated processes. (vi) 13Topic 2 is concerned with managing the supply base. It focuses on purchasing and supply strategy and policies, specifically targeting the strategic sourcing and outsourcing processes; and examines suppliers (particularly the various purchasing and sourcing decisions, the performance evaluation and selection of suppliers, supplier certification, and the various purchaser/supplier relationships). 14Topic 3 deals with the key performance indicators of purchasing and supply, such as the relationship between purchasing and supply management and corporate governance, and its impact on social responsibility, ethics, sustainability and risk management; the management of quality in purchasing and supply (including standardisation, value analysis and quality control); price determination and cost analysis; and the various tools required to manage purchasing quantity and inventories effectively and efficiently. 15Topic 4 covers the application fields of purchasing and supply management. In this topic we look at the purchasing of capital equipment; purchasing of services; and purchasing from small businesses with a focus on black economic empowerment. ASSESSMENT 16Answer all the assessment questions at the end of each study unit in your study guide. This is important preparation for the examination. You will notice that some questions are directly knowledge-based, while others require insight and application skills. You can expect a mixture of these types of question in the examination. 17The prescribed book also includes a list of self-evaluation and multiple-choice questions at the end of each chapter. Make sure that you attempt to answer these questions for your own enrichment. THE STUDY PROCESS 18As mentioned earlier, the study guide, combined with the prescribed book, will enable you to understand the theory in each study unit if you do the activities for each topic and study unit. You will remember something better if you understand it. We therefore suggest that you always follow the study guide when working through the prescribed book. One of the best ways to ensure that you understand the material is to summarise it in your own words. Work through one study unit at a time. 19The first tutorial letter which accompanies this study guide contains a proposed study programme that you can follow to ensure that you finish working through all the prescribed sections before the examination. The study programme also makes provision for adequate revision before the examination. If you follow the study programme and work through the study guide and prescribed book carefully, you can rest assured that you will know and understand the work and be able to apply it in practice. 20We wish you every success and hope you enjoy this module! [Show More]

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