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What Purchasing Methodology is the best?

4315 Views 21 Replies 10 Participants Last post by  amigi968
What Purchasing Methodology is the best for the context of commodity style materials?

I am curious to find out how everyone is operating their Purchasing Dept. or if they have one at all.

of course the original question "the best" will always be the usual management answer...."it depends", but feel free to outline your methodology, as most of our businesses are similar...Request IN---Service OUT.

Currently we operate as the following process:

  • Foreman radio/email in the items needed. (hopefully for the next 2-3 days and not just what they need for tomorrow)
  • Purchasing agent sends out for quotes to 3-4 vendors/supply houses.
  • Each vendor sends back an itemized quote.
  • The quotes are reviewed for the best price.
  • The quote is assigned a number and stamped approved.
  • The approved quote is then sent back to the vendor to process the order.
Here are some comments & problems we are trying to improve upon:

  • Vendors do not like quoting multiple Material Requests (MRs) each day.
  • Ideas have been thrown around, to do quarterly pricing.
  • Human Error and accuracy are continual issues.
  • Purchasing agent is always on the phone taking orders.
SO...come on everyone, lets get this thread going.

Give some FEEDBACK!

:thumbup: TheOfficeSlave
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-Multiple supply houses bid the material for the entire job.

-Cheapest supply house gets the orders faxed or phoned in by job foreman.

-Some exceptions for fixtures, switchgear, special or custom equipment.
Are you trying to put yourself out of a job?
Can your 'purchasing' geeks justify their existence (salaries etc) by cost saved?
Do you maintain a real (basic stock) warehouse and have your own delivery staff?

In an ideal world...
The estimator did an accurate take off and created a list of everything needed for the WHOLE job right down to the last coupling.

Break down the project by the phase of the work.
Bid it out have it delivered in phases (store in container etc).

The gear and light fixtures etc are the easy part.
The pipe/fittings (or MC), wire and misc hdwr. is where the issues are.

Most of these things are common supply house stock and get ordered AGAINST the bid quantities of them that you estimated and also in phases.

The cost of possible material waste/inefficiency/theft has to be weighed against the cost of tediously managing those purchases (see my first lines) vs a light handed monitoring of these items with a PO that references that project/phase.

As you alluded to there are no one size fits all answers. "It depends..." ;)
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If you had a BIG company and were constantly ordering BIG amounts of different types of material I could see where a purchasing person could save the company money. But most likely you're going to be ordering the same materials over and over again , and it will be from the same supply house because they're cheaper anyway. So that leaves me to believe that you're only shopping around for the "oddball" stuff, which IMO would not take an entire full time position to accomplish. Now, I could be wrong, this is just my on-the-surface-thought.
If you had a BIG company and were constantly ordering BIG amounts of different types of material I could see where a purchasing person could save the company money. But most likely you're going to be ordering the same materials over and over again , and it will be from the same supply house because they're cheaper anyway. So that leaves me to believe that you're only shopping around for the "oddball" stuff, which IMO would not take an entire full time position to accomplish. Now, I could be wrong, this is just my on-the-surface-thought.

We have two girls that do purchasing, not sure if they have any other duties. I know that they call around for the "oddball" things and the "I need it yesterday stuff" but on the common things the parent company has a preferred vendors list that is handled via email. Some things come right from the manufacturers and I have heard they purchase some items (pvc fittings) by the pound rather than by the piece due to the quanity. We have a small warehouse as do the other companies that are associated with us but, on large jobs we have several roll off trailers for stock and most of the job is purchased as a unit and left onsite.
We have someone who does this, but he also has other duties as well.

In fact, I think he originally worked for a supplier.
We have two girls that do purchasing, not sure if they have any other duties. I know that they call around for the "oddball" things and the "I need it yesterday stuff" but on the common things the parent company has a preferred vendors list that is handled via email. Some things come right from the manufacturers and I have heard they purchase some items (pvc fittings) by the pound rather than by the piece due to the quanity. We have a small warehouse as do the other companies that are associated with us but, on large jobs we have several roll off trailers for stock and most of the job is purchased as a unit and left onsite.
this is probably the best way to go...

unless you are doing tremendous volume, constantly shopping suppliers for pricing will only result in your pricing to go up...you will become the customer that they don't make money off of and don't want...

i'm not saying don't keep them honest...i am saying that if you buy only on price, you will forever be looking for a new supplier...
I will say that the procedures that have come down the pike from our parent company since they bought us have all seemed to be based on things flowing smoothly. Since the take over we have been adding people all over the place and getting more repeat/cyclical maintenance jobs keep coming in.
I will say that the procedures that have come down the pike from our parent company since they bought us have all seemed to be based on things flowing smoothly. Since the take over we have been adding people all over the place and getting more repeat/cyclical maintenance jobs keep coming in.
My former office manager went to work for a big (big a$ in billion), USA west coast EC as their east coast purchasing manager. Their practices in all areas of their operation bear no resemblance to the way that we 'mom and pops' used to manage our operations here on the east coast.

No expense is spared to make a project 'flow smoothly', a lot of new hiring (mostly degreed persons) and on and on . . .

From your posts, it sounds as though you are experiencing a similar change since your company buyout.

EC on a large scale now-a-dayz must be conducted in a 'board room' somewhere (Wall Street?). Those board members think that 'locknuts' is an STD, everything else is business.

Not suggesting that they are incorrect, as I was an M dollar company, they are a B dollar company.

Work'in For That Free Tee . . .
My former office manager went to work for a big (big a$ in billion), USA west coast EC as their east coast purchasing manager. Their practices in all areas of their operation bear no resemblance to the way that we 'mom and pops' used to manage our operations here on the east coast.

No expense is spared to make a project 'flow smoothly', a lot of new hiring (mostly degreed persons) and on and on . . .

From your posts, it sounds as though you are experiencing a similar change since your company buyout.

EC on a large scale now-a-dayz must be conducted in a 'board room' somewhere (Wall Street?). Those board members think that 'locknuts' is an STD, everything else is business.

Not suggesting that they are incorrect, as I was an M dollar company, they are a B dollar company.

Work'in For That Free Tee . . .
I agree, their way of thinking is better overall from what I have seen. The powers that be are working on a whole other scale of dollar values. It has been an easy transition, I thought it was going to be a real PIA, but we have had meeting and classes on the way to work with their paperwork and email announcements and postings and all. The new thing announced Friday was quarterly breakfast meetings for the two sides (IBEW/UA) guys to sit down and review completed and on going jobs. And the fact some guys need to volunteer to go to classes to work at a nuke site.
Are we referring to Emcor? :rolleyes:
Are we referring to Emcor? :rolleyes:
Yes he is.
Yeah, it's Emcor Group. Don't knock it if you haven't tried it.
Yeah, it's Emcor Group. Don't knock it if you haven't tried it.
I certaintly was not knocking anything, re: my last sentence:

"Not suggesting that they are incorrect, as I was an M dollar company, they are a B dollar company".

I realize that this is 2008.

Work'in For That Free Tee . . .
Are we referring to Emcor? :rolleyes:

I was refering to this comment HW, nothing you had said.
Are we referring to Emcor? :rolleyes:

I was refering to this comment HW, nothing you had said.
Not Emcore, but Berg Electric (bergelectric.com)
Not to be confused with Berg Electronics.

Work'in For That Free Tee . . .
what are your comments towards how an a contractors prices/quoting behaviors (Daily, Quarterly, per job, etc...) affects the contractors ability to land new jobs? Are there advantages or disadvantages in regards to competitive advantage within the contractors specific market place when these behaviors are present?
1) Thanks for posting back. Too many newbies never return to (further) address whatever their issue or question was.

2) Do you have any observations about the comments made to your inquiry?

what are your comments towards how an a contractors prices/quoting behaviors (Daily, Quarterly, per job, etc...) affects the contractors ability to land new jobs?
3) Huh? Beyond having to know your cost in order to quote...

Are there advantages or disadvantages in regards to competitive advantage within the contractors specific market place when these behaviors are present?
4) Who are you and what is your objective?
what are your comments towards how an a contractors prices/quoting behaviors (Daily, Quarterly, per job, etc...) affects the contractors ability to land new jobs? Are there advantages or disadvantages in regards to competitive advantage within the contractors specific market place when these behaviors are present?

Is that a direct quote from a workbook from a construction management class? I swear I have read that question before.
Yea, I'm gonna have to default to that too... we're doing someone else's homework.
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