Answer to Question #316541 in Management for Asivhothe Hope

Question

What is meant by the hierarchy of purchasing planning? 

Answer 1

Purchase planning is the process of establishing objectives and tactics to obtain the best value in a specific purchase. A company's purchasing function is critical to the long-term success of a business. Shrewd negotiations with vendors let purchasing departments economically source quality items that are integral to the manufacturing process and essential to providing customers with desirable finished products. purchasing is the strategic and operative process of supplying an organisation with materials and services from sources external to that organisation.

The development hierarchy of purchasing planning involves:

• Procurement and sales relations of the enterprises become more complex as production of parts and components is delegated to specialized suppliers.
• Customer’s requirements are increasing concerning product quality as well as delivery time and flexibility.
• Improvements in information technology and planning systems lead to changes in manufacturing organization and planning processes.
• E-business opens new possibilities to get into contact with partners, exchange prevailing information and integrate planning activities along the supply chain.