Manufacturing%20(production)

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Manufacturing (production)

• People responsible for purchasing may be called
  purchasing managers, industrial buyers, or
  procurement managers
• Master production schedule includes an analysis
  of when to make the purchases in factory so
  supplies are available to meet production
  schedule

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Buying Process (cont.)

• What is a bill of materials? The total of all
  materials needed to make a product
• As a buyer you would be in charge of this for a
  factory

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Wholesalers

• Purchase goods from a manufacturer/producer and
  then resell them typically to retailers
• Levis Manufacturing Wholesaler JcPenneys
  (retailer)
• Wholesaler stores jeans then when retailer needs
  them they send them what they need (saves
  manufacturer storage and time by not having to
  deal with 100s of retailers who sell their
  products)

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Retailers

• Buy the products from manufacturer or wholesaler
  and resell them in stores to the customer
• Abercrombie
• Wal-Mart
• Kroger

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Purchasing Items for a business

• 1. Do research and gather data on who has best
  merchandise for the price.
• 2. Open to buy the amount of money left over
  for buying goods after all purchases are received
  and on-orders have been considered.
• P (goods received goods ordered) OTB

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3. How do you select buyers?

• Based on production capabilities do they have
  the ability to fill your order, are not
  sweatshops, and have a good reputation
• Past experiences Products have been on-time,
  returns are low, have good quality

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Selecting buyers (continued)

• Special buying arrangements
• Consignment buying Goods are paid for after
  they are purchased by final customer
• Memorandum buying supplier will take back any
  unsold goods by a certain date
• Special Services UPC Codes on products, boxes
  have bar codes, good return policy

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Centralized Buying

• Buying for all branches in a chain store
  operation
• All buyers buy for a department or part of a
  department
• Examples JcPenneys has buyers for different
  departments for all of their stores
• Shoe department buyers
• Womens clothing buyers
• Mens clothing buyers
• Houseware buyers

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Decentralized Buying

• When local store managers or their designated
  buyers are authorized to make special purchases
  for their individual store
• Example Wal-Mart selling SHS, PC, and SWHS
  merchandise (only targeted in this area)
• Selling fish heads in Japan in Wal-Mart

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Resident Buyers

• Are retailers representatives in a central
  market
• Examples would be
• Buyers Market in Atlanta, Georgia (largest in
  USA)
• New York Citys Garment District apparel
• Paris fashion and jewelry market

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Buyers for Government Markets

• Government units buyers for government markets
• Government markets make up one of the largest
  single markets for retail goods and services
• Examples of gov. units are Federal Aviation
  Administration
• Department of Sanitation
• Public Library

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Institution buyers

• Buy for non-profit organizations such as
• Schools
• Colleges
• Hospitals
• Churches

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Stock Handling (process)

• Merchandise ordered by a store is
• Received (Dock area where orders are received)
• Checked
• Marked with selling price before its transferred
  to sales area.

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Receiving merchandise

• Merchandise received is recorded in a receiving
  record or log
• Receiving record describes the goods received
  by a business

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Checking merchandise Process

• Blind Check method write description, QTY, and
  record on a blank form compare with invoice
  (used when merchandise needs to go out on the
  sales floor and the invoice has not been
  received)
• Direct check method merchandise is checked
  directly against the invoice

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Checking merchandise

• Spot check method random check of items in a
  shipment (canned goods, paper products,
  pharmaceuticals)
• Quality check method inspect workmanship and
  characteristics of merchandise (high quality
  items, jewelry, cars)

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Marking Merchandise

• Source marking the seller or manufacturer marks
  the price before delivering the merchandise to
  the retailer
• Pre-retailing, pricing info. is marked in advance
  on purchase order

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Transferring merchandise

• Once merchandise is received, checked and marked
  it is transferred to different departments
  within the business

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Types of Inventory

• Keeping track of merchandise on a continual basis
  is perpetual inventory
• Through computers (inventory taken out of stock
  when scanned)
• Doing a physical count of merchandise is called
  physical inventory
• People physically count all inventory in store
  (what missing is inventory shrinkage)

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Storage of products

• Cold Storage where you have to keep products
  cold such as fruits, vegetables, and frozen
  products
• Commodity Storage Used primarily for
  agricultural products such as tobacco and grains
• Bulk Storage keep products in bulk form such as
  oil and chemicals

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Types of Warehouses

• Private warehouse built to meet the needs of
  the owner (building a warehouse for your stores
  inventory)
• Public warehouse offers storage to individuals
  or companies (rent a space in a warehouse to
  store your business items)

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Types of warehouses (cont.)

• Distribution centers designed to speed
  deliveries to a retail store (Wal-Mart
  Distribution Center in London)
• Bonded Warehouse either public or private store
  products that require payment of a federal tax.
• Save money because only pay taxes when products
  are taken out of warehouse

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Distribution

• The path that a product takes from producer or
  manufacturer to final user.
• Rack jobbers manage inventory and merchandising
  for retailers ex. Pepsi
• Direct distribution no intermediaries
• Indirect distribution involves 1 or more
  intermediaries (wholesaler, agent, etc.)

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Manufacturer/Producer

• Makes the product TTAI, Sharpe Houseboats

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Wholesaler

• Buys the product(s) from the manufacturer and
  stores it then resells to retailer

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Retailer

• Sells products to the customer Wal-Mart,
  Kroger, Walgreens

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Agent

• Do not own the goods they sell just bring a
  buyer and seller together
• Real estate
• Stock broker
• Travel agent

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Types of distribution

• Exclusive distribution protected territories
  for distribution for a product
• Honda dealership, McDonalds, etc.
• Selective distribution a limited number of
  outlets can sell the product (maintain an image)
• Ralph Lauren, Liz Claiborne, etc.
• Intensive distribution using all suitable
  outlets to sell a product (supermarkets,
  drugstores, retailers, etc.)
• Detergent, cat food, food products