Purchasing refers to a business or organization attempting to acquire goods or services to accomplish its goals. Although there are several organizations that attempt to set standards in the purchasing process, processes can vary between organizations; the word “purchasing” is not used interchangeably with the word “procurement”, since procurement includes expediting, supplier quality, transportation and logistics in addition to purchasing. Purchasing managers/directors, procurement managers/directors guide the organization’s acquisition procedures and standards. Most organizations use a three-way check as the foundation of their purchasing programs; this involves three departments in the organization completing separate parts of the acquisition process. The three departments do not all report to the same senior manager, to prevent unethical practices and lend credibility to the process; these departments can be purchasing and accounts payable. Combinations can vary but a purchasing department and accounts payable are two of the three departments involved.
When the receiving department is not involved, it is called a two-way check or two-way purchase order. In this situation, the purchasing department issues the purchase order receipt not required; when an invoice arrives against the order, the accounts payable department will go directly to the requestor of the purchase order to verify that the goods or services were received. This is what is done for goods and services that will bypass the receiving department. A few examples are NRE work, consulting hours, etc.. The purchasing department issued purchase for supplies, services and raw materials. In an effort to decrease the administrative costs associated with the repetitive ordering of basic consumable items, "blanket" or "master" agreements were put into place; these types of agreements have a longer duration and increased scope to maximize the quantities of scale concept. When additional supplies were required, a simple release would be issued to the supplier to provide the goods or services.
Another method of decreasing administrative costs associated with repetitive contracts for common material, is the use of company credit cards known as "Purchasing Cards" or "P-Cards". P-card programs vary. Purchasing managers realized once contracts for the low dollar value consumables are in place, procurement can take a smaller role in the operation and use of the contracts. There is still oversight in the forms of audits and monthly statement reviews, but most of their time is now available to negotiate major purchases and setting up of other long term contracts; these contracts are renewable annually. This trend away from the daily procurement function resulted in several changes in the industry; the first was the reduction of personnel. Purchasing departments were now smaller. There was no need for the army of clerks processing orders for individual parts as in the past. Another change was the focus on negotiating contracts and procurement of large capital equipment. Both of these functions permitted purchasing departments to make the biggest financial contribution to the organization.
A new term and job title emerged -- Strategic Sourcing Managers. These professionals not only focused on the bidding process and negotiating with suppliers, but the entire supply function. In these roles they were able to maximize savings for organizations; this value was manifested in lower inventories, less personnel, getting the end product to the consumer quicker. Purchasing managers' success in these roles resulted in new assignments outside to the traditional purchasing function – logistics, materials management and warehousing. More and more purchasing managers were becoming Supply Chain Managers handling additional functions of their organization's operation. Purchasing managers were not the only ones to become Supply Chain Managers. Logistic managers, material managers, distribution managers, etc. all rose to the broader function and some had responsibility for the purchasing functions now. In accounting, purchases is the amount of goods, it refers to information as to the kind, quality and cost of goods bought that should be maintained.
They are added to inventory. Purchases are offset by Allowances; when it should be added depends on the Free On Board policy of the trade. For the purchaser, this new inventory is added on shipment if the policy was FOB shipping point, the seller remove this item from its inventory. On the other hand, the purchaser added this inventory on receipt if the policy was FOB destination, the seller remove this item from its inventory when it was delivered. Goods bought for the purpose other than direct selling, such as for Research and Development, are added to inventory and allocated to Research and Development expense as they are used. On a side note, equipments bought for Research and Development are not added to inventory, but are capitalized as assets; the revised acquisition process for major systems in the U. S. Department of Defense is shown in the next figure; the process is defined by a series of phases during which technology is defined and matured into viable concepts, which are subsequently developed and readied for production, after which the systems produced are supported in the field.
The process allows for a given system t
Customer satisfaction is a term used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services exceeds specified satisfaction goals."The Marketing Accountability Standards Board endorses the definitions and constructs of classes of measures that appear in Marketing Metrics as part of its ongoing Common Language in Marketing Project. In a survey of nearly 200 senior marketing managers, 71 percent responded that they found a customer satisfaction metric useful in managing and monitoring their businesses, it is seen as a key performance indicator within business and is part of a Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and has become a key element of business strategy. "Customer satisfaction provides a leading indicator of consumer purchase intentions and loyalty."
"Customer satisfaction data are among the most collected indicators of market perceptions. Their principal use is twofold:" "Within organizations, the collection and dissemination of these data send a message about the importance of tending to customers and ensuring that they have a positive experience with the company's goods and services." "Although sales or market share can indicate how well a firm is performing satisfaction is the best indicator of how it is that the firm’s customers will make further purchases in the future. Much research has focused on the relationship between customer retention. Studies indicate that the ramifications of satisfaction are most realized at the extremes."On a five-point scale, "individuals who rate their satisfaction level as'5' are to become return customers and might evangelize for the firm. "Individuals who rate their satisfaction level as'1,' by contrast, are unlikely to return. Further, they can hurt the firm by making negative comments about it to prospective customers.
Willingness to recommend is a key metric relating to customer satisfaction." In literature antecedents of satisfaction are studied from different aspects. The considerations extend from psychological to physical and from normative to positive aspects. However, in most of the cases the consideration is focused on two basic constructs as customers expectations prior to purchase or use of a product and his relative perception of the performance of that product after using it. A customer's expectations about a product tell us how he or she anticipates how that product will perform; as it is suggested in the literature, consumers may have various "types" of expectations when forming opinions about a product's anticipated performance. For example, four types of expectations are identified by Miller: ideal, minimum tolerable, desirable. While, Day indicated among expectations, the ones that are about the costs, the product nature, the efforts in obtaining benefits and lastly expectations of social values.
Perceived product performance is considered as an important construct due to its ability to allow making comparisons with the expectations. It is considered that customers attributes. Olshavsky and Miller and Olson and Dover designed their researches as to manipulate actual product performance, their aim was to find out how perceived performance ratings were influenced by expectations; these studies took out the discussions about explaining the differences between expectations and perceived performance." In some research studies, scholars have been able to establish that customer satisfaction has a strong emotional, i.e. affective, component. Still others show that the cognitive and affective components of customer satisfaction reciprocally influence each other over time to determine overall satisfaction. For durable goods that are consumed over time, there is value to taking a dynamic perspective on customer satisfaction. Within a dynamic perspective, customer satisfaction can evolve over time as customers use a product or interact with a service.
The satisfaction experienced with each interaction can influence the overall, cumulative satisfaction. Scholars showed that it is not just overall customer satisfaction, but customer loyalty that evolves over time. "The Disconfirmation Model is based on the comparison of their ratings. An individual’s expectations are confirmed when a product performs as expected, it is negatively confirmed. The disconfirmation is positive. There are four constructs to describe the traditional disconfirmation paradigm mentioned as expectations, performance and satisfaction." "Satisfaction is considered as an outcome of purchase and use, resulting from the buyers’ comparison of expected rewards and incurred costs of the purchase in relation to the anticipated consequences. In operation, satisfaction is somehow similar to attitude as it can be evaluated as the sum of satisfaction
In business and manufacturing, quality has a pragmatic interpretation as the non-inferiority or superiority of something. Quality is a perceptual and somewhat subjective attribute and may be understood differently by different people. Consumers may focus on the specification quality of a product/service, or how it compares to competitors in the marketplace. Producers might measure the conformance quality, or degree to which the product/service was produced correctly. Support personnel may measure quality in the degree that a product is reliable, maintainable, or sustainable. There are many aspects of quality in a business context, though primary is the idea the business produces something, whether it be a physical good or a particular service; these goods and/or services and how they are produced involve many types of processes, equipment and investments, which all fall under the quality umbrella. Key aspects of quality and how it's diffused throughout the business are rooted in the concept of quality management: Quality planning - Quality planning is implemented as a means of "developing the products and processes needed to meet or exceed customer expectations."
This includes defining who the customers are, determining their needs, developing the tools needed to meet those needs. Quality assurance – Quality assurance is implemented as a means of providing enough confidence that business requirements and goals for a product and/or service will be fulfilled; this error prevention is done through systematic measurement, comparison with a standard, monitoring of processes. Quality control – Quality control is implemented as a means of fulfilling quality requirements, reviewing all factors involved in production; the business confirms that the good or service produced meets organizational goals using tools such as operational auditing and inspection. QC is focused on process output. Quality improvement - Quality improvement is implemented as a means of providing mechanisms for the evaluation and improvement of processes, etc. in the light of their efficiency and flexibility. This may be done with incrementally via continual improvement. While quality management and its tenets are recent phenomena, the idea of quality in business is not new.
In the early 1900s, pioneers such as Frederick Winslow Taylor and Henry Ford recognized the limitations of the methods being used in mass production at the time and the subsequent varying quality of output, implementing quality control and standardization procedures in their work. In the twentieth century, the likes of William Edwards Deming and Joseph M. Juran helped take quality to new heights in Japan and globally. Customers recognize that quality is an important attribute in products and services, suppliers recognize that quality can be an important differentiator between their own offerings and those of competitors. In the past two decades this quality gap has been decreasing between competitive products and services; this is due to the contracting of manufacturing to countries like China and India, as well internationalization of trade and competition. These countries, among many others, have raised their own standards of quality in order to meet international standards and customer demands.
The ISO 9000 series of standards are the best known international standards for quality management, though specialized standards such as ISO 15189 and ISO 14001 exist. The definition of "quality" has changed over time, today some variance is found in how it is described. However, some commonality can still be found; the common element of the business definitions is that the quality of a product or service refers to the perception of the degree to which the product or service meets the customer's expectations. Quality object; the business meanings of quality have developed over time. Various interpretations are given below: American Society for Quality: "A combination of quantitative and qualitative perspectives for which each person has his or her own definition. In technical usage, quality can have two meanings: a; the characteristics of a product or service that bear on its ability to satisfy stated or implied needs. A product or service free of deficiencies." Subir Chowdhury: "Quality combines people power and process power."
Philip B. Crosby: "Conformance to requirements." The requirements may not represent customer expectations. W. Edwards Deming: concentrating on "the efficient production of the quality that the market expects," and he linked quality and management: "Costs go down and productivity goes up as improvement of quality is accomplished by better management of design, testing and by improvement of processes." Peter Drucker: "Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for." ISO 9000: "Degree to which a set of inherent characteristics fulfills requirements." The standard defines requirement as expectation. Joseph M. Juran: "Fitness for use." Fitness is defined by the customer. Noriaki Kano
Code of Federal Regulations
The Code of Federal Regulations is the codification of the general and permanent rules and regulations published in the Federal Register by the executive departments and agencies of the federal government of the United States. The CFR is divided into 50 titles; the CFR annual edition is the codification of the general and permanent rules published by the Office of the Federal Register and the Government Publishing Office. In addition to this annual edition, the CFR is published in an unofficial format online on the Electronic CFR website, updated daily. Under the nondelegation doctrine, federal agencies are authorized by "enabling legislation" to promulgate regulations; the process of rulemaking is governed by the Administrative Procedure Act: the APA requires a process that includes publication of the proposed rules in a notice of proposed rulemaking, a period for comments and participation in the decisionmaking, adoption and publication of the final rule, via the Federal Register. The rules and regulations are first published in the Federal Register.
The CFR is structured into 50 subject matter titles. Agencies are assigned chapters within these titles; the titles are broken down into chapters, parts and paragraphs. For example, 42 CFR 260.11 would be read as "title 42, part 260, section 11, paragraph." While new regulations are continually becoming effective, the printed volumes of the CFR are issued once each calendar year, on this schedule: Titles 1–16 are updated as of January 1 Titles 17–27 are updated as of April 1 Titles 28–41 are updated as of July 1 Titles 42–50 are updated as of October 1The Office of the Federal Register keeps an unofficial, online version of the CFR, the e-CFR, updated within two days after changes that have been published in the Federal Register become effective. The Parallel Table of Authorities and Rules lists rulemaking authority for regulations codified in the CFR; the CFR is divided into 50 titles that represent broad subject areas: Title 1: General Provisions Title 2: Grants and Agreements Title 3: The President Title 4: Accounts Title 5: Administrative Personnel Title 6: Domestic Security Title 7: Agriculture Title 8: Aliens and Nationality Title 9: Animals and Animal Products Title 10: Energy Title 11: Federal Elections Title 12: Banks and Banking Title 13: Business Credit and Assistance Title 14: Aeronautics and Space Title 15: Commerce and Foreign Trade Title 16: Commercial Practices Title 17: Commodity and Securities Exchanges Title 18: Conservation of Power and Water Resources Title 19: Customs Duties Title 20: Employees' Benefits Title 21: Food and Drugs Title 22: Foreign Relations Title 23: Highways Title 24: Housing and Urban Development Title 25: Indians Title 26: Internal Revenue Title 27: Alcohol, Tobacco Products and Firearms Title 28: Judicial Administration Title 29: Labor Title 30: Mineral Resources Title 31: Money and Finance: Treasury Title 32: National Defense Title 33: Navigation and Navigable Waters Title 34: Education Title 35: Reserved Title 36: Parks and Public Property Title 37: Patents and Copyrights Title 38: Pensions and Veterans' Relief Title 39: Postal Service Title 40: Protection of Environment Title 41: Public Contracts and Property Management Title 42: Public Health Title 43: Public Lands: Interior Title 44: Emergency Management and Assistance Title 45: Public Welfare Title 46: Shipping Title 47: Telecommunication Title 48: Federal Acquisition Regulations System Title 49: Transportation Title 50: Wildlife and Fisheries The Federal Register Act provided for a complete compilation of all existing regulations promulgated prior to the first publication of the Federal Register, but was amended in 1937 to provide a codification of all regulations every five years.
The first edition of the CFR was published in 1938. Beginning in 1963 for some titles and for all titles in 1967, the Office of the Federal Register began publishing yearly revisions, beginning in 1972 published revisions in staggered quarters. On March 11, 2014, Rep. Darrell Issa introduced the Federal Register Modernization Act, a bill that would revise requirements for the filing of documents with the Office of the Federal Register for inclusion in the Federal Register and for the publication of the Code of Federal Regulations to reflect the changed publication requirement in which they would be available online but would not be required to be printed; the American Association of Law Libraries opposed the bill, arguing that the bill undermines citizens' right to be informed by making it more difficult for citizens to find their government's regulations. According to AALL, a survey they conducted "revealed that members of the public, researchers, students and small business owners continue to rely on the print" version of the Federal Register.
AALL argued that the lack of print versions of the Federal Register and CFR would mean the 15 percent of Americans who don't use the internet would lose their access to that material. The House voted on July 14, 2014 to pass the bill 386–0. Regulations.gov United States Reports California Code of Regulations Florida Administrative Code Illinois Administrative Code Code of Massachusetts Regulations New Hampshire Code of Administrative Rules New Jersey Administrative Code New York Codes and Regulations Oregon Administrative Rules Pennsylvania Code "About Code of Federal Regulations". Government Publishing Office. "A Res
Henry Ford was an American captain of industry and a business magnate, the founder of the Ford Motor Company, the sponsor of the development of the assembly line technique of mass production. Although Ford did not invent the automobile or the assembly line, he developed and manufactured the first automobile that many middle-class Americans could afford. In doing so, Ford converted the automobile from an expensive curiosity into a practical conveyance that would profoundly impact the landscape of the 20th century, his introduction of the Model T automobile revolutionized American industry. As the owner of the Ford Motor Company, he became one of the richest and best-known people in the world, he is credited with "Fordism": mass production of inexpensive goods coupled with high wages for workers. Ford had a global vision, with consumerism as the key to peace, his intense commitment to systematically lowering costs resulted in many technical and business innovations, including a franchise system that put dealerships throughout most of North America and in major cities on six continents.
Ford left most of his vast wealth to the Ford Foundation and arranged for his family to control the company permanently. Ford was widely known for his pacifism during the first years of World War I, for promoting antisemitic content, including The Protocols of the Elders of Zion, through his newspaper The Dearborn Independent and the book The International Jew, having an influence on the development of Nazism and Adolf Hitler. Henry Ford was born July 1863, on a farm in Greenfield Township, Michigan, his father, William Ford, was born in County Cork, Ireland, to a family, from Somerset, England. His mother, Mary Ford, was born in Michigan as the youngest child of Belgian immigrants. Henry Ford's siblings were Margaret Ford, his father gave him a pocket watch in his early teens. At 15, Ford dismantled and reassembled the timepieces of friends and neighbors dozens of times, gaining the reputation of a watch repairman. At twenty, Ford walked four miles to their Episcopal church every Sunday. Ford was devastated when his mother died in 1876.
His father expected him to take over the family farm, but he despised farm work. He wrote, "I never had any particular love for the farm—it was the mother on the farm I loved."In 1879, Ford left home to work as an apprentice machinist in Detroit, first with James F. Flower & Bros. and with the Detroit Dry Dock Co. In 1882, he returned to Dearborn to work on the family farm, where he became adept at operating the Westinghouse portable steam engine, he was hired by Westinghouse to service their steam engines. During this period Ford studied bookkeeping at Goldsmith, Bryant & Stratton Business College in Detroit. Ford married Clara Jane Bryant on April 11, 1888, supported himself by farming and running a sawmill, they had one child: Edsel Ford. In 1891, Ford became an engineer with the Edison Illuminating Company of Detroit. After his promotion to Chief Engineer in 1893, he had enough time and money to devote attention to his personal experiments on gasoline engines; these experiments culminated in 1896 with the completion of a self-propelled vehicle which he named the Ford Quadricycle.
He test-drove it on June 4. After various test drives, Ford brainstormed ways to improve the Quadricycle. In 1896, Ford attended a meeting of Edison executives, where he was introduced to Thomas Edison. Edison approved of Ford's automobile experimentation. Encouraged by Edison, Ford designed and built a second vehicle, completing it in 1898. Backed by the capital of Detroit lumber baron William H. Murphy, Ford resigned from the Edison Company and founded the Detroit Automobile Company on August 5, 1899. However, the automobiles produced were of higher price than Ford wanted; the company was not successful and was dissolved in January 1901. With the help of C. Harold Wills, Ford designed and raced a 26-horsepower automobile in October 1901. With this success and other stockholders in the Detroit Automobile Company formed the Henry Ford Company on November 30, 1901, with Ford as chief engineer. In 1902, Murphy brought in Henry M. Leland as a consultant. With Ford gone, Murphy renamed the company the Cadillac Automobile Company.
Teaming up with former racing cyclist Tom Cooper, Ford produced the 80+ horsepower racer "999" which Barney Oldfield was to drive to victory in a race in October 1902. Ford received the backing of an old acquaintance, Alexander Y. Malcomson, a Detroit-area coal dealer, they formed a partnership, "Ltd." to manufacture automobiles. Ford went to work designing an inexpensive automobile, the duo leased a factory and contracted with a machine shop owned by John and Horace E. Dodge to supply over $160,000 in parts. Sales were slow, a crisis arose when the Dodge brothers demanded payment for their first shipment. In response, Malcomson brought in another group of investors and convinced the Dodge Brothers to accept a portion of the new company. Ford & Malcomson was reincorporated as the Ford Motor Company on June 16, 1903, with $28,000 capital; the original investors included Ford and Malcomson, the Dodge brothers, Malcomson's uncle John S. Gray, Malcolmson's secretary James Couzens, two of Malcomson's lawyers, John W. Anderson and Horace Rackham.
Ford demonstrated a newly designed car on the ice of Lake St. Clair, driving 1 mile in 39.4 seconds and setting a ne
Frederick Winslow Taylor
Frederick Winslow Taylor was an American mechanical engineer who sought to improve industrial efficiency. He was one of the first management consultants. Taylor was one of the intellectual leaders of the Efficiency Movement and his ideas, broadly conceived, were influential in the Progressive Era. Taylor summed up his efficiency techniques in his 1911 book The Principles of Scientific Management which, in 2001, Fellows of the Academy of Management voted the most influential management book of the twentieth century, his pioneering work in applying engineering principles to the work done on the factory floor was instrumental in the creation and development of the branch of engineering, now known as industrial engineering. Taylor made his name, was most proud of his work, in scientific management. Taylor was an athlete who competed nationally in tennis. Taylor was born in 1856 to a Quaker family in Germantown, Pennsylvania. Taylor's father, Franklin Taylor, a Princeton-educated lawyer, built his wealth on mortgages.
Taylor's mother, Emily Annette Taylor, was a coworker with Lucretia Mott. His father's ancestor, Samuel Taylor, settled in Burlington, New Jersey, in 1677, his mother's ancestor, Edward Winslow, was one of the fifteen original Mayflower Pilgrims who brought servants or children, one of eight who had the honorable distinction of Mister. Winslow served for many years as the Governor of the Plymouth colony. Educated early by his mother, Taylor studied for two years in France and Germany and traveled Europe for 18 months. In 1872, he entered Phillips Exeter Academy in Exeter, New Hampshire, with the plan of going to Harvard and becoming a lawyer like his father. In 1874, Taylor passed the Harvard entrance examinations with honors. However, due to deteriorating eyesight, Taylor chose quite a different path. Instead of attending Harvard University, Taylor became an apprentice patternmaker and machinist, gaining shop-floor experience at Enterprise Hydraulic Works in Philadelphia, he left his apprenticeship for six months and represented a group of New England machine-tool manufacturers at Philadelphia's centennial exposition.
Taylor finished his four-year apprenticeship and in 1878 became a machine-shop laborer at Midvale Steel Works. At Midvale, he was promoted to time clerk, journeyman machinist, gang boss over the lathe hands, machine shop foreman, research director, chief engineer of the works. Taylor's fast promotions reflected both his talent and his family's relationship with Edward Clark, part owner of Midvale Steel. Early on at Midvale, working as a laborer and machinist, Taylor recognized that workmen were not working their machines, or themselves, nearly as hard as they could and that this resulted in high labor costs for the company; when he became a foreman he expected more output from the workmen. In order to determine how much work should properly be expected, he began to study and analyze the productivity of both the men and the machines, his focus on the human component of production Taylor labeled scientific management. While Taylor worked at Midvale, he and Clarence Clark won the first tennis doubles tournament in the 1881 US National Championships, the precursor of the US Open.
Taylor became a student of Stevens Institute of Technology, studying via correspondence and obtaining a degree in mechanical engineering in 1883. On May 3, 1884, he married Louise M. Spooner of Philadelphia. From 1890 until 1893 Taylor worked as a general manager and a consulting engineer to management for the Manufacturing Investment Company of Philadelphia, a company that operated large paper mills in Maine and Wisconsin, he was a plant manager in Maine. In 1893, Taylor opened an independent consulting practice in Philadelphia, his business card read "Consulting Engineer - Systematizing Shop Management and Manufacturing Costs a Specialty". Through these consulting experiences, Taylor perfected his management system, his first paper, A Piece Rate System, was presented to the American Society of Mechanical Engineers in June 1895. In 1898 he joined Bethlehem Steel to solve an expensive machine-shop capacity problem. While at Bethlehem, he discovered the best known and most profitable of his many patents: between 1898 and 1900 Taylor and Maunsel White conducted comprehensive empirical tests, concluded that tungsten cutting-steel doubled or quadrupled cutting speeds.
S. patent was nullified. Taylor was forced to leave Bethlehem Steel in 1901 after discord with other managers. Now a wealthy man, Taylor focused the remainder of his career promoting his management and machining methods through lecturing and consulting. In 1910, owing to the Eastern Rate Case, Frederick Winslow Taylor and his Scientific Management methodologies became famous worldwide. In 1911, Taylor introduced his The Principles of Scientific Management paper to the ASME, eight years after his Shop Management paper. On October 19, 1906, Taylor was awarded an honorary degree of Doctor of Science by the University of Pennsylvania. Taylor became a professor at the Tuck School of Business at Dartmouth College. In early spring of 1915 Ta