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CHAPTER 8
PURCHASING ANALYSIS TOOLS AND TECHNIQUES
SYNOPSIS
All professions have developed tools and techniques to help those who
operate within those professions to do their job effectively. The procurement
management profession is no different and can benefit from the use of these
tools and techniques
This chapter covers the key tools and techniques that can be used to enhance
the purchasing process and ensure that this process is carried out efficiently
and effectively. The chapter introduces the following topics:
• Value analysis.
• Process mapping.
• Project management.
8.1 INTRODUCTION
There are several tools and techniques that can be used to evaluate how to
accomplish the work carried out within procurement most productively. Some of
these have been covered in previous chapters. In this chapter we cover three
important groups of tools and techniques used in improving and managing
procurement processes, namely value analysis, process mapping tools and
techniques and project management tools and techniques.
Value analysis is an approach to improving the value of an item or process by
understanding its constituent components and their associated costs. It then
seeks to find improvements to the components by either reducing their cost or
increasing the value of the functions. Value analysis is used to determine and
improve the value of a product or process by first understanding the functions
of the item and their value, then its constituent components and their associated
costs, in order to reduce their costs or increase the functions value.
Business process mapping refers to activities involved in defining what
a business entity does, who is responsible, to what standard a business
process should be completed, and how the success of a business process
can be determined. The main purpose behind business process mapping is to
assist organisations in becoming more efficient. A clear and detailed business
process map or diagram provides a means for assessing where improvements
can be made to a current process.
Project management is the application of knowledge, skills and a group of
specific tools and techniques to execute projects effectively and efficiently. It is
a strategic competency for organisations, enabling them to tie project results to
business goals and thus better compete in their markets. Project management
tools and techniques are used to help ensure that projects are completed on
time, on budget and to acceptable levels of quality.