Purchasing Process

The high degree of change in the business environment has created a new challenge for industrial and service enterprises. That challenge is to determine an organizational structure that minimizes administrative costs while maximizing service to its customers.

Traditionally, managers have used organization charts to describe hierarchical structures and evaluate business decisions regarding changes to the organization. Unfortunately, these tools are no longer adequate because they do not take into account the process view and dynamics associated with administrative processes. Documenting the processes, understanding the dynamics of the business processes and activity costs in a changing administrative process can only be achieved with a tool like SIMPROCESS.

This hierarchical model of a purchasing process consists of 5 major processes:

  • Select Supplier
  • Negotiate Terms and Pricing
  • Prepare Purchase Order
  • Place Purchase Order
  • Audit Invoice
The demonstration model highlights one of the powerful features of SIMPROCESS – the ability to create alternative representations of a hierarchical business process. In this model, the purchasing process object consists of 3 alternative organizational representations.
  • Alternative 1 – Functional, Centralized Purchasing: The purchasing process is performed by centralized, functional organization where the five functions are performed by staff dedicated to each function.
  • Alternative 2 – Product based, Decentralized Purchasing: The purchasing process is performed by three decentralized, product organizations where the each product organization performs all 5 functions for its product line.
  • Alternative 3 – Hybrid Purchasing: The purchasing process is performed by a hybrid organization where the supplier selection and terms and pricing functions are performed by a centralized organization; and the other 3 functions are performed by decentralized, product organizations.

Demonstration Model

In order to view the demonstration model you must have SIMPROCESS installed on your computer and you must have a license. If you don’t have SIMPROCESS you may download a trial version.

You must save the demo model file by RIGHT CLICKING on the file below and select “Save Target As”. Save the file to your computer. After you launch SIMPROCESS select File and Open. Then navigate to where you saved the demo file and select to open it.

Additional demonstration models are in the models/Demos directory which is located in the SIMPROCESS working directory.