The Purchasing Process

The Purchasing Process

1. Purchasing Objectives

   • Objective 1:Support Operational Requirements
   • Objective 2:Manage the Purchasing Process Efficiently & Effectively
   • Objective 3:Select, Develop, and Maintain Sources of Supply
   • Objective 4:Develop Strong Relationships with Other Functional Groups
   • Objective 5:Support Organizational Goals and Objectives
   • Objective 6: Develop Integrated Purchasing Strategies That Support Organisational Strategies

2. Purchasing's Span of Control

   • Evaluate and Select Suppliers
   • Review Specifications
   • Act as the Primary Contact with Suppliers
   • Determine the Method of Awarding Purchase Contracts

3. The Purchasing Cycle

   • Identify or Anticipate Material and Service Needs
     • Purchase requisitions
     • Forecasts and customer orders
     • Reorder point systems
     • Stock checks
     • Cross-functional new product development teams
   • Select Suppliers
     • Evaluate past performance or visit data
     • Analyze request for quotations or proposals
     • Negotiate with suppliers as required
     • Make selection decision and issue purchase order or finalize contract
   • Evaluate Potential Supply Sources
     • Develop list of potential suppliers
     • Visit supplier facilities as required
     • Look at past performance
     • Determine important performance criteria
   • Release end Receive Material Requirements
     • Transit purchase requirements electronically, by fax, or through the mail
     • Shorten order cycle time through electronic data interchange and bar-code technology
   • Continuously Measure and Manage Supplier Performance
     • Do not assume that purchasing ends with receipt of material or service
     • Identify improvement opportunities or supplier nonperformance

4. Purchasing Documents

   • Purchasing Requisition
   • Request for quotation
   • Blanket Purchase Order
   • Purchase Release
   • Other documents/Electronic forms

5. Types of Purchases

   • Raw Materials
   • Semifinished Products and Components
   • Finished Products
   • Maintenance, Repair, and Operating Items
   • Production Support Items
   • Services
   • Capital Equipment

6. Improving the Purchasing Process

   • Online requisitioning systems from users to purchasing
   • Electronic purchasing
   • Purchasing process redesign
   • Long-term purchase agreements
   • Electronic data interchange
   • Online ordering
   • Procurement cards issued to users