The basics of purchasing
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The document discusses the basics of purchasing including procurement, administering purchase contracts, receiving and storing shipments, determining product needs, and making purchases. It also covers purchase authority and responsibilities, purchasing activities, objectives, market research techniques, distribution channels, and value added. Key aspects include the process of obtaining goods and services through an orderly exchange between buyers and sellers, determining required products and quantities, negotiating with suppliers, and maintaining adequate inventory while obtaining the lowest possible prices.
The basics of purchasing
- 1. THE BASICS OF PURCHASING
- 2. Procurementan orderly, systematic exchange between a seller & a buyerAdministering purchase contractsIt is the process of obtaining goods & services Receiving & storing shipmentsDetermining the types of products neededMaking purchases
- 3. Quantity of term purchasedTiming of deliveryImpact of effective purchasing on cash flowPrice
- 4. PURCHASE AUTHORITYResponsible for purchasing Commit the establishment funds to buy required productsdesign necessary control formPrepare reports for managementestablish fair practices with suppliersensure smooth cooperation with operating departments
- 5. National LocalRegional Geographic Authorized several buyer before make purchases either to assign buyers a geographic territory or assign the product responsibility Geographic or Product Responsibility Product Type
- 6. Maintaining sufficient inventoryAdministration the purchasing departmentPurchase requisitioningEstablishing quantity needsMaintaining good supplier relationsReceiving products Establishing quality needsPURCHASING ACTIVITIESOrder ExpeditingPurchase Order Processing Selecting suppliersStoring Products & Controlling InventoryNegotiating with suppliersPreparing specificationsMaintaining Adequate RecordsDispensing with surplus Products
- 7. Price & Product supply analysis The ABC analysisMARKET RESEARCHMake-or-Buy analysisValue Analysis
- 8. Maintain adequate inventory Minimize investment in inventoryPURCHASING OBJECTIVESMaintain quality standardsMaintain the organization’s competitive positionObtain the lowest possible prices
- 9. Time Communication Problems in Meeting ObjectivesRequire too much of a purchaser’s time Backdoor selling
- 10. DISTRIBUTION CHANNEL Sources :Farmers/Ranchers Manufacturer Fabricator WholesalersBrokers Manufacturer’s representativesManufacturer’s agentsSales agents Intermediaries :Users :Hospitality purchasers
- 11. Form valueTime value VALUE ADDEDInformation valuePlace valueCost of value
- 12. Exercise : In your own words, define purchasing. Explain the impact of effective purchasing on an operation’s cash flow.List and briefly explain, five activities for which a purchasing department normally has responsibility. Briefly list and discuss two problems that a purchasing department sometimes has in meeting objectives. Fiezha_1401