PURCHASING

Definition
Purchasing refers to a business or organization attempting for acquiring goods or services to accomplish the goals of the enterprise.
It is the function of procurement with a view of reducing the investment in, and the variety and value of, materials so as to facilitate the standardization and competitive marketability of the product

Objectives of Purchasing
To maintain uninterrupted flow of materials to support the development schedules. To procure materials economically at a cost consistent with the quality and service required. To buy materials of the right quality, in the right quantity, at right time, at the right price, from the right sources with delivery at the right place. To develop and maintain good buyer-seller relationship.

Functions of Purchasing
Checking of requisitions/purchase indents.
Selection of suppliers for issue of enquiries. Analyzing quotations and bids etc., and preparation of comparative statement. Negotiating contracts. Issue of Purchase Orders. Maintenance of purchase records.

Cont..
Maintenance of vendor performance records/data.

Keeping various Departments/Divisions informed of the progress of their indents in case of delay in obtaining supplies. Serving as an information center on the materials knowledge i.e. their prices, source of supply, specification and other allied matters.

Purchasing Cycle
Recognition of Need: Define the need
Description of Requirement. Selection of Source. Determination of Price and Availability. Placing the Order.

Order Acknowledgement.
Follow Up and Expediting. Checking the Invoice and Approval

Purchasing Procedure
Indenting
Enquiry from suppliers Receiving quotation from suppliers Preparing a comparative statement Approving the supplier

Placing an order with the supplier

Sending the copies of purchase order to

Indenting department Inventory control section Accounts department Stores department

Following-up the order

Receiving of supply from the supplier by the stores department

Inspection at the receiving section

Receiving the Inspection report Requesting the accounts department to make the payment

Key Steps of the Purchasing Process:

Request to Purchase: Identifying the purchase needs, what to buy, how much to buy, and when it is needed for delivery.
Supplier Selection: Identifying the supplier, price and lead time. Purchase Order: Identifying weather to raise the purchase order or not, how the purchase order is sent weather in a paper document or e-mail or in any other electronically device.

Fulfillment: The buyer should be satisfied according to the supplier weather he manufacturers or procures the goods. Goods Receipt: Goods should be checked weather they match what was ordered and that they are of correct quantity. Payment: Supplier sends the invoice which is processed by the financial department before the supplier is paid.

Conclusion
Purchasing is the first and the most important step in production.
If the company purchase their components in a planned manner it will be cost effective and also profitable .

Thank You