Purchasing process & activities (The purchasing process (Choice of…
Purchasing process & activities
The different purchasing and supply activities are often executed simultaneously and are interdependent.
Description of quality
Refers to measurable qualities, a condition or characteristics of materials/service usually expressed according to grade, class, brand/specifications
Price and quality, price and time, price & choice of suppliers and time & quantity are inseparably intertwined
The purchasing process
Choice of suppliers- choice of a supplier depends on whether it is a new purchase/repurchase, whether a contract needs to be entered into or already exists, or whether standard/specialised materials are required.
Development and description of a need.
Research on prices & availability-the prices of non-standard, specialised materials or custom-made items are often determined by tender/quotation in conjunction with negotiations
The steps in the purchasing and supply cycle are as follows
Issuing the order and concluding a contract-The order and the contract are important documents
Follow-up & expediting-If materials are not received in time the supplier should be reminded that it has not adhered to the to the clauses of the contract and that it should concentrate on the speedy delivery of the materials.
Receipts, inspection & distribution-Stores reception is responsible for checking the quantities and conditions of materials when they are received
Handling errors and discrepancies-If defective materials are received the purchasing and supply function should communicate with the suppliers in a way that will prevent future defective consignments, but still ensure good relations
Paying for the order-It is the task of purchasing and supply to prepare authorisation for payment of the supplier.
Quality decisions as a purchasing & supply activity
The quality of purchased products and services rests on the following considerations:
Determining the right quality for a given goal
Continuous high quality is an absolute necessity in stockless systems such as just-in-time (JIT) & materials-requirements planning (MRP)
Describing quality so that both the buyer and seller understand clearly.
The role of quality in purchasing
Controlling quality to ensure that requirements are met.
Determining the right quality
A buyer should have the right to question technical requirements or to request that specifications be reconsidered on the strength of commercial considerations
Quality that is purchased at the lowest price, which satisfies a specific need and performs the function for which it is purchased.
The best quality is determined by balancing suitability, availability and cost