Principles of Purchasing and procurement
OVERVIEW OF THE PURCHASING PROCEDURE
A part from the Pre-purchase activities such as participation in the preparation of specifications and budget decisions, purchasing has traditionally involved three main phases, each involving specific documents and considerable clerical activity.
The Identification Phase
This involves the notification of the need to purchase by either
Requisition offered by the stores or stocks control
Bill of materials issued by the drawing office or production control department
Requisitions from the user department
The Ordering phase
On the receipt of the requisition or bill of materials, the buyer will check them for accuracy, conformity to specifications and purchase records to ensure whether the purchase is a re-buy or a new-buy request.
If it is a re-buy request previously purchased from a satisfactory supplier at an acceptable price, a repeat order may be issued.
If however the item is a new purchase, the additional following steps will be involved:
Enquires will be sent to possible suppliers accompanied by additional documents such as drawings, specifications and so on which will enable them to quote.
Quotations will be received in response to the enquires and compared with respect to price, quality, delivery tool cost and terms of business.
When Quantities are substantial and quality and or delivery of great importance, further negotiations with suppliers including an evaluation of their capacity to undertake the order may be required.
A purchase order will be issued to the vendor whose quotation amended where necessary by subsequent negotiation is most acceptable.
An order acknowledgement should be required by the buyer to ensure that the order has been accepted on the terms and conditions agreed
The post ordering phase
It may be necessary to progress the order to ensure that delivery dates are met or to expedite delivery of overdue orders
An advice note notifying that the goods have been dispatched or are ready for collection will be issued by the supplier.
On receipt, goods will be checked for quantity by the store keeper or recipient. The inspection department will examine matters of quality or specification.
An invoice for the value of goods will be received from the supplier. The purchasing department paying special attention to the legitimacy of any variations from the quoted price, if satisfactory, the invoice will be passed to accounts department for payment.
On completion, the order will be transferred to a complete orders file.