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Purchase Management-1

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Harshit Shukla
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21 views18 pages

Purchase Management-1

Uploaded by

Harshit Shukla
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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PURCHASING

MANAGEMENT
Table Of Content

INTRODUCTION OBJECTIVE 7 R’S of PM

Purchase process Purchase price analysis conclusion


INTRODUCTION

Purchasing is the is the first phase of Materials management.


Purchasing means procurement of goods from some external agencies.
Purchasing, in a business environment, is one of the most critical functions
as it provides the input for the organisation to convert into output.
PURCHASING
A method used by organization to buy products and services.
A purchasing system manages the entire acquisition process, from
requisition, to purchase order, to product receipt, to payment.
Purchasing systems are a key component of effective inventory
management which involves:
► Monitor existing stock
► Help companies determine
> what to buy,
how much to buy
when to buy it.
The goal of purchasing is not only to procure raw materials at the
lowest price, but to reduce the cost of the final product.
1. Recogination of Need
The purchasing process begins when the business recognizes that they have a need
for a product, tool or service that will enhance their operations.
2.Specify the Requirement
During this stage, leaders investigate the need further and come up with a
plan for exactly what they require. The person who identified the need often
works with other team members and management to come up with the right
solution to the problem, especially when concerning a larger purchase.
3.Find and choose a Supplier
During this stage, it is a good idea to consider several suppliers and compare
them against one another. When necessary, contact the supplier and request a
quote proposal from them. As you are considering suppliers, consider factors
such as cost, reliability and delivery time.
4. Negotiate Costs
In many situations, it is possible to negotiate costs with a supplier, especially
when placing high-priced orders or orders you expect to recur regularly.
Contact the supplier you are considering and ask if they are open to negotiating
the price. Suppliers may negotiate if it means they can secure a large or long-
term contract for their business
5.Get order Approval
Before your business can initiate the transaction, you may need to get approval for
the order. This could include working with upper management and the accounting
department to ensure there are enough available funds within the budget for the
purchase.

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6.Place the ORDER
Once both sides agree to the transaction, you can formally place the order. Have
both sides agree to the specific details, such as price, delivery times, fees and
installations.

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7.Receive and approve the Order
When the order arrives, check for any issues with the product or anything the
supplier failed to deliver on. Timeliness is key because if there are any problems, the
supplier should address them before you release the rest of the payment.
8.Review supplier Performance
Whether you work with a supplier on a onetime transaction or set up recurring
transactions, make it a regular practice to review your suppliers' deliveries for
quality and timeliness. A record of these reviews can help you identify and track any
issues that might arise later in your contract. Continue relationships with suppliers
who continue to meet your business' needs.

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PURCHASE PRICE ANALYSIS
Purchase price analysis is the process of evaluating and comparing prices for
purchasing goods or materials from different suppliers. It involves analyzing various
factors such as unit price, discounts, shipping costs, payment terms, and additional fees
to determine the best value proposition for the organization. The goal of purchase price
analysis is to ensure that the organization obtains the required materials at the most
competitive price without compromising quality or service levels. This analysis helps
organizations make informed decisions about procurement and negotiate favorable
terms with suppliers, ultimately optimizing their purchasing process and reducing costs.
Our Team

HARSHIT
SHUKLA
4

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