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Dynamic Purchasing:
DISADVANTAGE:
DPS is that it is entirely
electronic and
commissioners may need
to undertake extensive
development work with
the market to ensure it is
able to respond to
theadvertised
opportunity.
PURCHASING FUNCTION
Purchasing function in a business environment is one of the
Procurement vs Purchasing
procurement :It involves the activities involved in
PurchasingObjectives:
Toprovideanuninterrupted flowofmaterialsand
servicesforcompany operations
Tofindreliablealternativesourcesofsupply
Tobuyatthemosteconomicorderquantities
Tobuythebestvalue:acombinationofrightqualityat
thebestprice withthebestsupplierservice
Tomaintaingoodrelationswithvendors
ImportanceofPurchasing:
Purchasingfunctionprovidesmaterialstothefactorywithout
which wheelsofmachinescannotmove.
Aonepercentsavinginmaterialscostisequivalenttoa10
percent increaseinturnover.Efficientbuyingcanachievethis.
Purchasingmanageristhecustodianofhisfirmsispurseashe
spends morethan50percentofhiscompanysearningson
purchases.
Increasingproportionofonesrequirementsarenowbought
insteadof beingmadeaswasthepracticeintheearlierdays.
Buying,therefore, assumessignificance..
Purchasingisthemainfactorintimelyexecutionofindustrial
projects.
THEROLEOFPURCHASING
Therearetwobasictypesofpurchasing:
Purchasingforresale
Purchasingforconsumptionor Transformation.
The formerisgenerallyassociatedwith retailersand wholesalers while
the latterisdefinedas Industrial purchasing.
Purchasingcanalsobeseenaseitherstrategicortransactional.
Strategic(direct)buyinginvolvestheestablishmentofmutually
beneficiallong-termrelationship betweenbuyersandsuppliers . usually
strategic buying involves purchase of materials that are crucial to the
support of the firms distinctive competenceThiscouldinclude( raw
materials, components used in production process)
Transactional(indirect)buyinginvolvesrepetitivepurchases, from
thesamevendor.These orderscouldincludeproductsand services not
listed on the bill of materials, they are used indirectly in
producingtheitem.
FACTORSFORPURCHASING
Theimportanceofpurchasinginanyfirmislargelydeterminedthe
fourfactors:
availabilityofmaterials.
absolutemoney volumeofpurchases.
percentageofproductcostrepresentedbymaterials.
typesofmaterialspurchased.
Purchasing must concern with whether or not the materials
usedbythefirmarereadilyavailableinacompetitivemarketor
Not. Ifthelattercondition prevails,creativeanalysisbytoplevelpurchasingprofessionalsisrequired
FUNCTIONS OF PURCHASING:
1Receivingindents
2.Assessmentofdemandordescriptionofneed
3.Selectionofsourcesofsupply
4.Receivingofquotation
5.Placingorder
6.Makingdeliveryatthepropertimebyfollowinguptheorders.
7.Verificationofinvoices
8.Inspectionofincomingmaterials
9.Meetingtransportrequirementsofincomingandoutgoingmaterials
10.Maintainingpurchasingrecordsandfiles
11.Reportingtotopmanagement
12.Developingcoordinationamongotherdepartments
13.Creatinggoodwilloftheorganisationintheeyesofthesuppliers.