Procurement and Purchasing Strategies
The Purchasing Process
Planning
Conduct a prospective study of needs to understand market products and prepare for future requirements.
Needs Analysis
The purchasing or procurement department receives requests from internal users and analyzes order priority.
Request for Bids and Budget
For high-cost or first-time purchases, a Request for Proposal (RFP) and budget are essential to avoid financial implications.
Evaluation of Bids
Received bids should be studied, analyzed, compared, and reviewed. Avoid requesting excessive bids for a more reliable assessment.
Supplier Selection
Consider factors like price, quality, conditions, and guarantees during supplier selection.
Negotiation of Terms
Negotiate aspects of the offer such as minimum quantity, payment terms, delivery date, and service.
Order Placement
Once an agreement is reached, create a binding document for both buyer and seller.
Order Tracking and Management
Monitor orders to ensure all required materials are received.
Special Purchases
These purchases involve acquiring assets, not materials for transformation or sale. They typically involve large investments and consultation with asset users.
Advance Purchase
This strategy involves purchasing before the need arises, typically for basic goods or in anticipation of rising prices. Consider minimum and maximum stock levels.
Seasonal Purchases
These purchases are made for seasonal products to meet anticipated demand based on previous sales data.
Routine Purchases
These are small, frequent purchases with daily deliveries to meet consistent demand for consumer goods.
Opportunity Purchases
These are purchases made at bargain prices, presenting a risk but potentially offering extra benefits. These opportunities may arise from manufacturer overstock, urgent financial needs, or end-of-season items.
Emergency Purchases
These are large-volume purchases made to meet urgent needs, such as stock shortages or unexpected customer demand. The process is typically expedited without time for budgeting.
Purchasing Planning
Advance planning involves identifying sources of goods and services. Potential suppliers can be found through various channels:
- Phone books and web pages
- Government offices
- Business and professional associations
- Newspapers and magazines
- Exhibitions and industry fairs
- Specialized databases
Direct Contact with Suppliers
- Interviews with supplier representatives: This is a convenient method as sales records and inventory are readily available, and consultation with production staff is possible.
- Visiting central markets: These are major cities or geographical areas where multiple suppliers are concentrated.
- Attending fairs and exhibitions: These events provide insights into current trends, new products, and technologies.
- Visiting buying offices: These are sales centers established by manufacturers in distant cities.
- Visiting wholesale importers: These companies offer foreign-branded products at competitive prices.
Needs Analysis
The purchasing department prioritizes requests, gathers quotes or information, and follows this process:
- Prioritize requests for materials with low stock levels.
- Determine if the item is regularly used or a first-time purchase.
- Sort requests by material type or supplier.
- Consult with the future user, especially for department-specific goods.
- Determine required quality, quantity, delivery time, and financial conditions.