As in most business organizations, purchasing management involves people, processes and technology. So what is purchasing? Purchasing involves the sourcing, purchasing and delivery of goods and services that a company needs either in its manufacturing and business management or for stock that it resells at a profit.
The purchasing department is a very important, if not the most important, part of a business as its good management directly impinges on the bottom line.
One of the fundamentals of purchasing is that goods are purchased at the best price and terms in order to deliver the best profit for the company.
This means that strong and easily understood purchasing procedures need to be in place. Some companies interchange the word procurement for purchasing, in others procurement means purchasing via tender and purchasing means the day to day purchasing via Master Sales Agreements with a select group of suppliers.
One of the methods that are used to ensure good purchasing management on day-to-day purchases is the use of purchase orders and purchase requisitions constrained by a known set of rules and procedures. Purchase orders are used to order directly with an agreed supplier.
Purchase requisitions are usually raised by people external to the purchasing department when they need a particular product either for maintenance purposes or to increase stock in abnormal situations.
In larger companies, and indeed even in some smaller companies, computerised purchasing and procurement systems facilitate purchasing management. As well as managing day-to-day purchasing, these systems can also manage a tender process and ad hoc purchasing activities.
One particular aid to management of your purchasing department is the production of a set of procurement-analysis figures. These can often be tailored to your own company’s particular needs.
In charge of purchasing management will be the Purchasing Manager and they will have a number of purchasing clerks and administration clerks working for them. They will all have job descriptions that detail their roles and responsibilities.
There have been a number of purchasing trends over the last few years. Two of the most important are JIT (Just In Time) which was bought over from Japan in the 1990’s. It is the ordering of inventory only when it is just in time to use. In the 2000’s e-procurement is becoming more popular as internet security and computer power becomes stronger and more prevalent.
Such is the important of the purchasing department, that comprehensive procurement guidelines are designed and published by governments, government offices, large companies, trusts and charities.
These often define such things as environmental purchasing, end of life disposal and dangerous materials. If countries recognize the importance of their publishing department, shouldn’t you have a firm purchasing management process in effect?
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Learn more about fundamentals of purchasing by clicking here.
Click here to learn more about purchasing forms, such as the purchase order, which is used for day to day standard requests and the purchase requisition which is used by non purchasing staff to order non standard items.
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There are two main purchasing forms, the Purchasing Requisition and the Purchase Order. Both are used to enable the efficient functioning of the purchasing department
Definition of Purchasing – if a company gets their purchasing wrong they are never going to be in profit. There is more to purchasing than just buying and paying bills.
The fundamentals of purchasing are the foundation of your purchasing department, which is the most important part of your business. Purchasing is managed three ways.
The procurement definition is the purchase of goods and services at the best possible prices, delivery dates and legal terms. Or procurement is up market purchasing
There are several key positions within a purchasing department and they each have their own purchasing job description.
The most important purchasing strategy is to find the best products at the best prices and terms, so any Purchasing Manager job description will have this core requirement.
In a well run purchasing department there is always a set of purchasing procedures in a formal document or manual that sets out each procedure in the purchasing cycle.
Purchasing systems are ways for companies to efficiently purchase goods and services at optimum terms and prices. Many companies use computerized purchasing systems.
With the advent of the internet, purchasing trends have changed in the last 10 years. From an initial skepticism and fear people purchase books, clothes and even food online.
So what is procurement? Well in its basic sense procurement is buying things, but if you say what is procurement to a business person the definition is much more complex.
Procurement service providers are effectively middlemen – Discover the 3 benefits of sourcing to procurement service providers and then only decide if you need to use them.