Purchasing process

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Purchasing Purchasing is the formal process of buying goods and services.

The Purchasing Process can vary from one organization to another but there are some key elements that are common throughout

The process usually starts with a 'Demand' or requirement – this could be for a physical part (inventory) or a service. A requisition is generated, which details the requirements (in some cases providing a requirements speciation) which actions the procurement department. An RFP or RFQ is then raised (request for proposal or Request for quotation). Suppliers send their quotations in response to the RFQ And a review is undertaken where the best offer (typically based on price, availability and Quality) is given the purchase order.

Purchase orders can be of various types including –
* Standard - A one time buy
* Planned - Planned PO is an agreement on a specific item an approximate date
* Blanket Blanket PO is an agreement on specific terms and conditions - date and quantity and amount are not specified

Purchase Orders are normally accompanied by Terms and Conditions which form the contractual agreement of the Transaction.
The Supplier then delivers the products/service and the customer records the delivery (in some cases this goes through a Goods Inspection Process.
An invoice is sent by the supplier which is cross-checked with the Purchase Order and Document which specifying that the goods received. The payment is made and transferred to GL.