Purchasing management


The purchasing management department ensures that all goods, supplies and inventory needed to operate the business are ordered and kept in stock. It is also responsible for controlling the cost of the goods ordered, controlling inventory levels and building strong relationships with suppliers.

Objectives Of Purchasing Management

Principles Of Purchasing Management OR (8 R'S)

  1. Buying Material at Right QUALITY.
  2. In the Right QUANTITY.
  3. From the Right SOURCE.
  4. At the Right PRICE.
  5. Delivered at the Right PLACE in.
  6. At the Right TIME.
  7. With Right mode of TRANSPORT.
  8. With Right Contract.

Procurement cycle refers to a term used to describle the actions, procedures, systems and methods used to purchase and obtain the goods and services and required execute a project.

Purchasing Cycle/ System OR Steps In Purchasing

Purchasing Process

Purchasing Process includes as usual 8 main stages as follows:

  1. Market survey

Requisitioning

  1. Approving
  2. Studying Market
  3. Making Purchase Decision
  4. Placing Orders
  5. Receipting Goods and Services Received
  6. Accounting Goods and Services
  7. Receiving Invoices and Making Payment
  8. Credit note in case of material defect

Purchasing Management Process

Purchasing Management Process consists usually of 3 stages:

  1. Purchasing Planning,
  2. Purchasing Tracking,
  3. Purchasing Reporting,
  4. Negotiate

Purchasing Planning

Purchasing Planning may include steps as follows:

Purchasing Reporting

Purchasing Reporting includes:

THE IMPACT OF PURCHASING MANAGEMENT A large study based on 175 company surveys with a respond rate of 22% performed by Carr and Pearson (2002) shows that the factors strategic purchasing and Purchasing Management have a positive impact on the firm’s financial performance in both small and large firms. Carr and Pearson (2002) also write that Purchasing Management and supplier involvement does affect the success of a new product introduction. This study also shows that a link exist between implementation of strategic Purchasing Management and achievements of a firm’s comprehensive goals. It is also stated in the report by Carr and Pearson (2002) that it is believed that most firms recognize the importance of strategic purchasing, because they spend a large percentage of their sales on purchased inputs. Carr and Pearson (2002) also finish their study with the words “Based on this study, management should better understand the importance of Purchasing Management, supplier involvement, strategic purchasing and its relationships with firm’s financial performance.

References

  1. "UTIPS education". University of Twente. 2006-02-13. Retrieved October 2007. Production companies purchase nowadays approximately 70% of their turnover, service companies purchase approximately 40% of their turnover!

Training Purchasing