Purchasing Management Process

Purchasing process structure

Purchasing process varies from one company to another but there are some key stages the purchase should go trough. The task of purchasing officer that manages the process is to make sure each stage reduces risks and costs, and creates an added value for the person or department that makes the purchase request. The structure of a typical purchasing process includes the following stages:

1. Requisitioning
2. Financial Approval
3. Market Assessment
4. Purchase Decision
5. Ordering
6. Delivery
7. Receipting and Accounting for Goods and Services Received
8. Payment

Requisitioning

At requisition stage purchasing officer should receive an accurate description of the goods or service required. The requisition form by which a member of staff notifies purchasing officer of a need for goods or services should be simple, but clear. The more accurate and detailed the requisition form is the more chances that the purchase will meet the expectations. Read More about requisitioning...

Financial Approval

At financial approval stage purchasing officer must be given the approval from a responsible person. It should be done before the purchasing commitment is made, and the purchasing system should ensure that this is done at the right time and by the right person. Read more about financial approval

Market Assessment

At market assessment stage purchasing officer receives an approved requisition and starts market research. He should check that the item is not already in stock, that there is a competitive market for the item, if there is a list of "approved suppliers" for the item, if a lower price can be negotiated, and so on. Read more about market assessment

Purchase Decision

At purchase decision stage, after purchasing officer completed the market assessment and determined the method of purchase, he decides on the supplier or suppliers. To avoid internal customer complains or audit reproof the decision must be well documented to provide clear reasons a particular supplier has been chosen. Read More about purchase decision

Ordering

At ordering stage the main instrument purchasing officer works with is an order form. The order form is an official, numbered document which details the purchase requirements and authorizes the supplier to deliver the goods or services to the company. Also it can fulfill other important functions. Read More how to making order

Delivery

At delivery stage purchasing officer controls the method, terms and time of delivery established when ordering. In case there is a competitive transport market, wise freighting decisions can lead to considerable cost savings. Read More about Delivery

Receipting and Accounting

At receipting and accounting stage purchasing officer should check if the quality and quantity of delivered goods or services are relevant to ones in the purchase order. Usually suppliers are not paid until the goods are checked, however, this procedure should be taken without unnecessary delays to ensure that payment terms are met.

Payment

At payment stage purchasing officer makes sure that payments are made on the dates they are due, because maintaining good supplier relations is very important. Also he should control the terms of payment in case they include previously negotiated discounts, progress payments or postponement of payment during warranty period. Read More

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