Purchasing management

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. Right service ...
6. Delivered at the Right PLACE in.
7. At the Right TIME.
8. With Right mode of TRANSPORT.
9. With Right CONTRACT.
10. With Right payment terms.

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

Contents

• Objectives of Purchasing Management
• Principles of Purchasing Management OR 8 RS
• Purchasing Cycle System OR Steps in Purchasing
• Purchasing Process
• Purchasing Management Process
• Purchasing Reporting
• References

Purchasing Cycle :

1) Indent

2) purchase Requisition

3) Purchase Quotation

4) Purchase Order

5) Goods Receipt

6) Purchase Invoice

7) Payment out

8) Goods Issue

9) Approval to manent

Purchasing Cycle / System OR Steps in Purchasing

Purchasing Process

Purchasing Process includes as usual 8 main stages as follows:

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

Purchasing Management Process

Purchasing Management Process consists usually of four stages:

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

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.