Purchase Procedure

A typical purchase department is usually engaged in purchasing a  number of materials and services falling in different categories. The activities are performed regularly by purchase professionals with the objective of fulfilling organisation's materials and services needs.

Naturally, depending upon the nature of procurement, environmental practices etc the purchasing systems and procedures may also vary substantially. However , purchase procedure can be seen to have a bit of standardisation across the globe and therefore a professional purchasing system does show following steps that eventually constitute a purchasing cycle.:   



Recognition and description of need

Procurement activities in an organisation start right since the stage a need is felt for any material or service.

An organisation categorises it's material requirements into two broad ways , viz. Inventory Control item or Non inventory item.

A department within the organisation may require an item which is non inventory and thus the department concerned shall have to describe the need. It implies writing down the specification of the item , the volume (quantity) etc of the item and some other related information to process it further.

For an Inventory item ,usually, there is a forecasting method by which the need for an item is addressed. What could be a need ?

The need for an item may be at regular interval , one time or even be sporadic in nature. This could be an item needed for running a machine , certain raw material needed for production, a service in terms of maintenance of a machine or for doing certain job needing the employment of labour, materials, machines etc.

Why need must be described clearly ?

The need, also called materials requirement, must be defined clearly as this is the stage where the right need description shall ultimately lead to getting the right material / service.




Once the need is made available to the purchaser, through a requisition , he has to check the requisition for its correctness and completeness and then to ensure that appropriate method has been used to satisfy the user and also to select the supplier.



Purchase Procedure (Steps)

Purchase Flow Chart
Recognition and description of need
Transmission of need (Indenting)
Selection of Source to satisfy the need
Contracting with the accepted source
Following up with the source / supplier
Receiving and inspecting material
Payment and closure of the case


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