Selection of Source, Modes of Tendering.....Purchase procedure (contd..)


Obtaining materials at the right price is a major challenge for any purchaser.
The right price is never an absolute term but is extremely relative.
It takes in view the right quality, the right time and the right source of supply.

Obviously , the mode of tendering also depends on the kind of materials to be purchased, when being purchased and from whom.   
Price , as such, happens to be the sole determinant of any purchasing process. Other things remaining constant , the

exercise of determination of the right price has resulted into different modes of tendering. The process finally succeeds in finding the right source or seller.

A tendering process addresses itself by clearly describing the need i.e. materials or service with complete specification (tender specification) so that there is no ambiguity left between the purchaser and the seller, identifying the sources (vendors / suppliers )from whom the need can be satisfied and spelling out the terms and conditions for agreement between the seller and the buyer. It's basically the urge to get the right price that the concept of competitive buying emerged.

It implies generating competition among the sellers in respect to the price for their acceptable materials / service , on the basis of other terms and conditions , by the buyer.

It is based on the tendering process that ultimately the seller is selected for placement of order.

The following are the widely recognised modes of tendering ,both in private and the  public sector domains.

In fact, these modes are the modes of tendering recognised by the materials management function every where :

Besides the above , other dimension of the modes of tendering is the tendering steps that is to be followed while scruitinising the tenders. The following are popularly used methods :

  • Single Bid
  • Two stage Bid
  • three stage Bid etc.



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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