Carter describes purchasing as the department which is concerned with the process of ascertaining the organisation’s material and service needs, selecting suppliers, agreeing on terms, placing orders and receiving goods and services. Lyson defines organizational purchasing as the function responsible for obtaining by purchase, Lease, other legal means, equipment, materials, supplies and services required by an undertaking for use in production. Menon argues that buying is merely the act of procuring an item of material at a price. This is what is done at a bazaar service. It is status concept. Purchasing is a very strategic activity in a company, as is marketing. Purchasing is a much broader concept than buying and covers a wide range of managerial functions right from participation in corporate planning and policy activities to product improvement, working capital management and profit improvement.
Purchasing cycle: Many definitions exist, some of which are too technical to understand. But simply put, purchasing is a part of business functions concerned with the acquisition of raw materials, finished goods production components, equipment and services used by an organization to achieve its goal. Purchasing decision covers some steps starting from requisition and ending in accounting.
Purchase Requisition Initiation: Every purchase transaction originates with the recognition of the need for an item by someone in the enterprise. This need may originate in the department using the material drawn from the stores. The stores must replenish its supplies of the item issued to the user. Thus, requisition is initiated from the recognition of need for an item by a user department. Purchase requisition is one of the ways in which user departments convey information about their required items to purchasing department. It is a document prepared by the person needing the item to present adequate information concerning the ideal product that purchasing should provide.
Ordering: This is giving of instruction to suppliers to deliver specified goods to the buyer within a specified date. Order is made through the use of purchase order. A purchase order, once accepted by the vendor, constitutes a contract for the delivery of the goods in accordance with the terms of the purchase agreement. This constitutes a legal document, and it usually contains many terms of agreement such as quantity, quality, delivery and price.
Expediting: Expediting is the follow-up or progress of supplies, to ensure the timely delivery from the suppliers. It is the process of quickening or catalyzing the delivery of badly needed critical items whose scarcity can disrupt smooth production of goods. Expediting is applied to ensure uninterrupted production and forestall problems of stock-outs when customers demand for the products. Critical items are identified and given special treatment so that they are supplied regularly to the buyer.
Receiving: When the supplier has delivered goods to the point of usage, store or any place specified by the buyer, the receiving department collects the items on behalf of the buying company. It checks the quantity, description and quality against advisory note and specifications contained in the purchase order. Checking is done to ensure that goods reach the expected location and they are in perfect conditions. If the item is technical and can only be properly checked by technical experts, receiving department arranges for the bringing of the inspectors for this task or the goods can be transported to a sub-store to quarantine for technical inspection
Goods Receivable Note (GRN): It is issued by the receiving department after inspection. The GRN indicates that the goods have been received in the required condition and that the invoice accords with the GRN and order terms of supply. Where technical experts are satisfied with the goods’ quality, quantity and descriptions, they also issue Inspection Release Note (IRN). These notes are passed to all relevant departments.
Returnable goods are separated and placed in special store and proper action is initiated toward effecting replacement or claims. Thereafter, goods are passed to the store or user. In addition, invoice from the supplier is passed for payment. However, where discrepancies (errors) are discovered, goods receiving department refers the invoice to the buyer for action.
Inspection: Inspection is the component of the quality control programme that is concerned with checking on the conformance of the item to the specifications set for it. People (including inspectors) are not infallible and they make mistakes. Materials may be faulty, and machines and tools are subject to wear and tend to get out of m adjustment. Because of the many m variables that enter into manufacturing, inspection is a never-ending purchasing function. Hence, as a concept, inspection has been defined as the process of measuring and evaluating the qualities or attributes of a product or service on the basis of prescribed specification standards.
Accounting: This function is performed by the accounting department. It is the final control step in the purchasing procedure. Invoices are checked against items supplied to the company to ensure that quantities billed conform with the quantities accepted by the receiving and inspection departments. Accounting staff check invoice against purchase order, goods received note, inspection note and other terms of the original purchase contract. By this final control step, payment is made only for the value of goods received and cheque is issued.
1. Selling function helps a firm to reach consumers and exchange the products thereby making the proceeds available for the organization to meet its financial obligations. Selling enables organizations to accomplish substantial sales volume, market share and profit objectives. Types of selling vary from one organization to another. They include trade, missionary, technical, new business, cold canvassing, development team, retail system and responsive selling.
2. The process of selling contains prospecting, pre-approach, approach presentation or demonstration, handling of objections, close departure and follow-up. Selling theories that can make salespeople effective in their territories are the wants-satisfying theory (WST), AIDA- Attention, Interest, Desire and Action), AIDCAS (Attention, Interest, Desire, Confidence, Action and Satisfaction) while DIPADA consists of Definition, Identification, Proof, Acceptance, Desire and Action.
3. Purchasing cycle is a decision-making procedure including requisition where the need for supplies is recognized and request is made; it incorporates placement of order with suppliers; applying follow-up measure to ensure timely delivery (expediting); receiving the needed materials, inspecting them and performing accounting function resulting in payment of the suppliers.
4. In terms of inter-departmental relationship, no department can succeed in isolation from others in a business organization. This implies that all departments depend on one another through cooperation and working relationship. In view of this, marketing relies on performance of other functional units while it provides them with timely, reliable, adequate and accurate data to support them. Marketing data are used by other departments to determine quantity and quality of items to produce.
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