This document outlines factors that favor purchasing items from outside suppliers rather than manufacturing them internally. It notes that external purchase may be preferable when suppliers have greater specialized knowledge, the buyer lacks expertise, needs are for small volumes, it is less costly, maintaining multiple suppliers is strategically important, the item is not critical to strategy, facilities are limited, or there is brand preference.

1. Purchase Procedure
Dr.S.Karthikumar

2. Purchase Department

3. Factors favoring purchase from outside
• Suppliers’ specialized know-how and research are more than that of
the buyer
• Lack of expertise
• Small-volume needs
• Cost aspects (costs less to purchase the item)
• Wish to sustain a multiple source policy
• Item not necessary to the firm’s strategy
• Limited facilities for a manufacture or inadequate capacity
• Brand preference

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