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PURCHASING AND
PUBLIC RELATIONS
BY N.S VILAKAZI
INTRODUCTION
◦ You know that all types of businesses need to buy things so that the business can function,
whether the business sells a service or goods. If your business is a manufacturing concern,
then you need raw materials to make the finished products. A business also needs goods for
its own use. Someone in the business will be responsible for buying all the goods that the
business needs to function properly. You learned about the purchasing function when we
discussed the business micro environment earlier in this book.
The purchasing function
The purchasing department will receive an allocation from the finance department to purchase
what is needed for the business. It is important to make sure that the purchasing function will
contribute towards the profitability of the business and to exercise proper control over the stock
purchased.
Activities of the purchasing department
One of the important functions of the purchasing department is to determine the needs of the
other departments in the business. Buyers should have expert knowledge of both the products
and the trends in the market. All the necessary documentation that accompanies a purchase
must be completed. Stock must be managed carefully to ensure a constant supply. Let’s have a
look at some important aspects that the purchasing department must consider when buying for
the business.
The right quality
Quality refers to the suitability of the product for its intended use. Quality can be
specified by the following: • Trademarks, which help the consumer identify the
product with which a certain quality is associated, for example Nike • Grading of
agricultural products, such as A Grade • Samples, which are smaller specimens
pieces of the actual product What do I still need to know? Activities of the
purchasing and public relations functions Week 1 • Micro environment 25 •
Technical drawings and blueprints, which will specify what the main
of the product will be as well as the material requirements to make the product
SABS quality marks indicate that a product meets internationally recognised
standards.
The right quantity
The buyers may need to order different amounts of the same goods from time to time. The
stock levels of the business must be monitored on a continuous basis. Accurate records of
goods in stock and sold must be kept. Once each stock item reaches a pre-determined
new items are ordered.
The right supplier
The stock for the business often has to be bought from different places. Potential
suppliers should be evaluated in terms of the following: • The reputation of the
supplier • The price for the quality and quantity desired • The time required for
delivery • The terms of payment • The geographical location.
The right priceThe right price is a price that is fair and reasonable to both the buyer and the seller. Buyers must
evaluate following: • The quality and quantity of the goods required • Market conditions, such as
fluctuations in prices • Seasonal factors where goods will be marked lower when they are unsold
the end of a season • Discounts for buying in bulk • Trade discounts to encourage the prompt
payment of goods bought on credit • Discounts for paying cash for goods purchased.
The right timeThe timing of the purchases also involves an understanding of the lead time requirements of the
various suppliers. The buyer can choose between the following alternatives: • Speculative buying.
involves the purchase of materials in excess of estimated requirements, with the expectation that
prices, or demand will increase in the future. • Forward buying. This refers to the practice of buying
materials in a quantity exceeding current requirements, but not beyond estimated requirements. •
Minimum buying. This refers to keeping the minimum quantity of materials in stock in anticipation of
prices falling in the near future.

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Purchasing and public relations

  • 2. INTRODUCTION ◦ You know that all types of businesses need to buy things so that the business can function, whether the business sells a service or goods. If your business is a manufacturing concern, then you need raw materials to make the finished products. A business also needs goods for its own use. Someone in the business will be responsible for buying all the goods that the business needs to function properly. You learned about the purchasing function when we discussed the business micro environment earlier in this book.
  • 3. The purchasing function The purchasing department will receive an allocation from the finance department to purchase what is needed for the business. It is important to make sure that the purchasing function will contribute towards the profitability of the business and to exercise proper control over the stock purchased. Activities of the purchasing department One of the important functions of the purchasing department is to determine the needs of the other departments in the business. Buyers should have expert knowledge of both the products and the trends in the market. All the necessary documentation that accompanies a purchase must be completed. Stock must be managed carefully to ensure a constant supply. Let’s have a look at some important aspects that the purchasing department must consider when buying for the business.
  • 4. The right quality Quality refers to the suitability of the product for its intended use. Quality can be specified by the following: • Trademarks, which help the consumer identify the product with which a certain quality is associated, for example Nike • Grading of agricultural products, such as A Grade • Samples, which are smaller specimens pieces of the actual product What do I still need to know? Activities of the purchasing and public relations functions Week 1 • Micro environment 25 • Technical drawings and blueprints, which will specify what the main of the product will be as well as the material requirements to make the product SABS quality marks indicate that a product meets internationally recognised standards.
  • 5. The right quantity The buyers may need to order different amounts of the same goods from time to time. The stock levels of the business must be monitored on a continuous basis. Accurate records of goods in stock and sold must be kept. Once each stock item reaches a pre-determined new items are ordered.
  • 6. The right supplier The stock for the business often has to be bought from different places. Potential suppliers should be evaluated in terms of the following: • The reputation of the supplier • The price for the quality and quantity desired • The time required for delivery • The terms of payment • The geographical location.
  • 7. The right priceThe right price is a price that is fair and reasonable to both the buyer and the seller. Buyers must evaluate following: • The quality and quantity of the goods required • Market conditions, such as fluctuations in prices • Seasonal factors where goods will be marked lower when they are unsold the end of a season • Discounts for buying in bulk • Trade discounts to encourage the prompt payment of goods bought on credit • Discounts for paying cash for goods purchased.
  • 8. The right timeThe timing of the purchases also involves an understanding of the lead time requirements of the various suppliers. The buyer can choose between the following alternatives: • Speculative buying. involves the purchase of materials in excess of estimated requirements, with the expectation that prices, or demand will increase in the future. • Forward buying. This refers to the practice of buying materials in a quantity exceeding current requirements, but not beyond estimated requirements. • Minimum buying. This refers to keeping the minimum quantity of materials in stock in anticipation of prices falling in the near future.