The document outlines the major objectives of a buying process or purchasing department. The key objectives are to lower costs by negotiating better prices and terms with suppliers, reduce risk and ensure security of supply through diversification and managing risks with suppliers, manage relationships both within the company and with suppliers, improve quality by working with suppliers and tracking key metrics, pursue innovation by sourcing new goods and technologies, and leverage technology to improve supply chain efficiency.

1. OBJECTIVES
OF BUYING
PROCESS
Made by- Gaurav
Sharma and
Nikhil Bansal

2. Introduction to buying process
Buying is a process which is in existence since the trading activities got evolved over
the ages. Hence for every organization, this is one of the most basic and universal
process. It plays significant role to survive in a competing situation. In case of a
retailer, the main function of the Buying Department is to obtain the best value for the
money spent on purchase of the required merchandise. The retailer’s buying
department has to ensure that the material procured is as per the requirement and
more particularly in tune with its strategic needs for a given product or category.
While performing its buying function, the Buying department has to balance all the
factors like material quality, cost of material, sources of supply, supplier’s strengths
and weaknesses, and customer expectations vis-à-vis product price.

3. MAJOR
OBJECTIVES

4. 1.Lower cost
This is by far the primary function of the purchasing department. A well -run
department should allow you to achieve immediate savings by choosing a mix of
suppliers who can provide the best prices and terms. In this process, relationships
with suppliers who cannot provide the right level of quality at the prices required are
terminated.
The purchasing department can also provide savings by taking advantage of
warranties and discounts often forgotten by non -specialists.
Purchasing can also help you save by providing better transparency in how your
company spends. This will, in turn, allow you to negotiate better contracts and free up
your cash flow.

5. 2. Reduce risk and ensure the security of
supply
Supply chain management involves sharing and managing risks with
suppliers. This can be done by moving the risks to the suppliers who are
best able to manage it. Or it can be done through diversification of
supply.
The purchasing department has to identify what goods and services are
crucial to the company and take the appropriate steps to secure their
supply chains accordingly. Often, this comes down to an economic
decision, where higher risks can result in lower prices, or vice -versa.

6. 3. Manage relationships
Purchasing is not only about sharing risk, it is also about sharing benefits.
Passing on risk to a supplier or outsourcing a service often requires more
management of the supply chain, not less. The challenge of the purchasing
department is to get the supplier interested in working with your business,
getting them to invest in the long-term relationship.
The department also has to manage relationships within your company. It has
to work with internal stakeholders such as marketing, finance, logistics and
distribution to ensure that they are all aligned.

7. 4. Improve quality
Purchasing departments can help to improve quality by establishing
target performance levels for quality and then tracking performance
against those targets. Critical to quality characteristics is a typical metric
used to measure things such as durability, the look and feel of the
product or the timeliness of delivery.
Some companies work closely with their vendors to develop their
processes and assist them in improving quality.

8. 5. Pursue innovation
Because the purchasing department is always in contact with a variety of
outside businesses, it is in an ideal position to source innovative goods
and services that can provide a competitive advantage to your business —
an edge in either price, quality or convenience.
The purchasing department will also play an important role in helping you
source supplies for innovative products or services developed by your own
firm. Commercializing R&D can often require close cooperation with
suppliers.

9. 6. Leverage technology
Your purchasing department should identify technology solutions to
address your supply chain problems. The purchasing department should
also play an important role in the selection and implementation of ERP
systems, inventory control systems and other technology that aims to
improve the efficiency of your supply chain management.