Purchasing is a subset of procurement. Purchasing generally refers simply to buying goods or services. Purchasing often includes receiving and payment as well.

1. Purchasing and
Procurement
PRESENTED BY: KAUSTUBH VARTAK
-2016172

2.  “Procurement” is the overall function that describes the activities and
processes to acquire goods and services.
 procurement involves:
 Activities involved in establishing fundamental requirements,
 sourcing activities such as market research
 vendor evaluation
 negotiation of contracts.
 It can also include the purchasing activities required to order and receive
goods.
 "Purchasing” refers to the process of ordering and receiving goods and
services.
 It is a subset of the wider procurement process
 Purchasing involves following process:
 Ordering goods
 approval, creation of a purchase order record
 receipting of good

3. Procurement:
Selecting Vendors
Establishing Payment Terms
Procurement
Involves
Strategic Vetting
Selection & Negotiation of Contracts

4. Steps in the procurement process
 Information gathering: search for suppliers who can satisfy the requirements
 Supplier contact:
1. requests for quotation,
2. requests for tender may be advertised
 Background review: References for product/service quality are consulted, and any
requirements for follow-up services including installation, maintenance, and
warranty are investigated.
 Negotiation:
1. Negotiations for price, availability, and customization possibilities are
established
2. Delivery schedules are negotiated

5.  Fulfillment:
Supplier preparation, expediting, shipment, delivery, and payment for
the P/S are completed, based on contract terms.
 Consumption, maintenance, and disposal:
evaluates the performance and service support.
 Renewal:
product or service is to be re-ordered the company take decision for
whether to consider other suppliers or to continue with the same supplier.
 Tender Notification:
to raise the competition These systems can either be direct from their e-
tendering software,

6. Objectives of Procurement:
Pay the right
price.
1
Save time.
2
Avoid overlooking
vital steps in the
process.
3
Minimize the risk
of making a costly
mistake.
4

7. Five rights of Procurement
Price Quality
•
•
•
•
•
Right
Right
Right
Right
Right
Quality
Quantity
place
time
price
Time Quantity
Place

8. Purchasing:
 Purchasing is a subset of procurement. Purchasing generally refers simply
to buying goods or services. Purchasing often includes receiving and
payment as well.
 Steps specifically related to purchasing are:
 Purchase Order Acknowledgement
 Advance Shipment Notice
 Goods Receipt
 Invoice Recording
 Payment to Supplier

9. Purchasing:
 A method used by organization to buy products and services.
 A purchasing system manages the entire acquisition process, from
requisition, to purchase order, to product receipt, to payment.
 Purchasing systems are a key component of effective inventory management
whichs involves:
 Monitor existing stock
 Help companies determine
 what to buy,
 how much to buy
 when to buy it.
 The goal of purchasing is not only to procure raw materials at the lowest price,
but to reduce the cost of the final product.

10. Types of Purchasing:
 Mercantile purchasing:
This type of purchasing is done for resale and facilitated by
middlemen. Agents, wholesalers and retailers come under this category
providing their own channels of distribution to the consumer.
 Industrial purchasing:
The purchaser is buying raw materials to convert into finished goods
and product.
 Institutionalized or government purchasing:
Under this group come governmental agencies and institutions who
buy for public utilities. They form an important group of purchasers because
they purchase in bulk.

11. Objectives of Purchasing:
 To enable company to maintain its competitive position & earn ROI.
 Competitive purchase
 Source selection
 Resource development
 Market research
 Continuity in available of materials to ensure schedule production of minimum
inventory level.
 Supplier lead time analysis
 Inventory management
 Quality management
 Supplier quality assurance
 Vendor rating

12.  Assistance in cost reduction
 Make or buy decision
 Standardisation
 Value analysis
 Maintenance of proper records and information
 Enhance company reputation by fair dealing with suppliers

13. Function of Purchasing:
 Locating, selecting, developing qualified source of supplier.
 Floating enquiries, processing quotation, conducting negotiation & release
purchase order.
 Predelivery follow-up & shortage chasing
 Inward inspection including timely return of defective materials to suppliers
 Approval of supplier invoice for payment.
 Formulating Effective Buying Policies.
 Source of Supply.
 Determining the Terms of Purchase.
 Transferring the title of the goods.

14. THANK YOU