The document discusses the basics of purchasing including procurement, administering purchase contracts, receiving and storing shipments, determining product needs, and making purchases. It also covers purchase authority and responsibilities, purchasing activities, objectives, market research techniques, distribution channels, and value added. Key aspects include the process of obtaining goods and services through an orderly exchange between buyers and sellers, determining required products and quantities, negotiating with suppliers, and maintaining adequate inventory while obtaining the lowest possible prices.

1. THE BASICS OF PURCHASING

2. Procurement an orderly, systematic exchange between a seller & a buyer Administering purchase contracts It is the process of obtaining goods & services Receiving & storing shipments Determining the types of products needed Making purchases

3. Quantity of term purchased Timing of delivery Impact of effective purchasing on cash flow Price

4. PURCHASE AUTHORITY Responsible for purchasing Commit the establishment funds to buy required products design necessary control form Prepare reports for management establish fair practices with suppliers ensure smooth cooperation with operating departments

5. National Local Regional Geographic Authorized several buyer before make purchases either to assign buyers a geographic territory or assign the product responsibility Geographic or Product Responsibility Product Type

6. Maintaining sufficient inventory Administration the purchasing department Purchase requisitioning Establishing quantity needs Maintaining good supplier relations Receiving products Establishing quality needs PURCHASING ACTIVITIES Order Expediting Purchase Order Processing Selecting suppliers Storing Products & Controlling Inventory Negotiating with suppliers Preparing specifications Maintaining Adequate Records Dispensing with surplus Products

7. Price & Product supply analysis The ABC analysis MARKET RESEARCH Make-or-Buy analysis Value Analysis

8. Maintain adequate inventory Minimize investment in inventory PURCHASING OBJECTIVES Maintain quality standards Maintain the organization’s competitive position Obtain the lowest possible prices

9. Time Communication Problems in Meeting Objectives Require too much of a purchaser’s time Backdoor selling

10. DISTRIBUTION CHANNEL Sources : Farmers/Ranchers Manufacturer Fabricator Wholesalers Brokers Manufacturer’s representatives Manufacturer’s agents Sales agents Intermediaries : Users : Hospitality purchasers

11. Form value Time value VALUE ADDED Information value Place value Cost of value

12. Exercise : In your own words, define purchasing. Explain the impact of effective purchasing on an operation’s cash flow. List and briefly explain, five activities for which a purchasing department normally has responsibility. Briefly list and discuss two problems that a purchasing department sometimes has in meeting objectives. Fiezha_1401