The Purchasing Function The Buying Process

Types of Purchase Situations New Task Purchase Occurs because of an unrecognized need. Desire to change an existing operation Want Slips – Used when a customer’s desires a product that is not carried by a location.

Types of Purchase Situations Modified Rebuy The buyer has the experience buying the good or service but then some element of the purchase changed. Some Reasons: New Vendor Increased Prices Analysis of Competition New Trade Information Resident Buying Offices Representatives in a central market, that send the business information regarding new merchandise offerings, closeouts, trends, and market conditions.

Types of Purchase Situations Straight Rebuy Routinely orders the same goods and services from the same vendor. Ex. Office Supplies Typically linked with Inventory System so that when supplies run low the supplies are automatically ordered.

Selecting Suppliers Businesses look for: Production Capabilities Past Experiences Product and Buying Arrangements Special Services

Selecting Suppliers Production Capabilities Determine Reputation – (Better Business Bureau, past users) Visit the facility Check the production ability Ethical Decisions Costs

Selecting Suppliers Past Experiences Businesses keep accurate records in order to evaluate their suppliers. Ex.) Products supplied, prices, delivery and date terms, sales representatives, and the quality of the goods provided.

Selecting Suppliers Special Buying Arrangements Consignment Buying Goods are only paid for until they are actually purchased by a customers. Memorandum Buying Agrees to take back any unsold goods by a certain pre-established date.

Selecting Suppliers Special Services Expectations besides a basic return policy that help suppliers stay competitive. Ex. Placement of the UPC labels on products helps keeps track of inventory, pricing, and other benefits to the retailer.

Negotiating Terms Terms that need to be negotiated include: Prices Dating Terms When payment is due Delivery Arrangements When, how often, by what carrier Discounts Reductions from quoted price, given when the business meets certain requirements.