Podcast
Questions and Answers
What is the initial step in the purchasing process?
What is the initial step in the purchasing process?
Which of the following best describes the role of the H.O.D. in the purchasing process?
Which of the following best describes the role of the H.O.D. in the purchasing process?
What document serves as the supplier's statement of what is being delivered?
What document serves as the supplier's statement of what is being delivered?
Which step follows the evaluation of supplier proposals?
Which step follows the evaluation of supplier proposals?
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During which step is the description of needed items prepared?
During which step is the description of needed items prepared?
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What must occur before a purchase requisition is honored?
What must occur before a purchase requisition is honored?
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Follow-up on an order is primarily the responsibility of whom?
Follow-up on an order is primarily the responsibility of whom?
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What is included in the closure of purchase records?
What is included in the closure of purchase records?
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Study Notes
Purchasing Process Steps
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Recognition of Needs:
- Needs typically arise in production units or storage areas.
- The Head of Department (H.O.D.) recognizes the need based on daily consumption of the item.
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Description of Needed Items:
- A description of the needed item is prepared, often utilizing a standard purchase specification.
- The description includes item name, quantity, unit cost, total cost, and sometimes brand names.
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Authorization of Purchase Requisition:
- The purchase requisition is authorized by the H.O.D. or according to company policy.
- Authorization is required before the requisition can be processed.
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Negotiation/Selection of Supplier:
- Suppliers are selected based on price calculations, past performance evaluations, and previous purchase records.
- If a supplier is already chosen, the price of the item is negotiated.
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Evaluation and Placement of Order:
- Supplier proposals are evaluated for compliance with company policy.
- Factors such as quality, pricing, delivery, and past performance are considered.
- The order is placed once the evaluation is complete.
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Follow Up of Order:
- Though theoretically the buyer should not have to follow up on an order after placement, it is common practice to do so.
- The supplier typically manages the follow-up process.
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Verification of Invoice and Delivered Material:
- The supplier's invoice is checked against the purchase order for accuracy in quality, quantity, and price.
- The delivered material should match the purchase order and invoice.
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Closure of Purchase Records and Payment for the Material:
- This step involves gathering all purchase documentation and organizing it for record-keeping.
- Payment for the delivered goods is authorized.
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Description
This quiz explores the essential steps involved in the purchasing process, including recognition of needs, item description, authorization, supplier selection, and order placement. Test your knowledge of how these steps ensure efficient procurement in an organization.
