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Selection of Source (Supplier)-------Purchase procedure (contd..)

'Sourcing' or 'Selection of source/s' is a major challenge for any Purchasing manager. Source of supply of required materials is basically selection of a suitable supplier. The Purchasing manager has to ensure , getting the material / service from the right source (one of 5 R).  

Once the Indent (also called requisition or Material Procurement Requisition/ MPR) is received in the Purchase department ,the concerned dealing person scrutinizes it , in respect of :
 
  • The complete specifications including drawings, if required
  • Consumption pattern
  • Stock in hand and dues in
  • Budget availability
  • Availability of all prescribed enclosures and certificates,
  • Estimates
  • Inspection guidelines, if any
 
 

On being fully satisfied that the next stage activities i.e. sourcing is now called for, the mode of selection of source , often called mode of tendering is decided.

In many firms , if the number of items is not large then the sources are known and on the basis of  suppliers record the Purchase order can be placed.

However, in government firms where opportunities are supposed to be given to any eligible supplier, tendering is resorted to.

 

Tendering is a process by which a potential source is contacted through a notice called Notice Inviting Tender (NIT).

The NIT contains the details of material / service  required , the terms and conditions applicable for entering into an agreement with the seller, offers made in response to NIT by the probable seller (Bidder) , for finally reaching the point of agreement between the selected bidder and the buyer.
NIT is issued by the buyer and Tender is submitted by the interested bidders  /

tenderers.

Depending upon various reasons, mainly emanating from the extent of knowledge about the existence of a source (supplier), the mode of tendering is decided.

 

Different popular modes of tendering for selection of a supplier are as below:

 
 
 

Purchase Procedure (Steps)

Purchase Flow Chart
Recognition and description of need
Transmission of need (Indenting)
Selection of Source to satisfy the need
Contracting with the accepted source
Following up with the source / supplier
Receiving and inspecting material
Payment and closure of the case

 

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