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A typical purchase department is
usually engaged in purchasing a number of
materials and services falling in different categories. The
activities are performed regularly by purchase
professionals with the objective of fulfilling
organisation's materials and services needs.
Naturally, depending upon the nature of procurement,
environmental practices etc the purchasing systems and
procedures may also vary substantially. However ,
purchase procedure can be seen to have a bit of
standardisation across the globe and therefore a
professional purchasing system does show following steps
that eventually constitute a purchasing cycle.:
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Recognition and description of need
Procurement activities in an organisation start right
since the stage a need is felt for any material or
service.
An organisation categorises it's material
requirements into two broad ways , viz. Inventory
Control item or Non inventory item.
A department within
the organisation may require an item which is non
inventory and thus the department concerned shall have
to describe the need.
It implies writing down the
specification of the item , the volume (quantity) etc of
the item and some other related information to process
it further.
For an Inventory item ,usually, there is a forecasting
method by which the need for an item is addressed.
What could be a need ? |
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The need for an item may be at regular interval , one
time or even be sporadic in nature. This could be an
item needed for running a machine , certain raw material
needed for production, a service in terms of maintenance
of a machine or for doing certain job needing the
employment of labour, materials, machines etc.
Why need must be described clearly ?
The need, also called materials requirement, must be
defined clearly as this is the stage where the right
need description shall ultimately lead to getting the
right material / service. |
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Once the need is made available to the purchaser,
through a requisition , he has to check the requisition
for its correctness and completeness and then to ensure
that appropriate method has been used to satisfy the
user and also to select the supplier. |
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