The Purchasing Process

Question 1

What are some of the items a good requisition form provides to the buyer?

Answer 1

1. Date
2. Indication if the request is for product information or for an actual purchase.
3. Detailed description
4. Quantity needs and the unit of measure.
5. Due date it is needed
6. If it’s one time buy or ongoing
7. Printed name and signature
8. Recommended or last used supplier

Question 2

What are some of the sources to use for information about suppliers?

Answer 2

1. Search engine
2. Supplier directories or catalogs
3. Catalogs and brochures by mail or sales people.
4. Magazines
5. Trade shows
6. Telephone books
7. Trade associations for domestic suppliers and foreign consulates for international sources.

Question 3

What do Purchasing lead times include?

Answer 3

The time required to process the request, time to produce the goods, transit time, and internal time to deliver to the user.

Question 4

What measures should be taken to qualify potential new suppliers?

Answer 4

1. Checking reputation- customer references
2. Physical inspection- visit onsite to suppliers facilities
3. Stability and Financial Strength- bank references and D&B reports

Question 5

What are the two purposes to obtaining bids or proposals?

Answer 5

1. Information finding for planning or budget preparation and to prepare for specifications.
2. Obtain costs for comparisons among competitors

Question 6

What does proper analysis involve in the bidding process?

Answer 6

1. Include all costs
2. Separation of labor and material costs
3. Speeds and feeds of machinery used to make an item
4. Transportation costs
5. Economies of scale

Question 7

What are the advantages to using a single supplier source?

Answer 7

1. Economies of scale
2. Responsibility is pinpointed easier
3. Cost of receiving, stock keeping, accounting, and record keeping is reduced
4. Buyer, negotiating strength from larger dollar volume order
5. Expense for only one set of tooling

Question 8

What are the advantages for multiple sources?

Answer 8

1. Continuous supply if one supplier has labor problems
2. Increased opportunity for ideas and product improvements
3. Generates more competition among suppliers for a greater percentage of the business.