PURCHASING METHODS

Purchasing Methods

Purchasing Methods

Introduction

Purchasing department is an integral part of the organisation. Different functions within the department of purchasing play their indispensable part in the smooth and effective functioning of the organisation. This paper revolves around the phenomenon of purchasing. This paper describes the role of the purchasing department as the separate and vital part of the organisation. In this paper, significance of relationship between supplier and buyer and different models of purchasing with its advantages and effectiveness are discussed.

Supply Chain Management

Supply Chain Management is the integration of the activities, which associated with the flow and transformation of goods from the raw materials stage to the end-user, as well as the associated information flows, through improves supply chain relationships to achieve a sustainable competitive advantage. Based on extensive research it is estimated that the costs associated with the flow of materials represent a significant proportion of the operating expenses. In some industries these costs approach 75% of the total operating budget. World-wide organizations are spending more than ?400 billion annually on logistics-related services and activities.

Purchasing A Discrete Organisational Function

In the public sector or organisations that are controlled by local authorities, the purchasing of goods and services is very important because this function provides support to all the functions of the government; each unit of the government needs supplies and equipment to achieve its mission (Thai and Grimm 2000, 241).

Relationship Between The Purchaser And Supply Market For Services

A positive and profitable relationship between the purchaser and the supply market is of utmost importance for an organisation. If a firm is to achieve success in maintaining its customers it is important for the firm to maintain the relationship with the suppliers. It is vital for the company to have certain extent of influence on suppliers if the competitive advantage for the company relies on the network of suppliers (Ellegaard et al 2003, 347).

Inventory Management Across The Supply Chain

At the same time, we can comprehend in terms of information systems. A 1995 KPMG Peat Marwick study on logistics' management and technology indicates that the two most important logistics' issues for businesses are controlling the costs of logistics-related operations and concern for information technology selection, deployment and integration.

For the development of information system, there are a number of new techniques come out, such as, internet world wide web, EDI, EFT and telecommunicate and so on. If we consider this question much more deeply “why these things have to emerge?” we can find out that the customer is the internal force. For instance, in the E-Procument, the company which wants to enhance external and internal purchasing and supply management processes, they trying their best to satisfy the customer needs.

FUNCTIONAL MODELS OF PURCHASING

Centralised And Decentralized Purchasing

Relying on the size of the local government, how much of the quantity and what it purchases, and various other consideration an organisation may choose to adopt a centralised purchasing function with staff comprises of many members; and in other way, an organisation can also form a decentralised purchasing ...