part one short answer
Purchasing is the management of the acquisition process. This includes deciding which suppliers to use, negotiating terms and conditions, etc. It must satisfy the firm’s long-term needs and support the firm’s capabilities to produce goods and services. Elaborate on the purchasing function as part of supply chain management and its importance.
Part two short response to following:
Purchasing is one of the first steps in the supply chain management process, and it comes after the planning phase. It involves the acquisition of raw materials and supplies from various vendors, and involves the selection of the suppliers, negotiations and agreements to terms and conditions, and the procurement process. The selection of a supplier determines the value of the materials or equipment delivered to an organization, and this value has a huge effect on the end product of the organization (Global Text Project, 2017). The factors to consider during the supplier selection include the price, quality, and the time of delivery (Global Text Project, 2017).
During the supplier selection, an organization also decides the number of suppliers it needs in the production of a selected good or the provision of specific services. Therefore, an organization typically evaluates the type and quality of goods or services it needs to provide, and then decides on the number of suppliers. The organization then enters into contracts with suppliers or prequalifies them in the case where it will use the bidding process to select suppliers for specific products or services. After selecting suppliers, an organization then proceeds to make purchase requests, and such requests typically contain a description of the products needed, the prices as per a budget that has previously been prepared, and the quantity to order.
In a typical organization, the departmental heads approve the purchase orders made by their staff members, submit the orders to the procurement officer for approval, who in turn obtains the approval of the MD or the CEO. Upon the approvals of these senior officers, the procurement department sends the PO’s out to the supplier(s). Upon the receipt of goods or services, the receiving department checks the items against the recommended standards or quality, and either accepts them or rejects them. Successfully received goods or services should meet the quality requirements that the department specified. The purchase of high-quality materials or equipment would ensure the production of high-quality end products or the provision of quality services.