Every organization needs goods & services to run its business. Arranging those goods & services from external sources is called purchasing. A purchase department buys raw material, spare parts, services etc. Sometimes these are available in local market and sometimes these need to be imported or manufactured from a workshop.
Depending upon the nature of business purchase manager needs some expertise/technical knowledge to discharge his/her duties well. Purchasing is one of those vital functions which can make or break an organization. It has to be done with great responsibility. The objective of a purchase department is to buy required items at minimum price. Also, it should avoid a stock out situation at all cost.
Following are few tips for small businesses to perform this function right:
· First understand what exactly you need to buy i.e. specifications/detail of the required product/service. This way you will protect yourself from ordering substandard or wrong stuff.
· Get three or more quotations from different suppliers.
· Make a comparative statement to select the right supplier.
· Always negotiate price.
· Try to get some credit.
· Always try to find out why one supplier is economical than other.
· Place order to a supplier with good repute.
· Place order on time. Delaying may hamper some business operations.
· When placing order mention complete specifications on the purchase order.
· Maintain a minimum stock to avoid disruption in business operations. Items which are not readily available their stock should be more than the ones available on short notice.
· Maintain good relationship with your suppliers.
· When selecting a supplier keep all his/her term & conditions in mind.
· Determine the exact quantity to be ordered. Buying too much will block your funds and ordering too little may create a stock out situation.
· Upon receiving the goods, thoroughly inspect the items to ensure these are as per your purchase order.
· Pay the supplier only when you are satisfied with the quality.
I hope you found the above helpful. Please feel free to comment.