The Purchasing Cycle: The Key Elements Of The Purchasing Cycle

Purchasing Cycle

The purchasing cycle demonstrate and indicates the key elements of purchasing. Under purchasing cycle documentation plays an important role. furthermore, without complete and correct documentation the purchasing function is not able to function at its best level in regards to optimising

As one learns/reads more about the procurement realm, it becomes glaringly obvious that each of the writers, theorists and consulting firms involved in procurement has a slightly different take on the stages in the procurement process. Procurement is so dynamic, in fact, that it requires constant analysis and monitoring by someone (or a team) within an organization. There is always more to know/more data to analyse/more forecasts to produce

The consumer purchasing cycle involves awareness for the need for a product, a search for information about the product category, evaluation of the products available, a decision to purchase a specific item and then post-purchase interactions (such as interactions with customer service). In a company setting, a purchasing cycle is established by a purchasing department and may include steps like obtaining approval for a purchase, completing purchase requisition paperwork, soliciting bids, issuing a purchase order, receiving and inspecting the item, adding it to an inventory and paying vendor invoices.

Stages in the Purchasing Process:

So what exactly is a purchasing cycle? Well it’s the steps taken to order and pay for products that a business requires. The purchasing cycle determines the frequency that products are purchased.

Step 1: Identify and Define the need

Step 2: Describe the need

Step 3: Investigate, evaluate and select suppliers

Step 4: Prepare, Place and issue Purchase order

Step 5: Follow up the orders

Step 6: Receipt and

Once accepted by the supplier, it becomes legal contract for delivery of the goods according to the terms and condi¬tions specified in the purchase agreement. The purchase order is prepared from the purchase requisition or the quotations and from any other additional information needed. Once a supplier is chosen, companies should stick with that relationship and try to establish preferred pricing and specific terms (i.e. delivery). A purchase order is a legal offer to purchase. Once accepted by the supplier, it becomes a legal contract for delivery of the goods according to the terms and conditions specified in the purchase agreement. The purchase order is prepared from the purchase requisition or the quotations and from any other additional information needed. A copy is sent to the supplier; copies are retained by purchasing and are also sent to other departments such as accounting, the originating department, and receiving. The business will investigate all relevant information to determine the best price and terms for the product. This will depend on if the company needs commodities (readily available products) or specialized materials. Usually the business will look into three suppliers before it makes a final