Recognition of needs:- The most obvious place for a need to occur is a production unit. The second location is the storage area in which the objective is to have on hand the right product in the right quantity at the right time. The need is recognized by the H.O.D. based on the daily consumption of the needed item.
Description of needed items:- The concerned person prepares it, generally the description is taken from the standard purchase specification. It states the name of the item, quantity, unit cost, total cost, sometimes brand names, etc.
Authorization of purchase requisition:-The third procedure of the purchasing process is authorization. Generally the requisition is authorizes by the H.O.D. or as per the policy status. The purchase requisition is not honored until the concerned person signs it.
Negotiation/ selection of supplier:- In this step the supplier is selected on the basis of price calculation, performance evaluation and records from the previous purchase. If the supplier is selected already the price of the needed item is negotiated.
Evaluation and placement of order:- All suppliers’ proposals are evaluated for the compliance with the policy. In the evaluation the quality factor, rates, delivery, performance of the supplied items is evaluated, and then the order is placed for the needed items.
Follow up of order:- Theoretically the buyer should not have to follow up an order after it has been placed and accepted, the supplier follows it.
Verification of invoice and delivered material:- The invoice is the supplier statement of what is being delivered or shipped to the buyer. The invoice should be checked against the purchase order for quality, quantity and price. Delivery and condition of the material should be in agreement with the purchase order and invoice.
Closure of purchase records and payment for the material:-It consists of the clerical process of assembling the written records of the purchase process. Filling them in appropriate places and authorizing payment for the goods delivered.
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