Introduction –

Almost every professional working in purchasing domain agrees that purpose of purchasing is to buy right things on right price with right quality and quantity at right time.  Broadly we can say that purchaser has to act meticulously to minimize risk with financial gain for organization.

How to decide” right” in buying procedure

Everybody expect from buyer that every time buyer would take right decision, but to take right decision buyer must work out on some points to turn out every decision right.

1. What is purpose of purchasing of material.
2. Nature of item – Raw material, Capex, Opex, consumable , spares , subcontracting
3. Consumption pattern
4. Shelf life
5. Market trend of MOC , price trends
6. Applicability of Test certificates, inspection reports, certifications etc.
7. Landed cost

Purpose of material  is very important to know for buyer , the process in which material is going to be use define the criticality of the material, if the material will use in normal procedure than buyer can think about some development of alternatives regarding material , vendor etc.

Nature of item defines strategies of purchasing, Capex  purchasing have different equations as it has long term impact , raw material purchasing need different set of skill for negotiations, likewise every type of  item purchasing needs  different strategies.

Consumption pattern plays a vital role when it comes to delivery negotiations, lead time of material, inventory capacity, just in time methodology all depends upon consumption pattern of material, it is very important to study previous consumption data before ordering.

Every material has some shelf life but if shelf life is short in terms of supply chain than buying strategy is altogether change. Buyers in hotel industry, FMCG, Chemical etc know that this factor can change the whole game. Whole negotiation procedure with supplier from pricing, delivery, quality till finished goods despatch totally depends upon the shelf life time hence it is very important factor for buyer.

For items which have lots of metals involved, must be ordered after checking market trends for that metal ,  hedging technique can be used if lot of up & down is expected. Some items have seasonal up downs in prices, like wooden packing material and cement found cheaper in rainy season than other seasons,  buyers should take utmost care for this factor to reach on decision.

To ensure the quality of supplied product testing procedure and reports are very important factor, if any critical instrument is to buy than its calibration & testing reports are very necessary to obtain, MTC reports for fabrication items  is always require to ensure quality. If material is require for hazardous area than necessary certification must be there as per laws, different certifications are also there as per nature of material. This factor is very important and should be carefully included while taking buying decision.

Landed cost is indisputably a decisive factor for any purchasing decision, it includes lot of calculation and analysis. Some major points like taxations, freight , guarantee warranty clauses , buy back facility, spares cost , inventory cost ,disposal procedure & cost ,scrap value and handling etc. is always to be taken care , in some cases CB CE analysis , technology benefit sort of analysis is also necessary to do before reach on final conclusion.

Conclusion-

Buying decision involves cost and the material received may cause serious impact on organization if analysis would not done properly. However there are lot of techniques used by buyers to reach on correct decision but the points mention are always be a part of every technique. Buyers must analyse each & every aspect by using above points to reach on plausible decision.