1. Identify the cycle of purchases of an item (product) in particular. 2. Explai
ID: 336544 • Letter: 1
Question
1. Identify the cycle of purchases of an item (product) in particular.
2. Explain in written form how this process is carried out and what are the particular characteristics of the process and what you consider to be relevant (necessary resources, strategies used, etc.).
3. Given the type of information required, it will be necessary to conduct interviews and inquire about the purchasing department and / or the company. For convenience you can alter data such as names, places, quantities, etc.
4. After the written explanation you must develop a flowchart of the purchasing cycle.
Explanation / Answer
1. Let us conduct a purchase process for a particular kind of machinery which will increase the total production by 20% and reduces the total waste to 80% of the current levels.
2. To purchase any product, Procurement department should get the requirement memo for the same. In this case, production department should conduct their study keeping in the mind increase in capacity, reduction in wastage, technical know-how, total cost of the machine, manufacturer companies, individual differences between products offered by different companies. All these issues can further be studied by the procurement department so as both the procurement and production department on the same plain and can take a perfect decision. After conducting the study by both the department, they will have to finalize the purchase decision. Purchase decision includes complete details of the machine such as manufacturer, model number, price, maintenance contracts, training, repairment, apart from machine details date of purchase, delivery of machine and all the other issues will be addressed. After finalizing the decision, budget to passed from accounts department. After that place the order to the manufacturer and pay them as per agreed terms. Receive the delivery of the machine, install it provide training to staff.
FLOW CHART:
=> What to buy: Purchase department will get requirement memo, with details of the product and date by which it needs to be delivered.
=> Where to buy: Purchase department will study the relative cost and benefit of all the available suppliers for the product.
=> When to buy: Purchase department will take a final call for placing the order with the specific timeline of the delivery and started to function.
=> When to Pay: Payment is one of the most important aspects of the purchase decision. Purchase department will have to finalize the terms of payment with accounts department and supplier of the product.
=> Receives the product: Purchase department will be the one who is still responsible for the delivery of the product to the department which raises the requirement memo. So, purchase dept needs to take follow up with the supplier and receive it as per pre-decided timelines.
=> Installation
=> Clear all the dues: After installation purchase department will receive a notification from the department which originates the memo, regarding potential defects, If the product is ok and as per the order, then purchase department will clear all the dues with the supplier.
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