The purchasing process is an important concept in business. Appropriate organization of purchases is one of the key elements of efficient business management. What exactly is the purchasing process? How to optimize it? We advise!
The purchasing process in a nutshell
Effective sales is the main goal of every enterprise. Its implementation is a long and demanding process, including activities on various levels - from rational strategy to customer service standards. The purchasing process, i.e. a well-thought-out set of tasks and activities with a specific goal, is of particular importance in managing the enterprise - to buy all the things necessary for the company to function properly, as cheaply, as quickly and as best as possible. However, it is worth remembering that the company's "shopping list" will be different for each company. It all depends on the business profile, demand and many other factors.
In the purchasing process, we can distinguish two key roles: the buyer and the dispatcher. The buyer is a person responsible for negotiating contracts - his task is to find the best offers, i.e. those with the highest value for the company. The dispatcher, on the other hand, handles orders and distributes completed purchases.
The purchasing process consists of several elements. These are:
- research and collecting the demand in the company,
- market analysis,
- collecting various offers,
- negotiations and selection of the best,
- product order,
- invoicing and settlement of payments.
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Sourcing in the purchasing process
Sourcing is defined as searching for sources of demand and selecting the best of them. The process includes such activities as: collecting and analyzing the needs, standardization of assortments for purchase, collecting offers, as well as the final selection of the supplier.
Sourcing is crucial in the purchasing process. The analysis enables an in-depth understanding of the company's needs. Thanks to this, you can prepare a well-thought-out "shopping list", which streamlines the entire purchasing process. Reliable market and supplier research facilitates the preparation of a rational, appropriate strategy for bidding. This, in turn, is the basis for making the right purchasing choices.
Sourcing gives the purchasing process a strategic character. A rational system of actions of a long-term nature contributes to construction the company's competitiveness on the market, it facilitates its implementation development strategy and reduces the purchasing risk.
Purchasing process - how to manage it?
The purchasing strategy for each category should be an element of the company's purchasing strategy. A category is defined as specific goods or services. In the management of the purchase category, the so-called strategic sourcing.
Strategic Sourcing is a comprehensive approach to the process of purchasing products and services, striving to achieve the lowest total cost of acquisition (TCO), while meeting customer requirements, minimizing purchasing risk and taking full advantage of market opportunities. Strategic Sourcing generates added value for the enterprise.
The process of strategic management of the purchasing process is divided into 3 stages:
- category diagnosis,
- strategy planning,
- implementation of developed solutions.
Category diagnosis
The diagnosis of the category analyzes the internal situation of the enterprise and its market environment in the context of the purchasing category. The goal is to define the scope of the project, the total cost of acquisition (TCO), the purchasing process, as well as establishing business goals, needs, expectations and concerns in terms of the category. The market analysis should take into account:
- supply chain dependencies,
- distribution of market forces,
- market trends,
- competition,
- current and potential suppliers,
- factors affecting the cost of products / services.
Correctly performed category diagnosis allows you to understand the company's business goals, the specificity of expenses, the impact of costs on profit, as well as the risk resulting from the market environment.
Planning categories
Based on the information obtained in the category diagnosis, a tailored strategy of the purchasing process is created based on the elements of competitive advantage. The strategy defines the next steps of the sales process, including the full schedule of processes, resources, people responsible for individual activities and the desired effects. In addition, it must take into account the methods of maintaining continuity of supplies and efficient management of the supplier base.
Implementation of the strategy
The implementation of the strategy is nothing more than the initiation of planned activities as part of the purchasing process. At this stage, suppliers that meet predetermined requirements are identified, contracts are negotiated and purchases are made.
The implementation of the purchase plan requires proper preparation each time. The following are key in the optimal management of the purchasing process:
- developing an interview scenario and a pricing strategy for a specific offer,
- creating a list of goals, arguments and possible concessions,
- collecting information about the second potential supplier - including its market situation, offer, customers and prices.
Striving to optimize the purchasing process is the basis for effective management of the entire enterprise. All activities introduced as part of strategy sourcing should be constantly verified and, if necessary, the adopted strategy should be modified. It is also important to monitor cooperation with specific suppliers. The so-called KPIs, i.e. key performance indicators.