Checklist
This checklist outlines a practical approach to purchasing.
Definition
A business or organization may buy goods or services either to resell to customers or for its own use. When choosing suppliers and merchandise, you need to consider price, quality, availability, reliability, and technical support. The goal of purchasing is to obtain the highest-quality goods and services at the lowest possible cost to your business. In order to accomplish this successfully, you need to keep abreast of changes affecting both the supply of and demand for products and materials, track market conditions and price trends, and be aware of sales and inventory levels. It is also advisable to have a working technical knowledge of the goods or services to be purchased and to make up a spec sheet for each product to include brand, model, price, service requirements, and payment terms.
Advantages
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Good purchasing practices will help you to avoid throwing away money by investing in unsuitable and expensive purchases.
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You will save time and money by using spec sheets, as you will be able to select the brand, model, price ceiling or price range, any features, and any other required options.
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By asking for quotes you can often get discounts and perhaps extra information from the supplier, which could help you get a better deal the next time.
Disadvantages
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Many small businesses just don’t have the expertise or time to check how much they should be paying for certain goods and services. They could be throwing away money by not getting the best deals.
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In a market such as fashion or technology, where trends can change overnight, it is often almost impossible for businesses to keep up fully with market conditions and price movements.
Action Checklist
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Vendors: Take the time to thoroughly understand the product/service—the more research you do, the better placed you will be to make good judgments. You may want to check out vendors by getting references from other customers, reading product reviews, visiting the vendor’s plants, and perhaps sampling the product or service.
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Quotes: For costly purchases, always ask to see a salesperson, as they can often get you discounts and perhaps recommend more suitable products. You should also try to get at least two or three quotes. Make sure the quotes you are comparing are “like for like”. If you need further information, ask your suppliers so that you can make an informed decision. And don’t just consider price—quality, service, and added value should also be taken into consideration.
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Spec sheets: You will need to create a spec sheet for each product you buy. This could specify: brand, model, price ceiling or price range, and any features and options. You should also specify delivery times, warranty or service requirements, and payment terms (for example COD or net 30/60/90 days).
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Purchase orders: Your purchase order should specify the name of the item or service being purchased and any details specified in your spec sheet, such as brand, quantity, style,
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type, or color. You will also need to specify packing and receiving requirements, delivery date, delivery address, shipping method, and payment.
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Receiving goods: Count the number of items delivered and check for any damage. Remember that when you sign for delivery you are generally agreeing that the quantity is correct and that the shipment has suffered no obvious damage. As soon as you can, open the shipment and examine it to check specs, quantity, and quality. If there are any problems, call the supplier immediately.
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Legal aspects: Check on any legislation affecting your purchasing decisions. Make sure that you are clued up on any legal requirements for the product or service you are buying.
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Contract renewal: Make a note of contract renewal dates and set yourself a reminder so that you have plenty of time to consider your options.
Dos and Don’ts
Do
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Consider using a specialist—they can save you time and hassle, as well as using collective bargaining to get better deals.
Don’t
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Don’t renew existing contracts out of habit or because it’s easier. Check! Your requirements or the market may well have changed.
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