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CHAPTER 3

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  • April 15, 2022
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  • 2021/2022
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LLL56
MNP 2601 Purchasing Management
Chapter 3: Purchasing processes and
procedures
Procedures in the purchasing process

No standard purchasing procedure is equally suitable for war businesses.

The following general steps are identified:

 Origin of the need
 Specification
 Source identification
 Selection of suppliers
 Bidding and negotiation
 Following up and expediting/contract administration
 Receipt, inspection and distribution
 Inspection of the incoming goods
 Handling faulty consignments and rejections
 Analyzing the invoice
 Closing the order – Payment
 Maintaining files and records
 Measuring supplier performance

Origin of the need
The need for specific materials originates with the users of the goods and services.

Need may arise for production, maintenance and cleaning materials, stationery, office or plant equipment etc

It is important the user functions identify the need in good time to avoid urgent orders. It is essential to
create specific purchasing procedures.

Mr. Control system of the inventory function should be designed to anticipate the production functions need
for production materials and to maintain adequate levels of supplies.

Where a materials requirement planning (MRP) system is used, the system not only provides information on
the size and the specific description of the need, but also schedules the purchasing in terms of the master
production schedule (MPS).

Description or specifications
The materials, components and services needed by the user function is communicated to the purchasing
function by means of one of the following documents.

 Purchasing requisitions – Office Equipment, stationery and protective clothing etc
 Travelling requisitions - repeated purchasing of standard inventory requirements
 Materials list – material requirements related to a particular production run or product group
 Kanbans – information cards forming part of the JIT system. Provide a clear description and
specification of the firms specific needs.

It is the responsibility of both the buyer and the user to ensure that the description meet the standards.

Is the buyers prerogative to question specifications on purchasing requisitions, travelling requisitions and
materials lists. It’s important that buyers do not alter obscure, superficial or incomplete specifications without
consulting the user.

Alterations to requisitions must be authorized.




Supply source identification


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