MODULE 5-6  ACQUISITION of services is

widely called CONTRACTING

Purchasing Management
 The major function of purchasing
Department is to assist the
identification, selection, and
acquisition of required materials
and services.
 Purchasing strives to accomplish
as economically as possible
 Utilizing professional ethics
 Acceptable standards of quality
and service
 Best Business Practices
throughout the process
Purchasing – is a profession defined as
the act of obtaining merchandise; capital
equipment; raw materials; services or
maintenance, repair, and operating
supplies in exchange for money or its
equivalent.
Purchasing profession are classified into
two:
1. Merchants
2. Industrial Buyers
 The traditional purchasing
function of receiving requisition
and issuing purchasing orders is
no longer adequate.
 Purchasing remains the core
activity of supply management
 Supply Management – is
increasingly being place of
purchasing to describe the
expanded set of responsibilities
of purchasing professional.
Key Activities of Supply Management
 Negotiations
 Logistics
 Contract Development and
Administrations
 Inventory Control and
Management
 Supplier Management
Procurement – is frequently used in
place of purchasing

 Merchants – includes wholesaler

and retailers who primarily for
resale purposes.
 Industrial Buyers – primary task is
to purchase raw materials for
conversion purposes

A Brief History of Purchasing Terms

 Purchasing is a key business
function that is responsible for
ACQUISITION of the required
materials, service and equipment
Material Requisition
 Material requisition MR
 Material users initiate a
request for material in
duplicate Purchase
Requisition PR
 Travelling Requisition
 Is used for materials and
standards parts that are
requested on recurring
basis
 Planned Order Release
 This approach is suitable
for firms that use the same
components to make
standard goods over a
relatively long period of
time

The Request for Quotation and The

Request for Proposal
 Request for a Quotational RFQ