6. Manage Control Grow

Control - Buying (Purchasing)

What Is Buying?
The buying in a business involves the purchase of products, either for resale or the purchase of materials for use in the process of production. It also involves the purchase of assets and equipment for the business.

Buying is the purchase of the right types of products that will meet the needs of your customers and therefore sell quickly at a good profit. If you get your buying wrong, customers won't want it, it won't sell and you won't make a profit.

The 5 main Steps in your Buying procedure
Purchasing for your business can include purchasing office supplies, materials for production, utilities, equipment, or services by specialists.

The procedures for purchasing are:

  1. Specify the information.
  2. Determine the supplier.
  3. Negotiate the prices.
  4. Organise the purchasing.
  5. Deliver and do final inspection of purchases.

You can reduce your costs through bulk buying or by grouping your purchases, or by purchasing in bulk by joining in with other businesses and buying the items together, or by just in time purchasing (orders are timed so they arrive just before you run out of supply, thus saving storage space and capital that is tied up).

Make sure you buy at the Right Price
Buying at the right price is critical if a good profit is to be achieved. Buying should be handled by someone who knows what he/she is doing because profit will be determined by the price the goods are bought at.

The purchasing person has to be experienced and know the types of materials available, as well as the sources they are available from in order to compare prices where necessary. The person will have cultivated a good relationship with the various suppliers, enabling them to negotiate good terms and good buying prices.

Other factors that the purchasing person will have to take into account are:

  • The speed of delivery.
  • The quality of the products.
  • Whether any guarantees come with the products.
  • Whether there are any credit terms available.

Buying the cheapest product is not always the best result for the business, because the poor quality may result in the goods being unacceptable to the consumers.

Other points that should be considered include:

  • Availability of replacement parts.
  • The charges for delivery.
  • Whether there are any discounts available for bulk purchases or prompt payment.

What it comes down to is that someone with experience has to be in charge of the buying function.

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