A business's purchasing process in the supply chain
Purchasing is one of the activities that play an important role in a company's operations. A perfect purchasing process helps a business operate effectively and successfully. So what must a business's purchasing process in the supply chain cover? Let's find out in the article below!
Quy trình mua hàng là gì?
The procurement process can simply be understood as the steps and sequence for carrying out purchasing according to the company's operations or rules. These purchasing processes simplify purchasing activities, so the business can easily increase production and scale and improve purchasing productivity and quality. They also help demonstrate the company's professionalism and credibility.
Quy trình mua hàng là gì?
However, ISO purchasing processes also create some administrative limitations for businesses and can easily get blocked when a step isn't carried out correctly. In particular, processes can also be restrictive, making it hard for the business to take shortcuts and stay ahead of market trends.
A business's purchasing process diagram
The purchasing process diagram of a supplying business needs attention to both the flowchart and the content of the process.
Purchasing process flowchart
The purchasing process flowchart is built from the start - the purchase request - through goods inspection, receipt and payment to the end. The detailed purchasing process flowchart is as follows:
Purchasing process flowchart
➤ See also: A professional sales process diagram
The content of a company's purchasing process
The content of the supplier ordering process must cover all of the following points:
Creating a “Purchase request”
When a need arises to buy goods, tools, materials, assets..., departments must make a request to the department responsible for purchasing so it can buy them and meet operational needs as effectively as possible. These requests must be approved directly by the department head or the person in charge.
On receiving a “Purchase request”, the purchasing department assigns the work to buyers, finds suppliers and gets quotes for the items to be purchased.
Finding suppliers
Creating a “Request for quotation”
Based on “Purchase requests”, the purchasing department creates “Requests for quotation” and sends them to existing or new suppliers according to the requesting department's specific conditions.
Tracking “Supplier quotations”
The purchasing department receives quotations from suppliers and assesses which suppliers can best meet the needs and the conditions set, then selects the best final supplier for the business. Based on the approved quotations and requests, the purchasing department creates and tracks the “Contract/purchase order”.
Approving “Supplier quotations”
“Supplier quotations” are reviewed by the business's leadership based on comparisons of quotes and purchasing terms for the same item, as well as comparisons of new and old quotes for the same item from different suppliers.
Creating the “Contract/Purchase order”
Once a supplier has been chosen for the contract/purchase order, the business needs to record the quotation, payment terms and delivery schedule and send them to the supplier to sign the contract.
Once signed, the contract must be passed to the relevant departments for specific, detailed tracking: accounting tracks payments and payables, and the warehouse tracks the receipt of goods.
Creating a “Receipt request” and an “Inspection request”
The purchasing department needs to do this to prepare for receiving goods on schedule so the relevant departments can track it.
Inspecting goods against the contract/purchase order terms
Receipts
When goods arrive at the warehouse, the warehouse department must fully check quantities, technical specifications, packaging... against the information on the contract/purchase order. Products that don't meet standards are reported to the purchasing department to be returned to the supplier. Products that meet standards are received into stock. When receiving, the purchasing department adds price information, and the warehouse department ensures specific, accurate quantities are recorded.
Thanh toán
The purchasing department prepares the payment file based on the contract terms and related documents and records. The accounting department receives and checks it and pays the supplier if it is valid. If not, it reports back to the purchasing department to correct or complete it immediately.
Common risks in the purchasing process
A business's purchasing process carries some potential risks that can cause a lack of transparency and fairness in choosing suppliers and in supply chain management, negatively affecting the business's performance. Failing to separate functions can lead to abuse of power, such as choosing familiar suppliers for commissions without ensuring quality. To choose the most suitable supplier, the using department, the inspection department and the accounting department should all be involved to ensure the greatest fairness and accuracy. Every step in the process must be carried out in the right order, avoiding cases where orders are placed before approval or goods are received without quality checks.
Managing purchasing with the SmartBiz software solution
If you are looking for a simple, convenient purchasing process management solution, SmartBiz ERP is a choice you can't miss. SmartBiz purchase management software helps you easily manage purchase orders and suppliers and improve supply chain and inventory performance with many outstanding features:
● Request for quotation management.
● Product management.
● Order management.
● Purchasing statistics.
● Vendor bill management.
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