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Purchasing


Price Determination

Price is not the only factor in making purchasing decisions. However, all other things being equal, it is the most important. In the average manufacturing company, purchases account for about 50% of the cost of goods sold, and any savings made in purchase cost has a direct influence on profits.

Functional Specification Description

Functional specification can be described in the following ways or by a combination of them:

- By brand;
- By specification of physical and chemical characteristics, material and method of manufacture, and performance;
- By engineering drawings;
- Miscellaneous.

Purchase specification

Purchase specification is a detailed description of the measurable characteristics desired in an item to be purchased, such as quality, size, weight, performance parameters, safety requirements, etc.

Purchasing Cycle


Successful purchasing organizations follow a purchasing cycle or process to ensure that the important elements are not overlooked. Each material or service being procured will require a different level of activity and priority. The experienced purchaser will ensure that each of the ten steps is fully performed and executed.

The purchasing cycle consists of the following steps:

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