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Purchasing is the formal process of buyinggoods and services. Thepurchasing process can vary from one organization to another, but there are some common key elements.
The process usually starts with ademand or requirements – this could be for a physical part (inventory) or aservice.[1] Arequisition is generated, which details the requirements (in some cases providing a requirements specification) which actions theprocurement department. Arequest for proposal (RFP) orrequest for quotation (RFQ) is then raised. Suppliers send their quotations in response to the RFQ, and a review is undertaken where the best offer (typically based onprice,availability andquality) is given thepurchase order.
Purchase orders (PO) can be of various types,[2] including:
Purchase orders are normally accompanied byterms and conditions which form the contractual agreement of the transaction. The supplier then delivers the products or service and the customer records the delivery (in some cases this goes through a goods inspection process). Aninvoice is sent by the supplier which is cross-checked with the purchase order and documents specifying which goods have been received. The payment is then made and transferred to the supplier.
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Depending on what type of purchase you are going to make, then the process concerned is not the same. The following examples show the different processes that take place concerning the different purchase types.[3][self-published source]
Theconsumer purchases for the consumption of themselves, then they fall into this very important category class. They are ultimately driving the economy through the purchase of its products. Therefore, the economy becomes dependent on them.[3][self-published source]
Facilitated by middlemen for the intention of re-sale to meet others requirements. Agents, wholesalers and retailers come under this category providing their own channels of distribution to the consumer.[citation needed]
The is buying to convert material intofinished goods andproduct. It entails buyingraw materials. Components, supplies and consumable stores, spares and tools, machines and equipment and office appliance.[3][self-published source]
Government agencies or institutions are very important, critical, they purchase in bulk forpublic utilities.[3][self-published source]