Purchasing and functions of purchasing department

Purchasing

Purchasing is the function of obtaining the materials, equipment, supplies and services required by an organization in the right quality, right quantity, at the right price, from the right source and at the right time (the "five rights"). In the Government of Nepal, purchasing follows the Public Procurement Act, 2063.

Functions of purchasing department

1. Receiving and analysing purchase requisitions: Check what, how much and when the user department needs.
2. Selecting sources of supply: Find reliable suppliers, maintain a supplier list and evaluate them.
3. Inviting quotations/tenders: Call for bids (bolpatra for public bodies), compare price, quality and delivery.
4. Negotiating price and terms: Settle payment, discount, delivery and warranty.
5. Placing purchase orders: Issue a formal order and contract.
6. Follow-up and expediting: Ensure on-time delivery.
7. Receiving and inspection: Check quantity and quality with the stores and quality control.
8. Verifying invoices and payment: Match order, receipt and invoice before the accounts department pays.
9. Maintaining records: Purchase files, price lists and supplier performance.
10. Inventory coordination: Work with stores to avoid shortage or excess stock.
11. Market research and cost reduction: Study price trends, value analysis and standardization.
12. Disposal of scrap and surplus.

Requisition -> Source -> Quotation -> Order
 -> Follow-up -> Receipt/Inspection -> Payment

A good purchasing department lowers cost and ensures continuous operation, for example, NEA buying transformers and cables on schedule.