SC Quiz 5

c-Trading Companies d-Import Merchants 10. Using the Key steps of the Basic Purchasing Process, cite an example of an industrial purchase for a raw or packaging component of your choice : Scenario: Startup company looking to purchase bulk plastic packaging containers for their product. Basic Purchasing Process: - 1) Need for plastic identified . (request for goods usually done by employee within org.) - 2) Obtain necessary authorization (based on value/amount of goods multiple managerial authorizations may be necessary. Purchase Requisition sent to authorized approver) - 3) Identify and compare Suppliers (may use a Request for Information (RFI ) to obtain information on potential suppliers and their capabilities) - 4) Make Supplier Selection (Competitive Bidding process may be initiated. Buyer can issue Request for Proposal (RFP ) to supplier for items they have not previously purchased to determine supplier’s capability. Buyers can issue Request for Quotation (RFQ ) for routine of repeat purchased items) - 5) Purchase Order (PO ) is created and delivered to Supplier -> 5,000 plastic containers 10x10 inches. (PO identifies item to be procured, quantity needed, requested delivery date, and price to be paid. PO = buyer’s formal offer, only binding when accepted by Supplier) - 6) Supplier confirmation of PO . - 7) Fulfillment . -> Plastic Containers delivered (Supplier delivers agreed upon goods) - 8) Receipt of Goods . -> Buyer conducts receipt process and checks to ensure all 5,000 containers were delivered and are of good quality. - 9) Invoice -> Supplier prepares invoice for transaction and sends to buyer, either with goods or separately. - 10) Reconciliation (invoice may need to be reconciled to purchase order and receipt of goods before payment) - 11) Payment -> Buyer pays supplier for containers - 12) Reclamation of Taxes (Supplier may be required to charge the buyer a tax based on quantity of goods exchanged, but buyers often have tax exemptions based on their business status) - 13 ) Close out PO (If all terms and conditions of PO have been met and paid, then PO should be closed out in the purchasing system) - 14) Analysis (measure accuracy and efficiency of PO transaction to improve upon in the future)