What is Purchasing System ?
Purchasing System is a method used by businesses to buy products and/or services. It controls the entire purchase procedure, from requisition, to buy, to product invoice, to payment.
They are a key component of effective stock management in that they observe current stock and help organizations decide what to purchase, how much to purchase and when to buy it. A popular Purchasing System is based on economic buy quantity models. Purchasing Systems create the purchasing procedure more efficient and help organizations decrease supply expenses. Automated Purchasing Systems can cut companies’ management expenses, reduce the length of the buying pattern and decrease human mistake, thereby reducing shortages. They can also make simpler by monitoring and help you to manage purchasing costs by quickly creating expenses reviews. The efficiency of getting actions can be improved by proper company and synchronization of them. There are four types of Purchasing System:-
- Contract Purchasing: Agreement of material is given to an agency. It has a benefit that low cost of those materials whose cost varies highly.
- Purchase created as per requirement: No buy is produced in advance. The buy is done as the need occurs. Method usually used for an urgent need or irregular goods.
- Market Purchase: Purchase is created of the marketplace to benefit from cost variations.
- Schedule Purchasing: It is a cyclic buy model. A plan of buy is created and it is used for those products whose cost does not go up and down.