Purchasing

Purchasing is the business function of acquiring goods and services from suppliers to meet an organization’s needs. It covers supplier selection, ordering, and purchase administration.

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Purchase requisition: An internal request for authorization to buy specified goods or services. A requisition commonly starts the purchasing process by documenting an organization’s need.
Demand planning: The process of forecasting and coordinating demand for goods or services. Reliable demand estimates help purchasers avoid shortages and unnecessary orders.
Procurement: The broader organizational process of obtaining external goods and services, including sourcing, purchasing, and contract management. Procurement includes purchasing but also covers strategic sourcing and supplier governance.
Supply chain risk management: The identification and management of risks that could disrupt supply-chain operations. Supplier choices and concentration can expose purchasing organizations to disruption.
Request for quotation: A document inviting suppliers to quote prices and terms for specified goods or services. Purchasers use quotations to compare supplier offers against a defined requirement.
Specification (technical standard): A precise description of required characteristics, performance, or quality for a product or service. Clear specifications let suppliers bid on the same organizational requirement.
Strategic sourcing: A long-term approach to analyzing spending and markets to select suppliers and improve value. Unlike transaction-focused purchasing, it shapes supply choices across categories and time.
Supplier diversity: An approach to expanding opportunities for businesses owned by underrepresented groups in an organization’s supply base. Purchasing policies can influence which suppliers gain access to organizational spending.
Supplier selection: The process of evaluating suppliers and choosing one to provide specified goods or services. This decision converts market research and bids into a chosen source of supply.
Supplier relationship management: The systematic management of an organization’s interactions and performance with its suppliers. Purchasing decisions depend on maintaining and evaluating supplier relationships over time.