GERARDO BARRIOS UNIVERSITY

USULUTÁN

TEACHER : Lic. Orlando Araujo

CAREER : Degree in Administration of

Companies

CYCLE : I 2014

SUBJECT : Purchasing Management

Research Work : Purchasing process of the Institutions

Public (National Hospital of Jiqulisco)

Date : April 2014

GROUP MEMBERS :

GLADIS NOEMI PARADA DE REYES USLA102597

JOSE ARMANDO CÁCERES MONRROY USLA010598
Hugo Edgardo Ayala Aguilar USLA052910
ORSY NORBERTO LOPEZ VASQUEZ USLA048013
CONRADO ERNSTO BATRES OSTORGA USLA048211
PURCHASE RESEARCH PROJECT
ELEMENTS:

Cover
Index
Theme Page.
Introduction

Since a company or business starts, the person or institution that created it

The first thing that is analyzed or considered is the customers, the product, and its
profit margin. The second aspect that is considered is how it will acquire,
will manufacture and deliver the product to the client. In this second aspect: in how
will acquire, manufacture, and deliver the product, activities are being analyzed for
purchase. A trader constantly engages in the activity of buying,
Indeed, there is a common phrase that is used: "he who buys well sells well".
which is also relevant for a manufacturer of a product or the supplier of
some service.
Currently, the search for hidden costs in all areas of a
company, especially in areas outside the production departments has
increased, for example, in the expenses incurred for the replacement of the rejection
from a supplier's material. In this case, the person in charge of the purchase or
What business with the supplier, must know the effect of that rejection and of the
decisions made subsequently inside and outside of your department.
This work presents a synthesis of the topics, concepts, and strategies.
for those in charge of making the decision to purchase a material, and
a service process.
The purchasing processes and the principles of free competition are being investigated.
the moment when a state institution carries out the acts of acquisition and
hiring, as well as the compliance with the procedure that the law of
hiring and acquisition establishes.
The administration acts in the market of goods and services by exchanging
benefits with the administrators and with specialized companies.
With the aim of carrying out this procedure clearly and efficiently
opportune, ensuring appropriate and equitable procedures.

Chapter I: Research Methodology

1.1 Statement of the problem

Currently, companies and institutions need to become competitive.

to go through a transition that allows them to make available to the consumer
of products and service seekers and have a greater presence in the
medium and market, this is achieved through different tools.
Companies face a common problem of not having a greater reach.
in the market and being uncompetitive.
To analyze the problem, we will rely on the normal process of
purchase of goods and services by a public institution.
Purchasing as processes through which each of the Institutions
from the Public Administration, they use public funds, acquire or contract
works, goods, and services for a specific purpose, whether to satisfy
public needs according to their nature and relative importance, or to
its operation.
It is also established that the acquisition and contracting within the
public administration is very important for the fulfillment of the goals of
the institutions of public administration.
In light of this statement, it is equally important to consider the ways of
procedures for making purchases, the way to proceed in the
acquisition and contracting we ask ourselves some questions: What are the
procurement processes of the National Hospital of Jiquilisco and whether they adhere to

law of public administration contracts applying this law to

the contracts through the famous public tenders?
1.2 General and specific objectives
General
Determine the different processes carried out by the people in charge of the
Acquisition and Contracting Units of the Public Administration to create
a reference tool that helps optimize activities and operations
related to the purchase of goods and services.
Identify the causes that lead to the poor performance of institutions
to carry out administrative acts such as acquisition and contracting
of works, services, and goods. Enforce free competition with regulations
regulatory bodies for procurement and contracting.

Specific
1. Establish the position of the Purchasing Department or Unit within the
institution, its importance from an economic point of view.
2. Performance and interrelation with other departments or units,
depending on the organizational structure that is in place.
3. Provide specific tools for the normal development of the
related operations, such as negotiation, purchasing goods and services,
quality control and transportation.
4. Offer the reader a description of the current situation of the departments or
Purchasing units in Public Institutions (National Hospital of
Jiquilisco)

1.3 Justification of the project

Purchasing is a process by which each of the Institutions of the
Public Administration, using public funds, acquires or contracts works,
goods and services for a specific purpose, whether to satisfy
public needs according to their nature and relative importance, or to
its operation.
For which the principles governing purchases must be taken into account.
public entities such as:
 No discrimination

Advertising

Free Competition

Equality

Ethics

Transparency

Impartiality

Probity

Regulatory Centralization and Operational Decentralization

The Units of Acquisitions and Public Administration Contracts UACI
they carry out the processes of acquisition and contracting in accordance with the legal framework

in force, making rational use of the allocated financial resources, achieving the
effectiveness, timeliness, and transparency in the processes.
Just like planning, organizing, directing, controlling, and coordinating activities in
procurement of goods and supplies required
according to the procedures outlined in the Law of Acquisitions and
Public Administration hiring and other related laws in order to
observe the advantages and mistakes made in the different processes.

1.4 Scope and Limitations

Scope

Define strategies in order to acquire quality goods and services.

complying with all established standards.
Determine the feasibility of the different purchasing processes for goods and
services applied by the Law on Acquisitions and Contracts of the
Public Administration

Limitations
 Due to company policies, the disclosure of names, figures, and certain
information that they consider important to safeguard will not be
mentioned in this project.
The decision to implement the research project is up to
discretion of the Autonomous Institution.
The project will be valid during the period in which it is carried out with the data.

provided by the Institution, as it may be modified.

regulations by the executive.

1.5 Proposal Development Method

This research is of a qualitative, non-experimental, small-scale nature.
Qualitative research: the quality of activities and relationships is studied.
matters, means, materials, or instruments in a certain situation or
problem. It seeks to achieve a holistic description, that is,
try to analyze thoroughly, with great detail, a matter or activity in
particular.

Chapter II: Theoretical Framework

2.1 Generalities of Purchases

Definition PURCHASES
It is the act of obtaining the product or service of the right quality, at the price,
agreed time and place.
Currently, the word purchases can be related to the following terms:
acquisitions, provisioning or materials, inventory control and warehouses.

The buying activity is considered as old as sales themselves. These

two activities are complementary, as one cannot exist without the other, being
Are these national or international, of an industrial, commercial, or service nature.

Purchases are essential for the progress of any company, whether it is small,
medium or large, buyer and seller pay special attention to the
negotiations they carry out.

Every company dedicated to the production of goods, marketing of the

the same, it must necessarily be supplied in an appropriate and continuous manner of
raw materials, goods or other materials for their proper functioning.

Currently, purchasing should be considered a vital function for the

success of any company, whether it is industrial, commercial or service.

Companies must consider at a minimum in their organizational structure a

Purchasing department on which these functions specifically fall,
whose objective will be to acquire the raw materials and the necessary items for the
manufacturing of the goods to which it is dedicated, or of finished products for their
to sell or provide the appropriate services. It is the purchasing department that must use
in the best possible way the company's financial resources, as it is its
responsibility to obtain essentially the best quality, the best price, the best
Delivery and payment terms.

The purchasing function is commonly known as the acquiring function,

contemplating the need, location, and selection of one or more suppliers,
negotiating the price and other terms related to the input to be purchased,
ensuring its delivery through appropriate tracking.
Currently, the term buying has evolved to acquiring, considering
an expansion of the buying options, however, considering the
custom in the use of the term buy, this will be used throughout the work
referring indistinctly to purchase or acquire.
Buying is acquiring a good or service legally, and purchase is one of
the ways we can acquire those goods but we can also
to do it by leasing, donation, loan, etc.
It is precisely a professional's skill to know the different ways and
purchase methods, considering the particular circumstances of each one
of them as they are:
Input to purchase
Volume
Weight
Quantity
Date required
Unit of measurement
Cost, etc.

Objectives of purchases
To maintain a competitive position in the market and achieve profits
satisfactory, materials or products need to be managed at the lowest price that
let the demands for quality and service be allowed.
The fundamental objectives of any purchase can be summarized as follows
next:
Maintain the continuity of supply.
2. Do it with the minimum investment in stock.
3. Avoid duplications, waste, and uselessness of materials or products.
4. Maintain the quality levels of materials or products, based on what
suitable for the intended use.
5. Acquire materials or products at the lowest possible price compatible with the
quality and the required service.
6. Maintain the company's competitive position and preserve its level of
benefits in terms of material costs.

2.1.1 Situations that give rise to the purchase

Although the interest in the behavior of the purchasing function has been a
phenomenon especially of the 20th century, it was recognized as a function
independent and important in many organizations, mainly the
railway workers long before 1890. Prior to World War I,
most companies considered the purchasing function
mainly as an office activity, merely bureaucratic; without
embargo during the periods of World War I and II,
considering that the success of a company did not depend on what it could sell,
given that the market was almost limitless, the purchasing function began to be
relevant.

The ability to obtain raw materials, supplies, and from vendors.

the necessary services to continue operating the factories and mines were the key
determinant of the organization's success, which is why attention was paid to the
organization, to the policies and to the procedures of the purchasing function and
emerged as a recognized business activity. During the 1950s
By 1960, purchases continued to gain ground, as did the techniques for
to carry out this function became more refined as the supply increased
trained and competent individuals to make decisions evident
purchase.
At the beginning of the seventies, resulting from the increase in prices of
oil, the organizations faced two cumbersome issues one
international scarcity of almost all basic raw materials necessary for
sustain operations and an increase in price levels above the
normal since the end of World War II.
These events motivated company executives to focus on
attention directly on the purchasing departments, due to their
function to obtain the necessary items from sellers at realistic prices
it meant the difference between success and failure.
As we move forward in time and in accordance with the competition in
the globalized economies of the 21st century, it becomes more evident that the
organizations must have a purchasing and materials management function
efficient and effective if they want to successfully compete with national companies and
foreigners.

The purchasing department or area has the potential to play a role

key in the development and operation of a strategy that leads to a great
efficiency and high competitiveness, through actions such as:
Combat inflation by resisting the search for controlled prices.
Significantly reduce monetary investment in inventory of
materials through optimal planning and selection of suppliers.
Increase the quality level and consistency of the final product or
service provided with the purpose of being improved.
Reduce the segment of materials sold to the cost of the items.
Make improvements to the product and the process by stimulating and facilitating a
open communication between buyer and seller, so that there is a
mutual benefit for both parties.

[Link] Direct repurchase

The direct buyback.
This is a routine purchase, the organization buys from the same supplier and under
the same purchasing circumstances, so the uncertainty is minimal. The
the need for information in these cases is null and the decision-making is done
almost automatically.
[Link] Modified Repurchase
These types of situations occur when there is a change in the conditions of
purchase with the aim of obtaining more benefits, that is when there is a change in the
price, in quality or even when there is a change of supplier.
In this type of purchase, the same selection criteria as in can be used.
the direct repurchase, but in this case the uncertainty is greater because
will need more information.
This type of purchase poses a danger to suppliers who may lose to
your clients or be forced to accept sales conditions that are not favorable to them
beneficial. It also represents an opportunity for the rest of the sellers.

[Link] New purchase

This type of situation occurs when the organization purchases for the first time.
See a product. Now there will be decisions to make about the specifications of the
product, quality, price, payment terms, suppliers...

The greater the importance of the product to be purchased, the greater the
need for information and a larger number of people will be needed to
make the decision.

The idea of new purchases in an organization can arise from needs.

internal factors of the organization, or by external factors, such as pressure from the
clients.

2.1.2 Objectives and importance of the operational and functional analysis of the
purchases
Objectives of the purchasing function
The person in charge of making purchases must simultaneously achieve various
goals, in addition to trying to balance the objectives that are often
opposed, and make the necessary negotiations to obtain a mix
optimal between obtaining the necessary input at the best possible cost, considering,
the various suppliers, volumes to be purchased, etc.
A more specific statement of the general purchasing goals may
include the following nine points:
Provide an uninterrupted flow of materials, supplies and
services required for the operation of the organization.
2. Preserve minimal investments and losses in inventory.
3. Maintenance of adequate quality standards or controls.
4. Find or develop competent suppliers.
5. Standardize, as much as possible, the purchased items.
6. Purchase of the required items and services at the lowest final price
possible.
7. Improve the competitive position of the organization.
8. Achieve harmonious, productive work relationships with others
departments within the organization.
9. Achieve purchasing objectives at the lowest possible cost level.
administration.

However, the purchasing function has more specific objectives,

these include:
However, the purchasing function has more specific objectives,
these include:
Cost reduction or obtaining profits. The objective of profits.
it is implied in the concept of obtaining appropriate materials at the price
appropriate, in the right amount, from the right seller and in the
precise moment.
Adherence to the goal of utility as a target and a motivation requires
caution in judging the best value for money spent, as there is a balance
logical between price and use value.
The service. The objective of the purchasing service is a necessity.
recognized. To allow the organization to operate efficiently in the long term
 within the deadline, the purchasing function can operate below maximum efficiency
in the short term.
The Purchasing Department must occasionally be ready to provide service.
even though this represents an uneconomic purchase.
Purchasing has the primary objective of supporting the operation program of the
organization.
In the long term, cooperation between the operational departments and activities
shopping can result in maximizing the contribution of
Purchasing Department for the procurement of the service and as a consequence of
the profits.
On the other hand, the service is just one of the purchasing functions, an area that must
always pursue the optimal value of goods and services that must be purchased.
When the service must take priority, the prices paid in excess of value
Optimal must be substantiated.
Control of financial commitments. It is imperative that the members of the
management knows exactly and at all times what commitments are
have contracted and have a centralized control over the acceptance of the
same; since without it, the financial stability of a company can be
easily endangered, therefore, the Purchasing Department must
maintain, necessarily, very strict rules regarding the acceptance of
commitments.
Control of negotiations and relationships with suppliers. It is a function
inherent to the Purchasing Department to maintain careful control over
the negotiations and in the relationships with the suppliers, due to the
following reasons:
The effectiveness of a negotiator in a Purchasing Department is
quite weakened if not recognized as the person being dealt with
from the very beginning. It must control all contacts with
suppliers.
When negotiating with suppliers about price or other conditions, the
Unintelligent revelations can be very harmful to interests
 from the company. Other departments are requested to restrict their
discussions with the suppliers, to the specifications and to the execution, and
leave the price negotiations to the Purchasing Department.
It is more feasible for suppliers to negotiate on a confidential basis.
with a firmly controlled organization.
In many industries, there are relatively few highly specialized firms.
competitive. Technological progress can be faster. The advantage of
getting there first with the best can mean the difference between success and failure.
failure. The Purchasing Department is responsible for supervision and
the control of negotiations with suppliers, in order to minimize
the possibility of presenting information in a clumsy manner.
Effective relationships with suppliers are necessary to achieve the
supply security and protect the good reputation of the
company.

2.1.3 Importance
The general mission will consist of obtaining materials from outside the company,
products and/or services needed for its operation, in the quantities and
established deadlines, with the necessary quality levels and at the lowest price that
allow the market.
The objectives will be valid for any type of company, whether of type
industrial or commercial, depending on the competitive strategy of each company
will focus on qualitative or quantitative aspects. For example, the
company that operates in a 'mature' market (many
competitors and little diversification) will have to focus on obtaining
of minimum prices, on the contrary, the innovative company that does not emerge
this pressure on prices will focus its concerns on research,
worried about obtaining information on behavior of
new materials, new technologies, etc.
The concrete goal of purchasing management will be to cover (satisfy) the
needs of the company with external elements, "maximizing the
value of the invested money" (economic criterion) but this short-term objective
the deadline (immediate) must be compatible with the contribution of purchases in 'harmony'

with the rest of the Departments to achieve the company's objectives, well
cyclical (improvement of benefit) or strategic (improvement of position)
competitive).
Purchasing function
Cost reduction or profit generation
Service
Control of financial commitments
Control of negotiations and relationships

2.1.4 Conceptualization of supply

Supply is something that is acquired continuously, this activity is
perform repeatedly. It is necessary to plan and schedule the supply, this allows us
it leads to making agreements with suppliers usually in periods that
they generally last a year.
Supply is then the repeated purchase of one or more inputs,
that the standardization of the same must be extremely detailed.

2.1.5 Situations that give rise to supply

The situations that give rise to the supply will depend on the company and its line of business.

size and needs they may have, in order to be able to carry out their
activities and thereby achieving their previously established goals and objectives.
They generally occur in organizations that already have some positioned
product in the market and consequently require maintaining the levels of
quality, quantity, and cost in a stable manner.
Among some of the most outstanding situations are:
Production volume
 Storage capacity
Production system
Equipment maintenance
Cleaning of the factories
Office consumables
Taking the above into account, the supply function will schedule the
deliveries of supplies according to the needs previously established by
the requesting departments or areas.

2.1.6 Importance and objectives of operational analysis

It is necessary to conduct an operational and functional analysis of the supplies.
to be able to understand the consumption cycles, and to ensure the materials
available when required, since otherwise, it would be impossible
for the organization to achieve its objectives.
Similarly, because there needs to be management in purchasing and
supplies (since it is a functional area), whose most important objective is
obtain the optimal cost, ensure that the investments are made with quality, price and
right time, in order to meet the needs of each one of the
departments.

2.1.7 Definitions of Purchases

I. Purchases: A set of activities to be carried out in the company to satisfy that
the need in the best way, that is to say, at the minimum cost, with the appropriate quality and

at the right moment.

In this set of activities, they can be listed according to the following

functions:

a. Detection of the need

b. Request and analysis of purchase alternatives

c. Negotiation with suppliers

d. Placement of purchase orders. (The purchase order is a document or

form that initiates the administrative purchasing procedure, upon awarding
provider of said operation

e. Monitoring and activation of purchase orders. It refers to the process of

which, once the purchase order has been issued, the production and delivery of
product or service acquired in order to meet the quality requirements and
times.

f. Receipt of purchased goods

g. Storage and registration

h. Delivery of supplies for their use to the sector that originally provided them.
required.

Author.- Yapeyú Institute of Private Education

Economics and Management of Organizations
Management Technologies

II. Purchase or acquisition: Activity aimed at making acquisitions.

of materials in the necessary quantities and economically in the appropriate quality
to the use it will be destined for, at the appropriate time and at the total price more

convenient.

Crous Alyail
University College of Administration and Marketing of Venezuela

III. Purchases: Process of locating and selecting suppliers, acquisition of

products (raw materials, components, or finished items), after
negotiations about the price and payment conditions, as well as the
accompaniment of this process to ensure its compliance with the
agreed conditions.

José Luis Benaque

[Link] What is an organizational purchase?

Organizational buying is the decision-making process by which
Formal organizations establish the need for the purchase of products.
and services and identify, evaluate, and select among brands and suppliers
alternatives.

2.1.8 Types of purchases

PURCHASES SUPPLIES
Capital goods (are those that Materials and supplies
they help us produce goods that Raw material
generate profits):
Materials of
Machinery
conditioning
Furniture
Consumer goods (receive all the

Lands additional administrative costs, that

they can be identified or not in the
Vehicles final product):

Computers Stationery

Light (Energy)

Internet
[Link] Advance Purchases
They are called those that can be planned and carried out.
in advance, through a program, arising from a normal need or
customary and not for the acquisition of products to develop projects
specials.
[Link] Emergency purchases
They arise when the time factor prevents the use of normal purchasing, which is why it is
I need to implement certain controls such as:
A) Limit of urgent purchases, according to administrative policies.
B) Review the Order calmly, as well as define responsibilities.
C) Authorization from the person responsible for approving the order.

[Link] Speculative purchase

It is considered as a variable of the Early Purchase, combined.
with the upward price fluctuation related to trade ethics.
The Early Purchase can be transformed into a Speculative Purchase, in the
moment in which their object and interest are secure supply and efficient, at prices it
as low as possible, or seek benefits in the costs of the items
compared.
[Link] Reciprocal purchases
They are used by the supplier as a pressure measure, carried out between a
buyer and a supplier, in which the latter has more power, as he sets
conditions to your convenience, this purchase is observed in the time of Depression,
where everything possible is done to obtain orders, or when there is a shortage of it
what is wanted to be bought.

[Link] Personal Purchases

They refer to making purchases for the people of the Entity, through
Purchasing Department, for their benefit, as they obtain prices from
wholesalers, special discounts, attentive service, delivery time and of
payment.
[Link] Salvage Purchases
Also known as Salvage Acquisitions, they are related to the
supply and occur when an item becomes surplus to one or the other
department.
The Purchasing department, in light of this situation, proposes the transfer of the
product, which has the advantage of avoiding purchases and having excess; the above
it conforms to a salvage in the utility and in the value of the material, which is
responsibility of the Purchasing Department.
[Link] Purchases of surpluses
It is usually to acquire materials to meet normal needs and perhaps
future of the company, a situation that is often a source of supply
economic to cover occasional aspects, emergency cases, or to have
preventions, and possibly perfectly studied and appropriate excesses.
[Link] Purchases in the open market
It happens when the requests for a material, item, or service are few.
volume; when the trend in the market is changing; when they appear
convenient situations in the Market to buy; when the items and
other materials, products or services requested can be obtained with
facility.
[Link] Purchases of related items
They are carried out in small portions of articles and/or services, providing
economy in certain activities different from manufacturing, mainly for
the Administrative departments and the Accounting department.

[Link] Special purchases

They occur when items and/or services are requested that are not needed.
routinely in the Company, or when departments require a
only product or service, in very small volume.
[Link] Purchases of special items
It happens when one wants to acquire items, materials, or services at a cost.
stable, of important and particular elements for the entity, where they can be
obtain volume discounts by choosing from a large number of
suppliers.
[Link] Purchases of low-cost items
The items must be analyzed in terms of their amount, quality, and necessity that
they must cover, in order to know if they are potentially acquirable.
[Link] Corporate purchases
They are those developed by large groups, the transnationals, or the
corporations, for their subsidiaries.
[Link] Consolidated purchases
They are carried out by large business groups for their branches or subsidiaries.

[Link] National Purchases

They are those that take place within the borders of a country, in accordance with the
laws of the same, which in turn can be local.
[Link].1 Bids
Also called public competition or contract of the Public and Private Sector is
the administrative procedure for the acquisition of supplies, execution of
services or execution of works that are conducted by entities, organizations, and bodies that

they are part of the Public Sector.

[Link] International Purchases

International purchases are those made by an individual or

moral outside of its original independent country regardless of its payment method.

2.1.9 Basic Principles of Purchasing

Purchases should be moderated, based on certain principles or rules, that
they allow making decisions regarding their choice. There are four aspects
basic, correct and traditional, that are considered in the purchase and therefore in
the supplies, which are the following: quality, quantity, price,
financing and service.

[Link] Quality
The quality of a product does not indicate that it is made of the best material, the one that ...

An article being of quality implies that it meets the need.

that a person has.

Among the elementary peculiarities to consider, the following are found:

properties, volume, size, size, etc.

Quality considerations

There are certain situations regarding the quality of materials, articles, or services, the
what are: convenience, availability, cost, systematization, and control of
quality.

1) Convenience: Determine what the minimum acceptable quality is.

difficult, since it cannot be measured, in general, as it is relative to each buyer,
What is relevant for one may not be relevant for another.

2) Availability: It means, in addition to obtaining the material, the item or the

service that is desired, also acquire them easily under conditions of
convenience, within a reasonable period and considering various providers.

3) Cost: The Purchasing Department or its Manager must be responsible for

achieve the lowest prices, with the desired quality without neglecting the service, nor
financing.

4) Systematization: Includes the conjugation of the articles, quality conditions,

advantages that suppliers must provide and the lowest costs; to
make decisions.
5) Quality Control: Refers to checking that the items, materials, or the
services shall be acquired according to the requested requirements, specifications
and consider certain specific parameters.

[Link] Quantity

The quantity relates to the time when the materials should be purchased.
with which they should be sought, and with the economically justifiable volume,
both when buying and in storing.

The purchase of the correct quantity in the order is regulated by:

Type of items.

Delivery time.

Need for the order.

Unit price of the material or service.

Average inventory purchases.

Order issuance.

Transaction cost.

Purchase period.

Inventory maintenance (maximum and minimum).

[Link] Exact price

It is the monetary value assigned to a good or service, which serves to
determine the exchange value for that good or service. Several purchases are
they obtain through offers, which the competition can also know,
special prices, which can lead to specifying part of the efficiency of the
responsible.

[Link] Financing
It is the set of financial monetary resources to carry out an activity.
economic, characterized by the fact that it usually involves amounts taken
a loan that complements the own resources. Financial resources that the
the government obtains to cover a budget deficit. The financing is
contracts inside or outside the country through credits, loans, and others
obligations arising from the subscription or issuance of credit titles or any
another document payable on time.

[Link] Service
A service is the set of activities carried out internally by a
company for example to be able to respond and meet the needs of a
client. It is a good but is different from this because it is always consumed in the
moment it is loaned.

2.1.10 Objectives of the purchasing department

To make use of materials, suppliers, and equipment at the lowest cost

Minimizing entry costs increases productivity and allows for
profitability of operations.

Ensure the continuous flow of production: through a continuous supply

of raw materials, components, tools, along with the department of
repair and maintenance.

Increase asset turnover:The investment in inventories is due to

maintain minimumin relation to the sales volume. This will increase the
volume of assets and therefore the profitability of the company.

Develop an alternative supply source: Explore other sources

supply alternatives for materials increase the bargaining power of
buyer, allows to minimize the cost of materials and increases capacity
to respond to emergencies.

Establish and maintain good relationships with suppliers: maintain

Good relationships with the supplier help in the evolution of an image.
favorable in business circles. These relationships are beneficial for the
buyer in terms of changing or negotiating a reasonable price and being able to have
a preferential treatment of materials in the event of material shortages, etc.

Achieve maximum integration with other departments of the company:

the purchasing function is related to the production department, in
regarding the specifications and the flow of material, to the engineering department
for the purchase of tools, equipment, and machines, to the department of
marketing for sales forecasts and their impact on purchasing
materials, to the finance department for the purpose of maintaining the levels
of suitable materials and estimate the required working capital, to the department
for proper staffing and the development of the
purchase and maintenance department for a good relationship with the
suppliers.

Train and develop personnel: the purchasing department is composed of

by various types of people. The company must try to enhance its strength of
work through training.

Maintain an efficient record of data and present management reports.

This data processing and reporting must be normalized or standardized.
so that record keeping can be facilitated. The presentation
of periodic management reports on purchasing activities, justifies the
independent existence of the department.
2.1.11 Relationship of the purchasing department with other areas

Purchasing is intensely related to numerous sectors important for the

business, among them with:

General Direction: setting general policies, procedures and

analysis of environmental changes.
Production: information on delivery times, cost of supplies,
available quality.
Finance: setting financial policies, funding requirements and
budgets.
Reception and warehouses: management in the logistics of movements and
coordination of space needs.
Accounting: inventory control, material costing, and valuations
and provisions of purchases.

2.1.12 Organizations of the purchasing department

The company's management can adopt three distinct criteria when it comes to
organize the Purchasing Service:
A centralizing criterion.
A decentralizing criterion.
A mixed criterion.
A company organizes itself internally through the division of tasks.
division is made based on the existence of:

Various functions or services.

Various locations or establishments.
Various external economic activities or businesses.

Some functions can be centralized or decentralized with a criterion.

spatial or sectorial.
In a large company with many establishments and operating in different
economic sectors, the absolute centralization of purchasing functions would be
not only difficult, but possibly inefficient. However, the total dispersion of the
function could also be to waste economies of scale and make
more difficult to follow the guidelines of the general management.

Centralization or Decentralization

The common practice in large companies is a mixed policy of centralization.

decentralization, adopting the first or the second of the options according to the
economic or physical traits of the purchase:
Purchases that exceed a certain value can be decentralized.
Certain classes of products can be centralized/decentralized, depending on their
ease of localization, according to its application (raw materials, machinery,
spare parts), according to their nationality or the nationality of the supplier, according to the

origin of the need (stock purchase, direct purchase, new

investments) .
Each company will set some general criteria that are properly justified;
for example, the centralization of could be decided:
Purchases of more than a fixed amount of money.
Common consumer products in more than one department.
The raw materials.
Imports.
You have to take into account that in each case the advantages and disadvantages must be weighed.

disadvantages of choosing one of the two alternatives.

2.1.13 Purchasing Staff

The staff performing purchasing functions is in a vulnerable position.
when it comes to ethical issues. The above is due to the amounts of
money that is handled or to the budget items of your area when they are
purchases made by the State, due to the acquisitions it makes and for the
I have ongoing dealings with external sources to the company, hence the behavior of the
Purchasing staff must be free from all immortal suspicion when carrying out the
acquisitions, which requires him to act ethically. That is, with:
Honesty
Integrity
Equity
Probity
Responsibility

2.1.14 Purchasing Committee

The Purchasing Committee is responsible for studying and evaluating the acquisition of goods and

services; for this it has the specialized technical support of the areas according to
each case and recommends the best purchasing alternatives, according to
quality criteria, relevance and cost-benefit relation.
Its integration aims to properly consolidate the organization of the
different actions that coincide in the development of the company's plans, and
it is often integrated by the following areas:
The general director of the company
Finance
Production
Accounting
Purchases
Warehouse
Credit and collections

[Link] Some attributions of the purchasing committee.

Establish the foundations on which acquisitions should be formulated,
derived from the budget for that purpose.
Approve or modify the procurement programs as appropriate.
 Establish policies and standards that must be observed in acquisitions
and supplier selection.
Establish the foundations for the standardization of machinery and equipment.
Monitor the strict functioning of acquisitions.
Evaluate the results obtained from the implementation of the comprehensive program
the acquisitions.
Recommend the rotation or reorganization of the committee in order to give it the
due transparency to all company purchases.

2.1.15 Purchasing Policies

Purchasing policy refers to the criteria generated by management
a company with respect to the conditions, payment terms, types of
suppliers, which are applied to carry out all acquisitions.
Product policy:
Any purchasing process requires the prior definition of the
specifications (what is going to be purchased) and the forecast of needs (how much and
when).
Supplier policy:
It is the responsibility of Purchasing to design a supplier panel that can
guarantee the supply of products and services based on the needs of the
Company.
Savings policy:
define a uniform criterion in the accounting of savings within the
different negotiation processes, for which there is a calculation procedure and
accounting of savings, in which the different concepts are defined
savings and the methodologies for calculating them.
Information systems policy:
Purchasing advocates for continuous improvement in information systems of
Purchases that allow for smooth electronic communication between users and
buyers, and between the organization and suppliers, generating and storing the
minimum possible written documentation in the process.
Objectives
Establish criteria for decision making.
They are an administrative tool.
They delimit the responsibility of purchases.
They must be made known to all Purchasing personnel.
They must be reviewed and updated periodically.
Some examples of purchasing policies
Employees are prohibited from accepting gifts or gratuities.
All acquisitions of the company must be made by the
Purchasing Department.
The Purchasing Department reserves the exclusive right to object.
the quality and type of materials, in order to protect the interests of the
company.
The requisitions must describe the specifications and the date when
the materials are required.
All purchases over one million pesos must be
authorized by the company's purchasing committee.
All imports of machinery and equipment must be authorized.
by the purchasing committee.

2.1.16 Purchasing Manual

The Purchasing manual is one of the elements that every organization must have.
company as a formal compendium of its organizational structure. It can be
to state that it is the official guide for the organization and operation of the area of
Purchases.
The Purchasing manual is a particular compendium unlike the general one, as
understand the organization of the Purchasing area as well as the definition of the
operations of the same. For this reason, the content of the Purchasing manual does not
will oppose the general manual established in the company and thus will submit to its
general provisions.
Typically, the purchasing manual should consider, among others, the
following points:
Introduction.
Index.
Instruction for use.
Objectives.
Policies.
Organization chart of the Unit

Job descriptions.
Procedures.
Flowcharts.
Formats that will be used in purchases.

2.1.17 How to plan purchases in a company

A comprehensive program for planning and controlling profits includes the
planning and control of the raw materials and component parts that are used
in the manufacturing of finished goods. This phase of the productive activity
it involves a coordination problem as it must be planned and controlled:

the needs for materials and component parts for production.

2) the levels of raw materials and parts inventory.

3) Purchases of raw materials and parts. When specified in the plan of

production the required quantities of each product that will be manufactured, the
the next step in the manufacturing program planning involves the
consideration of the different needs and costs of production (materials
direct materials and component parts, direct labor and indirect costs of
manufacturing.

It is said that to adequately plan a company's purchases, one must

to follow a judicious rule, as empirical acquisitions today already
they have no reason to exist. In important companies, purchases must be based on
in scientific and rational methods, so that they can be carried out
correctly

2.1.18 The function of the purchasing department

The purchasing department is responsible for making acquisitions.
necessary at the right time, with the required quantity and quality and at a
appropriate price. This department was previously assigned to others
departments mainly to production because it was not given the
the importance it requires; since it must provide to each
department of everything necessary to carry out the operations of the
organization.

Obtain in the national or international market those products or materials

prerequisites that a company requires to ensure a correct supplier and obtain
efficiency and quality, punctuality in delivery with the best conditions of
purchase either in cash or on credit.

2.1.19 Purchase process

The buying process for companies consists of eight clear steps. In
the first step the company identifies a need, for which the response is
the purchase of a product. The final step is the execution of a purchase contract.
The intermediate steps build an organized and informed process that has
as a result that the company purchases the correct product to cover its
the need for a qualified supplier whose product is the most durable
price.

[Link] Acknowledgment of the problem

Identify a need
Identify the need for the purchase of a product. For example, a company
of grass wants to offer pruning services to its clients. To do this
he needs to buy a lawnmower. Then, the need to carry out is identified
purchase of a product, a mower

[Link] Determination of solutions

Select the specific product
Select a specific product to meet the need. For example, the
the lawn company must select what type of mower from among the multiple
market varieties of pushing and mounting meet the company's need
of a mower in a better way.

[Link] Product specification

Technical specifications
Make a list of technical specifications required to ensure that the
product meets the needs of the company

[Link] Supplier Search

Research potential suppliers
Investigate the various types of products that meet the need along with their
suppliers to identify the most durable model at the best price. If the company
decides to buy a lawn mower, research is conducted
which brand and manufacturer provides the most durable product for the price
requested.

[Link] Acquisition and analysis of proposals

Awarding of the contract
Select a supplier from the submitted quotes and make the contract.
of purchase.

[Link] Evaluation of supplier proposals

[Link] Ordering Procedure
The buyer places an order with the chosen suppliers, and it is completed when
the purchased products are delivered to the users and are in condition of
to be used.

[Link] Performance Evaluation

Assessment of the performance of the purchased products and the suppliers who
they supply it. If the evaluation is positive, the relationship is maintained with the

considered provider, and if the evaluation is negative, it can be raised the

need to dispense with it and replace it with another.

2.1.20 Influence on the buying process

Consumer behavior is influenced by a series of variables.
which are divided into two large groups:
External variables that come from the economic and technological field,
cultural, environmental, social class, social groups, family and influences
personal.
Internal variables, which are mainly of a psychological nature, and
could be, motivation, perception, experience, characteristics
personal and attitudes.

2.1.21 People involved in the purchasing process

1. Influential: they are the people who explicitly or implicitly exert some influence.
influence on the decision and we find them in:
Distribution aimed at ensuring that buyers find the
product in the right place.
Promotion is important to make the product known.
 The price is determined according to each and every one of the
product characteristics.
2. The initiators: They recognize a problem and the need to acquire products
or services.
3. The influencers: They are those who directly or indirectly exert some
influence in the decision-making process. They are the technicians and the advisors.
4. The buyers: They are the ones who have the formal responsibility to choose the
suppliers and make purchases. They are the purchasing directors.
5. The decision-makers: They are the ones who have the effective power to choose the supplier and the

products or services that must be purchased. They are the members of the management in
the important purchases.
6. The cerberuses: They are those who control the flows of relevant information to
the purchase decision.
7. User: is the person or people who consume or use the product or
service.

Chapter III: Suppliers

3.1 Concept
Suppliers are the person who provides other companies with the necessary stocks.
for the development of the activity.

A supplier can be a person or a company that supplies others.

companieswith inventory (items), which will be transformed to
sell them later or they are directly purchased for resale.

3.2 Decision to select the suppliers

The decision to negotiate a given volume of operations, with a certain
provider, must always be properly supported, since the art of
buying, in terms of performing such a function properly, rests on a
reasoning that adequately justifies rests on reasoning
that justifies such a decision.
3.3 Characteristics of what constitutes a good supplier
The selection of a supplier will be influenced by the idea that one has
Buyer, regarding what a good seller is.
An adequate supplier or preferred supplier will be one that does the following
for your clients:
Sell products of the specified quality and make their delivery.
on the established dates.
Offer products at an acceptable price.
Able to adapt to unforeseen needs, such as they could be
sudden increases or decreases in business volume,
the changes in the specializations, the issues related to services and
any other legitimate request.
The good supplier takes the initiative to suggest appropriate, superior ways of
serve the clientele, and seeks to discover new ways to develop products and
services that allow customers to carry out their operations in the best way possible
economically, in advance when there will be material shortages, strikes, and
any other thing that may affect the operations of the Buyer; will provide
technological and other advisory services, when requested by the client.

3. 3.1 What is sought in a supplier?

1.- Commit to your company. A good supplier is one who

Establish a continuous process with your client. Look for a supplier.
collaborative, that not only shows a product catalog, but also
advise what is best for your business and be able to respond and do
suggestions at all times, as well as solving problems in situations
desperate.

2.- It should be effective. A good supplier is able to deliver the product in the
agreed time and in good conditions. In addition, it has the ability to
to anticipate their needs, that is, to know what they think and what they need
before I ask for it.
3.- To deliver a cordial treatment. Companies are made up of people:
the important thing, for a good relationship with your supplier, is that they are

responsible, helpful, informed, and experienced in the subject. They should be

capable of providing information and options that best satisfy the
needs of your company.

3.4 Supplier Evaluation

Once the supplier is approved, it is necessary to ensure that the expectations

initially noted are maintained over time. In this way,
a continuous evaluation must be carried out to ensure that the
The supplier meets the established requirements on a permanent basis.

The first step to carry out the evaluation of suppliers is to define the criteria.
that will be taken into account. The evaluation must include the following criteria:

1. Quality of supplies. This criterion measures the level of

compliance by the supplier with the specifications defined by the
company, that is to say, to what extent it has exactly supplied what was required
I had requested. To evaluate the quality of the supplies, the following are taken into account:
results of the reception controls and the possible incidents that the product
supplied may have generated in the production process.

2. Reliability of supply deadlines. It measures the degree of compliance.

by the supplier of the set delivery times. This criterion is
important in some cases, because a delay in the delivery of raw materials
can stop the production process.

3. Supplier flexibility. This criterion reflects the degree of adaptation of

supplier to the needs of the company. For example, the ability to
reaction to an unforeseen urgent request.
 4. Reliability of information. Here, the administrative relationship with the
supplier: the quality of their offers, the reliability of their delivery notes and

invoices, compliance with deadlines in billing.

5. Competitiveness. Price level. This criterion takes into account the relationship
between the price of the products supplied by the supplier and their quality,
as well as the comparison between the supplier's price and those of the rest of
suppliers. It is not about valuing the cheapest supplier more, but rather to
the one that has a better value for money in the market.

Once the criteria that will be taken into account for evaluation are defined
the suppliers, it is necessary to assign a weight to each of them, since not all
the criteria hold the same importance for each company.

A possible weighting would be the following:

Supply quality 50%
Supply reliability 20%
Supplier flexibility 20%
Flexibility information 5%
Competitiveness 5%

The next step is to define the evaluation system to be used for each of
scores from 0 to 10; scores from 0 to 5; ratings A, B, C, thus
like the cases in which one punctuation or another is used.

In the case of supply quality, if a system has been chosen

A score from 0 to 5 will need to define in which cases a 5, a 4, etc. is given.
The possible rating scale would be as follows:

· Score 5. When no breaches have been detected

specifications during the evaluated period.
 · Score 4. When the non-compliance with specifications is
between 1% and 2% of the supplied amounts.

· Score 3. When specifications non-compliance are

between 3% and 5% of the supplied amounts.

· Score 2. When the specifications non-compliance occurs

between 6% and 10% of the supplied amounts.

· Score 1. When specification non-compliance is

between 11% and 20% of the supplied amounts.

Score 0. When the non-conformities of specifications exceed

20% of the supplied quantities.

Finally, it is necessary to define the frequency of evaluation of the suppliers:

quarterly, semi-annual, annual, as well as the actions to be taken based on the
result obtained, since the evaluation aims to ensure that the company
I worked with the best suppliers. One example of actions to take is the
next:
Suppliers with a score of 0. They immediately cease to be suppliers.
approved and, therefore, will not be able to supply more products to the company. If
they wish to supply products again, they must go through the process again
homologation.
Providers with a rating of 1 or 2. The provider is notified that within a period of
In one month, he/she must deliver to the company a written and scheduled action plan.
to correct its breaches. If in the next two months the supplier does not
you can demonstrate that you are taking actions to reach a satisfactory level,
it will beunapproved y no will be able
supply
to more products.
Suppliers with a score of 3 or 4. The supplier is notified of the
non-compliances that have occurred, and a plan is requested to correct them, informing you
that in the next evaluation they must improve their results.

With this type of actions, the company achieves:

1. Select the best suppliers, eliminating those that offer worse.

quality.

2. The selected suppliers progressively improve the quality of their

supplies, their reliability, flexibility and prices.

The evaluation conducted for each supplier must be recorded in a file.

evaluation, which includes the results obtained for each of the
criteria. It is also advisable that the record shows the evolution that has
had the supplier in the last evaluation periods.

ANNEX No.1 Supplier Evaluation Record

3.5 Analysis of Suppliers

Suppliers are also a key piece for the functioning of our
company. In our analysis, we should pay special attention to the following
elements about the suppliers:
Geographical location.
Level of specialization.
Features of the service or product that it offers us: quality, quantity,
prices....
Additional products or services.
Presentation.
The guarantees offered.
Bonuses and discounts.
Information and advisory service.
After-sales service.
Delivery deadlines.
 Payment conditions and facilities.
Once we have selected the suppliers of our interest, it can be very
usefulness of having another file with data regarding alternative suppliers before
possible problems with our suppliers.
Likewise, one must be attentive to possible changes in the sector of
suppliers. Sometimes these changes can represent a threat to the
company, so the entrepreneur must react quickly.

3.6 Means of recruiting suppliers

Once we have formulated our list of suppliers, and determined the

selection criteria that we are going to use, we will proceed to gather the information
necessary from each supplier, which allows us to evaluate them according to the
established criteria.

In addition to the means by which we came to know about the supplier, other ways
through which we can obtain information from the suppliers can
to be

requesting information: whether by asking for it directly, for example, to

their sellers, representatives, etc. (for example, we can ask them
about your experience, the work you have done, your main clients, etc.
Or requesting it through email or a letter (for example,
we can ask you for information about your prices, the features of your
products, payment facilities, asking them to send us catalogs,
budgets, etc.).
visiting them: to obtain information from potential suppliers
we can also choose to visit their companies and observe, for example, the
performance of its staff, its organization, its customer service, its
infrastructure, etc.
looking for references: we can also look for references, for example,
We can find out who their clients are or have been, contact them and
 to inquire about their impressions, opinions, or the satisfaction they have with
regarding the supplier.
visiting their web pages: a quick and easy way to obtain
Information about the potential supplier is available by visiting their website, where

in addition to being able to obtain the information that they include in it,

we can analyze your page to give us an idea of the company, a

A neglected page is very likely to mean a neglected business.
conducting tests: another way to obtain information about the potential
provider, is to put it to the test, for example, by requesting a sample,
making an order and assessing if they meet the deadlines, to hire them for
the production of a small quantity of products, etc.

3.7 Requirements that a supplier must meet

All suppliers must undergo the supplier selection process.
in which the following criteria will be taken into account: Commercial, Financial
and Quality.
In the supplier selection mechanisms, the figure of open bidding or
closed, for the contracting of works, goods or services. Each process of
Bidding is independent and must guarantee the selection criteria and
ratings that allow for the objective selection of the best offer.
The selection criteria must be aligned with those outlined in the
Manual, however, depending on the type of provider or partner, these may
to be modified by the process owner, keeping a record of it and of the
qualification and selection process.
The companies awarded contracts through this modality,
must meet the other requirements established in the Registration Manual and
evaluation.
The conditions that must be met by those interested in participating in the processes
The bids are listed below:
Subject of the invitation
 Overview
Deadline for submission of offers
General conditions
Specific conditions (Legal, Financial, and Technical)
Policies and Guarantees
Time and place for receiving proposals
Comply with evaluations according to the following criteria: ACCORDING TO
WITH ITS CLASSIFICATION, FINANCIAL CAPACITY, QUALITY

3.8 Supplier Registration

It consists of opening a file in alphabetical order that will be used to store the
summaries of quotes, price lists, catalogs, circulars, and in general all the
information that can be obtained about the goods that are purchased or that
may replace them.
The supplier registration must provide the following information:
1. Time required for shipments made by train, express or truck;
2. Supplier capacity;
3. Credit rating;
4. Rating of the company regarding the judgment it deserves and another
analog information

3.9 Supplier Development

The Development of Suppliers is the coexistence of Large Companies with

SMEs in supply relationships. The main motivation for these is to improve
the competitiveness of the whole, through the generation of relationships of a character
strategic and prolonged over time, leading to continuous improvement processes
detonating productive chains.

The dynamism of businesses worldwide forces companies to rethink

its administrative, commercial and productive structures so that they can
responding to the demands of their clients, in an increasingly competitive market
competitive. One of the strategies that has proven to be most effective and that
supports the removal of barriers to market entry, it is the development of
PDP Suppliers.

The concept of Supplier Development consists of a Large Company,

select the suppliers that guarantee you the time, cost, and quality of
the products or services that supply you. Therefore, several must be optimized
relevant aspects of the relationship, such as product quality, prices and
the delivery times.

Supplier Development. Critical factors:

Define the characteristics of the products and services to be acquired.

Determine the evaluation criteria for both the Suppliers and the
Company, and the relative importance of each of them.

Criteria to consider with Suppliers:

Compliance with legal and fiscal matters.

Product-Service Quality, competitive price.
Response and delivery time of the product or service.
Response to improvement requirements.
Technical advisory and after-sales service.
Logistical capacity for deliveries.
Commercial and financial capabilities.

Criteria to consider for the company's purchasing policy:

Adequate communication of the specifications of the products-services.

Payment terms and methods.
Technical support and training for your suppliers.

Purchasing schedule.
 Measure satisfaction with current suppliers, conduct an analysis
regarding the supply proposals in the sector, and to diagnose the
supplier capabilities.
Propose and implement an improvement plan agreed upon with the supplier.
Monitoring and Auditing of the Improvement Plan.
Tracking of the products and services delivered by the supplier.
Align the company's strategies with those of the Suppliers.

3.10 Relationship with suppliers

It is necessary to seek ways to maintain a good relationship with suppliers.
looking for:
A) Equity
Give all sellers complete attention.
Keep the competition open and fair.
Decline to take advantage of the seller's mistakes.
Do not make the Seller incur unnecessary expenses.
Do not request bids, by system, from a potential supplier, if the current one
meets the requirements.
B) Integrity
Observe strict accuracy in all transactions, with the
sellers.
Respect the trust of the Supplier, or their company, regarding the
quotes.
Stay free from obligations to any seller.
C) Service
Answer the letters promptly.
Expedite, when possible, the testing of the received samples and
submit quick reports to the entity that presented the sample.
D) Progressivity
 Keep an open mind about new methods and materials
offered.
Stimulate the preparation of tests or trials of materials, which can
be of value.
Visit the supply sources when necessary and ensure
reports on stability and its methods.
E) Friendship
It is an appropriate framework to be stimulated between buyer and seller, and that
it can be a great advantage for both parties, as dealing with business friends,
when an item is required, it is the quickest way to find the right one
and the best price.
F) Entertainment or Gifts from Suppliers
The acceptance of gifts, different from promotional novelties, is prohibited in
at all times, as employees should not compel themselves with any supplier and not
they must include any transaction through which they could personally benefit.
G) Reciprocity
Good relationships are an essential factor in business and a good means of
developing them means giving preference to those who return in favor.

3.11 Supplier stability monitoring

3.11.1 Financial considerations
A) Price
If the reference base is defined as the final cost to the user, it will be against
which the other factors are measured; however, the price as it is quoted
for a provider, it does not represent such cost.

B) Transportation cost
This, if not included in the price of the unit delivered at the point of consumption
The buyer must calculate it using the quoted shipping weight from the point.
of origin, and the appropriate transportation fee.
C) Installation cost
It is the cost of putting the purchased good into use; it may be found to differ.
materially among the quoted sources, as the installation is considered
and the assembly.
D) Preparation cost
The cost of accessories, tools, data, etc., is a variable in the policy.
of supplier quotes.
E) Preparation cost
These are rarely included in the bidder's price, so it is advisable,
consider them for price comparison.
F) Payment terms
As long as discounts for early payment tend to follow a norm within
from a specific industry, in the accounting sense, a discount for early payment
payment is not a portion of the price of an item.
G) Price protection
This can be achieved through advance contracts.

3.11.2 Selection of quotes

The factors to be considered are:
A) Desired number of bidders
The number of potential sources selected to quote prices must be
sufficient to ensure competition, this list should be as
broad, as necessary to ensure that all types are taken into account,
desired competencies, including:
Price Competition: Look for the products with the lowest cost for
the distributors, in relation to quality, service, payment terms,
basically.
Technological Competence: Look for the differences that exist between the
potential suppliers in the field of ideas; in the solutions of
engineering, design, materials, and production techniques.
 Service Competence: Inquire about those who are better
trained to deliver at all times and in the quantities
required, as well as to provide maintenance, parts and
spare parts, warranties, etc., in the case of machinery, equipment, and units
of transport.
Geographic Location: Certainly one or several local sources must
to be the beginning of the research. The cost of an article of quality
required at the point of use, it is a good purchasing criterion.
Sales Representation: Locate the most suitable ones, in all
aspects.
Reciprocity Conditions: This is often a factor that
affects both the request for quotations and the final decision of the
purchase.

3.11.3 Product Quality

It is the degree of quality that will result in the most economical lifespan of the item.
for the required purpose. It is the measure of the desired characteristics of
product.
A) Specifications and design
They should be considered for this: the tabulation of offers or the checklist, the
study of the catalogs and literature of the participants, the discussion
meticulous about the aspects of specifications, and the design with the
sales representatives.
B) Reputation
The level of respect that a product has in the market is an indication of its
quality and reliability for the required purpose.
C) Ability to supply anticipated volumes
It is based on the Buyer having the assurance that the chosen Supplier
be able to meet future requirements.
D) Commitments to others
Cover obligations with: company, parent companies, subsidiaries or affiliates, clients
exceptional greats.

3.11.4 Work relationships

The labor relationship is the one established betweenthe workand ethe capitalin
the productive process. In that relationship, the person who contributes the work
denominationworker, while the one who contributes the capital is referred to
employer, employer or businessman. The worker is always a natural person,
so much that the employer can be both aindividualas aperson
[Link] modern societies, the employment relationship is regulated by acontract
of work in which both parties are formally free.

3.11.5 Financial Responsibilities

It is responsible for certain specific aspects of an organization that vary from
agreement with the nature according to the nature of each one of these
functions, the most basic functions that management develops with
financial responsibility are: Investment, Financing and decisions
about the dividends of an organization. Fund management, investments.
Debt policies for entrepreneurs. Project quantification.
Chapter IV: Case study: (Name of what will be investigated.........)
4.1 Historical Background
4.2 Mission
4.3 Vision
4.4 Values
4.5 Policies
4.6 General Organization Chart

4.7 Branches (if any)

4.8 Suppliers
4.9 Description of the current purchasing process

4.10 Relevant facts at the company level

4.11 Development of the proposal
4.12 Centralized Purchasing Department
4.13 Decentralized Purchasing Department
4.14 Mixed Purchasing Department
Conclusions
Bibliographic references
Purchasing Contract Manual (Corferias Bogotá)January 19/11 GA-A-005
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12)[Link]
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13) [Link]
14) [Link]
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Annexes
No.1 Provider Evaluation Sheet