Purchasing effectively - checklist

The word 'buy' on a tidy black desk

Effective purchasing practices can make the difference between business profit and loss. Our helpful checklist explains how to get the best from your purchases.

  • Make purchasing part of business planning and budgeting and consider purchasing issues when developing products and planning production.
  • Focus on high-priority purchases ? those on which you spend most and those which are most important to your business.
  • Decide how to organise purchasing, and who will be authorised to purchase which supplies; set individual purchasing limits.
  • Specify what you need, such as product features, quality and reliability, delivery schedules, guarantees and support.
  • For asset purchases, identify lifetime costs (eg maintenance and consumables); consider alternatives such as outsourcing, purchasing second-hand and leasing.
  • Identify potential suppliers; ask for recommendations.
  • Get quotes based on your specification; compare them in terms of the factors which matter most to you.
  • Investigate the reputation and financial stability (for a long-term relationship) of your favoured supplier; if appropriate, ask for references.
  • Negotiate pricing and terms and agree the contract.
  • Introduce systematic ordering for raw materials and other consumables, based on stock levels and forecasts of supply needs.  
  • Set up systems for checking deliveries and dealing with errors, for storing and monitoring stock and for handling invoices and other paperwork.
  • Consolidate purchasing with a small number of suppliers but avoid over-dependence on a single supplier.
  • Build relationships with key suppliers; keep them informed of your needs, and co-operate to handle problems and suggest improvements.
  • Regularly review supplier performance on key issues such as quality, price, reliability and service; keep track of competing supply offers.

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