Organizational buying process

Organizational buying process

1. Organizational Buying process 1

2. Organizational Buying Process Need Recognition:- First step of organizational buying process is need recognition in which someone in the company recognizes a need that can be met by acquiring a good or a service. When the need or problem arises, the organization has to take the decision whether to make or purchase the product . Needs are recognized through internal stimuli and external stimuli. For example if the organization recognizes the need for the purpose of expansion of office, function, new branches are open or new product are developed. 2

3. Organizational Buying Process 2 General need description:- Needs description is second step of organizational buying process. In this step of organizational buying process, organization, organization describes the general characteristics and quantity of a needed items. Helps of engineers, users and consultants should be taken to prepare need description of complex goods. 3

4. Organizational Buying Process 3 Product speciation:- At this stage of organizational buying process, organization decides on the product and specifies the best technical product characteristics for needed items. If organization thinks to purchase externally then the product features, outlook and its requirement are determined. The product or items characteristics such as the product quantity, quality, price, method of payment, mode of payment, delivery date, and place design of the product. 4

5. Organizational Buying Process 4 Suppliers Search:- At this stage of organizational buying process, the buyer searches or identify possible potential suppliers who can supply goods and services according to their committed product specifications. Buyer prepare a list of suppliers to select good and proper suppliers. This list is prepared by looking at trade directory, searching in internet, asking other companies for suggestions etc. Regular products are purchase from regular suppliers but if the goods to be bought are new, complicated, and costly, it needs long time to search suppliers. 5

6. Organizational Buying Process 5 Proposal solicitation:- Proposal solicitation is the fifth step of organizational buying process. In this stage the buyer invites qualified suppliers to submit proposal from public media. If the product is costly and complicated, the buyer demands detailed proposal and if the product is technical, business organization calls for presenting the product itself. It should meet all the required technical specification 6

7. Organizational Buying Process 6 Supplier selection:- The organizational buyer evaluates the proposal and selects the most reliable and capable supplier who can supply products to the organization according to the requirement. While evaluating process they can adopt several criteria such as the past performance of the suppliers, regularity, punctuality, product quality and quantity, goodwill, price, terms and conditions of delivery of goods, relationship with the buyers, business efficiency and services etc. 7

8. Organizational Buying Process 7 Purchase decision:- After selecting suppliers, they make purchase decision. While make purchase decision, the buyers should be clear or they take specific details about the terms of sales/ credit arrangement, technical and additional services. Organization writes the final order with the chosen supplier, listing, the technical specifications, quantity needed, expected time of delivery, return policies and warranties. 8

9. Organizational Buying Process 8 Performance evaluation:- Performance review or evaluation is the final step of organizational buying process. At this step of the business buying process, the organization reviews supplier performance. The organization rates its satisfaction with suppliers deciding whether to continue, modifies or drop them. 9