Consumer Purchasing Process - Essay Example

?Consumer Purchasing Process Introduction Business undertaking involve buying and selling of products and services. Both buying and selling involves activities performed by a buyer to acquire materials. According to Monczka et al (2010), these activities vary with the organizations involved, size of the purchase, importance of the purchase, time available, quality demands, and nature of the purchase. The aim of this paper is to analyze the purchasing process used in making purchases and draw recommendations to show what Mr. Goodman could have done differently. Purchasing process Purchasing process is identical to the process used by final consumers. However, it can sometimes involve activities that at times make it complicated. The activities involved in the process include identifying and evaluating vendors, selecting specific products, placing orders, and resolving arising issues (Schneider, 2010). All these activities facilitate the acquisition process from either the supplier or producer. The purchasing process takes six steps which are need recognition; supplier identification and selection; contract negotiation; purchase order placement; purchase order follow-up; and order receipt and fulfillment (Li, 2007). Each of these steps involves several purchasing activities. In the first step of the purchasing process, a company identifies a need for a certain material. The step involves purchasing activities like identification of materials and their delivery time. It also involves quality, quantity, and attributes identification. The second step goes on to identify specific sellers or distributers for the materials identified in the first step. This step involves purchasing activities like price trend analysis, supplier availability analysis, and market conditions analysis (Li, 2007). The third step involves negotiation of the terms and conditions of the purchase process thus opening sale. Upon agreement on the terms and conditions, a purchase order is placed. According to Li (2007), this fourth step involves issues like delivery arrangement, payment provision, and free on board provision. In the fifth step, the purchaser keeps track of the order status after the supplier receives the placed order. Here the purchaser is required to inform the supplier changes arising after the placement of an order. In the six steps, the purchaser receives the order and verifies both quality and quantity supplied. It is in this step where the sale is closed and the company gets ownership of the purchased materials. In most situations, purchasing process involves interaction between the purchasing personnel of a company and key account managers of the supplying company. The account managers should have skills like planning and marketing, relationship building, problem solving, negotiating, opportunity creating, organization, communication, and presenting skills (Cheverton, 1999). In some situations, the suppliers use global accounts management instead of key accounts management. These situations require the vendor company to be global and coordinated. Competences required for personnel in global accounts management is identical to the ones required in key account management. The reason for this is the similarity in the activities undertaken in each of the cases. Analysis Purchasing process involves the purchasing company and the selling company. These companies have conflicting interests. Each of them tries to maximize benefits derived from a purchase while minimizing both risks and costs. Negotiations are always required in order to achieve these objectives. This indicates that the persons selected to represent a company in a purchasing process should have good negotiation skills. Negotiation skills are in line with communication skills and therefore, these persons need to have good communication skills as well. If persons representing a company lack negotiation skills, the other company may take advantage of the weakness in the purchasing process. Due to this, the weaker company may make loses while the other company make abnormal profits from the purchase. Purchasing process also involves several individuals. For the selling company the persons involved consist of the key accounts management team whose head is a sales representative. For global markets, a global accounts management team might also represent the selling company. For the company undertaking the buying in a purchasing process, the individuals involved are the production manager, production engineer, and purchasing officer. The production manager is mostly interested in smooth production flow and cost saving aspects of the materials purchased. Production engineer is interested by the specifications of the materials purchased while purchasing officer is interested on the financial aspects of the purchased materials. This indicates that the activities undertaken in a purchasing process require more of teamwork effort that individual dedication. The activities involved in the purchasing process could be categorized as buyer centered and seller centered activities. The approach on these activities distinguishes the organizations operating in the same market. An approach selected by a selling company can increase its reliability and thus enable have a competitive advantage over other companies in the market. The best approach to use in coordinating activities is the use of a purchasing process model. The purchasing model divides the purchasing process into various steps and defines the activities undertaken in each of the steps. The model makes the organizations undertake the process effectively thus increasing its competitiveness. Magnitude and value of sales made in a purchase vary from one purchase to the other. We have large and small magnitude sales. However, the magnitude definition of purchases as either small or large depends on the organizations involved. For the sales, we have high value sales and small value sales. One of the most conspicuous differences between the high value sales and low value sales is that high value sales can generate large revenues to the company while low value sales cannot. Another most conspicuous difference is that high value sales involve complicated procedural activities while activities in low value sales do not have complicated procedures. Magnitude and value of sales made in a purchase plays a great role in shaping the purchasing process and thus they should be considered when undertaking a purchase. Recommendations Purchasing process currently used by Cloverleaf PLC is more of individualized dedication. This could be somehow ineffective especially when the purchase involved is of very large magnitude. It requires the person involved to be very competent in undertaking sales. As a sales representative for France, Mr. Goodman should start employing teamwork in undertaking the purchasing process. A team pulls ideas from different individuals thus making the purchasing process much easier (Chaverton, 2004). Individuals like production engineers, sales manager, and purchasing manager are very useful when involved in the purchasing process. Threfore Mr. Artos, Mr. Bull, and Mr. Mr. Bertrand will be very fundamental in the negotiation process. Purchasing process undertaken by Cloverleaf PLC requires to be improved. Embracing technology for the process can play a very great role in enhancing success. Most fundamental technology, which can be used to improve a purchasing process, is the use of internet technology and other information system technology (Schneider, 2010). This technology can improve the way purchasing activities are undertaken as well as reduce the time taken in a purchasing activity. As the person in charge of sales in Cloverleaf, Mr. Goodman should adapt and implement technology in the selling process. This would increase the effectiveness of these processes and thus improve the revenues generated from sales. The coordination of activities undertaken in the purchasing process in Cloverleaf PLC requires to be improved. One of the ways of doing this is documentation of all activities undertaken in the process (Burrow & Bosiljevac, 2011). Mr. Goodman should start documentation of activities involved in the process. This would improve the coordination of the purchasing process model selected for undertaking purchases. Conclusion Purchasing process involves undertaking purchasing activities. The process also involves several personnel. For the buying company it involves personnel like the purchasing and procurement offers. For the selling company it involves the key accounts management team. The two types of organizations involved differ in terms of interests and thus the persons selected to represent them should have a certain levels of competencies. Moreover, the magnitude and value of sales undertaken vary from one to another. To improve the purchasing process there are several activities that should be undertaken. One of the activities is the introduction of new advanced technology. The other one is starting to document the activities undertaken in purchasing process. Employing teamwork in the process could also improve the way purchasing is done in an organization and thus increase revenues generated from purchases. References Burrow, J. L., & Bosiljevac, J. (2011). Marketing. Mason, OH: South-Western Cengage Learning. Chaverton, P. (2004). Key Accounts Management: A Complete Action Kit of Tools and Techniques for Achieving Profitable Key Supplier Status. London: Kogan Page Publishers. Li, L. (2007). Supply Chain Management: Concepts, Techniques, and Practices Enhancing Value through Collaboration. Hackensack, NJ: World Scientific Publishing Company. Monczka, R. M. et al (2010). Purchasing and Supply Chain Management. Mason, OH: Wadsworth Cengage Learning. Schneider, G. P. (2010). Electronic Commerce. Mason, OH: Wadsworth Cengage Learning. Read More