Organization Buying Process: step for organization buying process

Organization Buying Process

Let's start with one example, A Company name by XYZ, they want to packaging machinery, up to now they done by their worker, but it's slow process, and they want to match increase demand they want a fully automatic machinery.

Step 1: Problem Recognition

When company face a problem or need that can be met by acquiring a good or service. As per our example, XYZ company facing problem of slow packaging. Therefore they need a automatic machinery that can match their demand in market. That can be triggered by internal or external stimuli. Other than our example, company want to start new product, expanse their production, or security reason, or sometime government rule triggering stimuli.

Step 2: General need Description and Product Specification

Now, company want to general characteristic and required quantity. If item is complex organization involve engineers, users to define characteristics such as reliability, durability, or price. As per our example, Company involve engineers to understand what  capacity required require, what will maintains cost, what will set up cost.

Now, organization develop item's technical specification. Often, the company will assign a product - value - analysis (PVA) to engineering team. Main aim of PVA is cost reduction that studies components to determine whether they can be redesigned or standardized or made by cheaper methods of production. XYZ company's PVA team will analysis the machinery's specification also work on best cheapest way to solve packaging solution.

Step 3: Supplier Search

Now, company have product description and specification, time to search supplier who meet their needs. Company can search supplier through Internet, trade directories, contact with other companies, trade advertising, and trade shows. As per our example, Company will lookout packaging machine manufacturer in their area, near city or country, they want from outside of company, collect list of suppliers

Step 4: Proposal Solicitation

Now, XYZ company, contact with suppliers and chose some suppliers and asking to submit their proposals. If item is complex or more expansive buyer asking to detail written proposal. After evaluating proposal, company invite few supplier for make formal presentations.

Step 5: Supplier Selection

At this stage, company analysis suppliers, they rate and identify the most attractive suppliers. XYZ company can be give rank to supplier on basis of Price, Supplier reputation, Product reliability, Service reliability, Supplier flexibility.

Step 6: Order-Routing Specification

XYZ, company elected a supplier, now they listing technical specifications, the quantity needed, negotiates the final order, expected time of delivery, return policies, warranties and so on.

Step 7: Performance Review

Now, company take review from end users for machinery's performance and ask for their evaluations. For XYZ company, asking or taking review or machine operator. Sometime company set up incentive systems to reward purchasing managers for good buying performance.

Reference:

Marketing Management by Philip Kotelr