PowerPoint Presentation

Ruth Ann Oommen S2 MBA

Organizational Buying ProcessThe Organization's buying process is a process in which the organization's recognize the need of a product or service and search of the best available brand or suppliers among all the alternatives. Understanding the organization's buying process is now given immense importance as with globalization there is an increased competition in the market, there are many brands or suppliers available for the same product but one has to be street smart to choose the best product or service in quality and price.

Stages ofOrganizationalBuyingProcess

1. Need recognition

Organizationalbuyingprocessstarts from need recognition. In anorganization, a certain person recognizes need of certain goods and after buying the needed goods, need is fulfilled. Needs inorganizationcan be recognized in two ways. They are: external stimuli and internal stimuli. If a company decides to produce new goods, it is internal stimuli. It needs to buy new goods and equipment's. Similarly, when a buyer observes trade exhibition, she/he may make his/her idea to buy new goods. Such idea is external stimuli, because this idea ismade from outer environment and materials should be purchased for this.

2. Need description

After the need is recognized, the buyers should describe need. This task is completed in the second stage oforganizationalbuyingprocess. While describing need, features of needed goods and needed quantity should be described. If the goods have standard, this task becomes easy; if otherwise, it becomes complicated. Help of engineers, users and consultants should be taken for complex goods.Example: If the IT department requires new laptops, the manager is supposed to determine the number of laptops that are required.

3. Product specification

The task of preparing specific description of goods is the third stage of organizationalbuyingprocess. In this stage, the manager is required to give the specifications that are needed in the product. The list of specifications play an important role in the selection of the brand that the firm is going to purchase the product from. Technicians help should be taken for this task. In this stage, the value of goods is analysed.Example: In case of laptops, the manager need to specify the speed processor, RAM and other important features that should be available in laptops.

4. Supplier search

At this stage oforganizationalbuyingprocess, the buyer searches proper suppliersor sellers. Buyer prepares a list ofsuppliersto select good and proper suppliers. This list is prepared by looking at trade directory, searching in Internet, asking other companies for suggestions etc. If the goods to be bought are new, complicated and costly, it needs long time to searchsuppliers.

5. Proposal solicitation

Proposal solicitation is the fifth stage oforganizationalbuyingprocess. At this stage, buyer calls bestsuppliersfor submitting proposal. As a reaction, some send catalogue or sellers to theorganization. If the product is costly and complicated, the buyer demands detailed proposal, and if the product is technical, business organizationcalls for presenting the product itself.

6. Supplier selection

At the sixth stage oforganizationalbuyingprocess, buyers assess the proposal and select one or moresuppliers. For selecting thesuppliers, a list is prepared and rating is made on the basis of their attribute and importance. Then the best supplier is selected. Analysis of thesuppliersis done in the following ways.

Supplier attribute`RatingVery poor(1)Poor(2)Fair(3)Good(4)Excellent(5) Price competitivenessx

Product quality, reliabilityx Service and repair capabilitiesx On-time delivery

x Quality of sales representativesx Overall responsiveness to customer needsx Overall reputation Average Score = 4.29

x7. Order routine specification

After the bestsuppliershave been selected, the buyer prepares final order. In this final order, all the matters such as attribute of goods, quantity,specification, time for supply, warranty, method of payment, service after sale etc. should be clearly mentioned and handed over to supplier.

8. Performance review

This is the lastprocessoforganizationalbuying. At this stage, the buyer reviews the feedbacks on suppliers performance and evaluated.. This type of review helps to take decision whether to continue relation with the supplier or change or end the relation. If the performance of the supplier is satisfactory, the relation can be continued; if it is somewhat defective, partial correction is made and the relation is maintained. But if the performance is disagreeable, it is broken.

Stages of the buying processBuying situationsNewtaskModifiedrebuyStraightrebuy 1.Problem recognitionYesMay beNo 2. General need descriptionYesMay beNo 3. Product specificationYesYesYes 4. Supplier searchYesMay beNo 5. Proposal solicitationYesMay beNo 6. Supplier selectionYesMay beNo 7. Order-routine specificationYesMay beNo 8. Performance reviewYesYesYes