Chabot College

CISCO NETWORKING ACADEMYCISCO NETWORKING ACADEMY

Chabot CollegeChabot College

ELEC 99.05ELEC 99.05Business Purchasing Process


Business PurchasingBusiness Purchasing

• Different from personal purchasing:– Who buys?– Stores used– Ordering– Pricing– Delivery– Payment– Tracking


Who Buys?Who Buys?

• Purchases usually are not made by the employee

• Instead, the Purchasing Department staff makes the buys.

• The employee requests that the purchase be made by completing a purchase requisition - a document that describes the requirements.


Buy from...Buy from...

• Purchases are made from these sources:– manufacturers– distributors– government contracts– catalog vendors

• Generally, purchases are not made at retail stores.


OrderingOrdering

• Purchasing Department staff don’t go to the vendor’s store to buy.

• Instead, they send the vendor a purchase order, a document that describes the items ordered, price, shipping address, and delivery dates.

• A purchase order is sometimes called a “P.O.”


OrderingOrdering

• Before they issue a P.O, the Purchasing Department checks to be sure the employee’s budget has sufficient funds for the purchase.


PricingPricing

• Many items are not pre-priced. • To learn the price, the employee contacts a sales

representative at the manufacturer or distributor and seeks a price quotation.

• e.g. “I need a quote for a Cisco 2514”.• The quote is usually delivered by E-mail or fax

but sometimes is given over the phone.• The quote is usually attached to the purchase

requisition.


DeliveryDelivery

• Purchased items are usually shipped to the business or organization’s Receiving Department.

• Then the business distributes the shipments that were received to the persons who requisitioned them.


PaymentPayment

• After the merchandise has been shipped, the vendor sends the business an invoice - a bill.

• After the business verifies that it has received the merchandise ordered, it pays the invoice by check.

• It then charges the ordering department’s budget account that was listed on the requisition.


Fixed Asset TrackingFixed Asset Tracking

• Many business keep track of large or costly items purchased by entering them in a database of fixed assets.

• For example, when furniture, computers, or major equipment is received by the Receiving Department, it is tagged with a fixed assets barcode tag and the location is entered into the database.


Process SummaryProcess Summary

• Employee– determines requirements– (optionally) obtains quotation(s)– submits requisition (with supervisor approval)

• Purchasing Department– obtains quotations (if not done already)– checks to be sure ordering employee’s

department budget has sufficient funds– issues purchase order


Process Summary (cont.)Process Summary (cont.)

• Receiving Department– receives shipped merchandise– tags major assets and logs in database

• Accounting Department– pays invoice by check– charges cost to ordering department budget

account


Why All this Procedure?Why All this Procedure?

• Fiscal Control - procedures designed to be sure:– employees don’t spend money that their

department doesn’t have;– employees don’t steal what they buy;– employees don’t pay themselves;– the business gets the best available prices;– the business keeps track of what it buys.


““Open P.O.”Open P.O.”

• When business need to make frequent, small purchases (e.g. computer repair parts) the traditional ordering process is too slow & cumbersome.

• Instead, the issue an open purchase order for a fixed dollar amount. It authorizes a few specific employees to make phone calls orders against this total dollar amount.


Example RequisitionExample Requisition

• To be completed by employee:– Name– Date ordered & needed– Merchandise

• Description• Quantity• Estimated Cost (include quote if available)

– Suggested vendor– Delivery location– Budget account # to be charged


Requisition AssignmentRequisition Assignment

• Complete a requisition using clear handwriting.

• Request a Cisco 2501 router, software and maintenance contract.

• Charge to Account #312120-25550-6401-093400

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