Chabot College
ELEC 99.05
Business Purchasing Process
CISCO NETWORKING ACADEMY
Business Purchasing
• Different from personal purchasing:
– Who buys?
– Stores used
– Ordering
– Pricing
– Delivery
– Payment
– Tracking
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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.
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Buy from...
• Purchases are made from these
sources:
– manufacturers
– distributors
– government contracts
– catalog vendors
• Generally, purchases are not made at
retail stores.
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Ordering
• 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.”
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Ordering
• Before they issue a P.O, the
Purchasing Department checks to be
sure the employee’s budget has
sufficient funds for the purchase.
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Pricing
• 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.
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Delivery
• 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.
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Payment
• 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.
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Fixed 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.
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Process 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
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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
CISCO NETWORKING ACADEMY
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.
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“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.
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Example 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
CISCO NETWORKING ACADEMY
CISCO NETWORKING ACADEMY
Requisition Assignment
• Complete a requisition using clear
handwriting.
• Request a Cisco 2501 router, software
and maintenance contract.
• Charge to Account
#312120-25550-6401-093400
CISCO NETWORKING ACADEMY