DYNAMIC PURCHASING

Dynamic Purchasing:

Dynamic Purchasing Systems

(DPS) is an electronic system for
the purchase of commonly used
goods, services or works. It is
essentially designed to cover
regular "off the shelf" purchases.
It is an optional process designed
to assist the buyer in setting up
and maintaining a list of providers
from whom a buyer can achieve
better value for money for
commonly used purchases, such
as gas and electricity, etc when
the need arises

It can only be established using the rules of the

Open Procedureand must be open throughout its
duration for the admission of any provider which
satisfies theselection criteriaand submits an
indicative tenderwhich complies with theservice
specification.

The buyer will advertise the establishment of the

DPS. The buyer establishing the system must offer
full, unrestricted, direct access to the specification
and any other additional documentation or
information such as the electronic equipment used
for the DPS, technical connection arrangements and
rules regarding its operations.

 All this information needs to be available by

electronic means in the contract notice, as soon as

possible after forming the notice, until the date in
which the dynamic purchasing system is no longer
operating.
The suppliers that are interested in joining the DPS
and meet the selection criteria can set out a tender
stating all the terms for supplying the required
goods, works or services
The buyer must usually evaluate a tender within 15
days. This evaluation must include all tenders that
match the specification.
The market place will remain competitive, prices
will remain current and innovative providers are
able to join

ADVANTAGES AND DISADVANTAGES

ADVANTAGES:
reduced timescales for
procurement
is that it is open throughout
its duration for the
admission of any provider
which satisfies the selection
criteria and submits an
indicative tender which
complies with the service
specification. Additional
advantages are the same as
for theopen tender process.

DISADVANTAGE:
DPS is that it is entirely
electronic and
commissioners may need
to undertake extensive
development work with
the market to ensure it is
able to respond to
theadvertised
opportunity.

PURCHASING FUNCTION
Purchasing function in a business environment is one of the

critical functions as it provides the input for the organization to

convert itintooutput. Inputs must be available at proper time,
quantity, and in proper place. Companycostsand profit are
generally affected by them.
Thepurchasingfunctionis usually performedbya specialised
and centralised purchasing department , directed by an efficient
manager to achieve the performance in an economical manner.

Procurement vs Purchasing
procurement :It involves the activities involved in

establishing fundamental requirements, sourcing activities

such as market research and vendor evaluation and
negotiation of contracts. It can also include the purchasing
activities required to order and receive goods
Purchasing: The term Purchasing refers to the process of
ordering and receiving goods and services. It is a subset of
the wider procurement process. Generally, purchasing refers
to the process involved in ordering goods such as request,
approval, creation of a purchase order record (a Purchase
Order or P.O.) and the receipting of goods.

PurchasingObjectives:
Toprovideanuninterrupted flowofmaterialsand

servicesforcompany operations
Tofindreliablealternativesourcesofsupply
Tobuyatthemosteconomicorderquantities
Tobuythebestvalue:acombinationofrightqualityat
thebestprice withthebestsupplierservice
Tomaintaingoodrelationswithvendors

ImportanceofPurchasing:
Purchasingfunctionprovidesmaterialstothefactorywithout
which wheelsofmachinescannotmove.
Aonepercentsavinginmaterialscostisequivalenttoa10
percent increaseinturnover.Efficientbuyingcanachievethis.
Purchasingmanageristhecustodianofhisfirmsispurseashe
spends morethan50percentofhiscompanysearningson
purchases.
Increasingproportionofonesrequirementsarenowbought
insteadof beingmadeaswasthepracticeintheearlierdays.
Buying,therefore, assumessignificance..
Purchasingisthemainfactorintimelyexecutionofindustrial
projects.

THEROLEOFPURCHASING
Therearetwobasictypesofpurchasing:
Purchasingforresale
Purchasingforconsumptionor Transformation.
The formerisgenerallyassociatedwith retailersand wholesalers while
the latterisdefinedas Industrial purchasing.
Purchasingcanalsobeseenaseitherstrategicortransactional.
Strategic(direct)buyinginvolvestheestablishmentofmutually
beneficiallong-termrelationship betweenbuyersandsuppliers . usually
strategic buying involves purchase of materials that are crucial to the
support of the firms distinctive competenceThiscouldinclude( raw
materials, components used in production process)
Transactional(indirect)buyinginvolvesrepetitivepurchases, from
thesamevendor.These orderscouldincludeproductsand services not
listed on the bill of materials, they are used indirectly in
producingtheitem.

FACTORSFORPURCHASING
Theimportanceofpurchasinginanyfirmislargelydeterminedthe
fourfactors:
availabilityofmaterials.
absolutemoney volumeofpurchases.
percentageofproductcostrepresentedbymaterials.
typesofmaterialspurchased.
Purchasing must concern with whether or not the materials
usedbythefirmarereadilyavailableinacompetitivemarketor
Not. Ifthelattercondition prevails,creativeanalysisbytoplevelpurchasingprofessionalsisrequired

FUNCTIONS OF PURCHASING:
1Receivingindents
2.Assessmentofdemandordescriptionofneed
3.Selectionofsourcesofsupply
4.Receivingofquotation
5.Placingorder
6.Makingdeliveryatthepropertimebyfollowinguptheorders.
7.Verificationofinvoices
8.Inspectionofincomingmaterials
9.Meetingtransportrequirementsofincomingandoutgoingmaterials
10.Maintainingpurchasingrecordsandfiles
11.Reportingtotopmanagement
12.Developingcoordinationamongotherdepartments
13.Creatinggoodwilloftheorganisationintheeyesofthesuppliers.