A method used by businesses to buy products and/or services.
A purchasing system manages the entire acquisition
process, from requisition, to purchase order, to product
receipt, to payment.
Purchasing systems are a key component of effective inventory
management in that they monitor existing stock and help
companies determine what to buy, how much to buy and when
to buy it.
FUNCTIONS OF PURCHASE DEPARTMENT
Purchase materials at lowest possible cost while maintaining quality. Maintain good relationship with the suppliers. Take advantage of economies of scale. Maintain records efficiently. Develop highly competent personnel. Co-ordinate with all the departments of the organization.
TYPES OF PURCHASING SYSTEM Tender System Stockless Purchase System Blanket Order E-Purchasing / E-Procurement Subcontracting Rate Contract Method Petty Cash System Capital Equipment Purchase
Subcontracting refers to the process of entering a contractual agreement with an outside person or company to perform a certain amount of work. The outside person or company in this arrangement is known as a subcontractor. Many small businesses hire subcontractors to assist with a wide variety of functions
. Example: A small business may use an outside firm to prepare its payroll.Subcontracting is probably most prevalent in the construction industry, where builders often subcontract plumbing, electrical work, drywall, painting, and other tasks. In some cases, a general contractor may only be used as the construction manager or supervisor. In that case, subcontracting accounts for all of the physical work done on the premises. The general contractor’s only responsibility is to approve the contracts, keep the project within budget, and inspect the work.