The terms purchasing and procurement are often used interchangeably, although they do differ in scope. Purchasing generally refers to the actual buying of materials and those activities associated with the buy process. Procurement has a broader meaning, and includes purchasing, traffic, warehousing and re­ceiving inbound materials.

"The purchasing decision-maker might be likened to juggler, attempting to keep several balls in the air at the same time, for the purchaser must achieve several goals simultaneously." The goals of purchasing are to:

• Provide an uninterrupted flow of materials, supplies and services required to operate the organization.
• Keep inventory investment and toss at a minimum.
• Maintain adequate quality standards.
• Find or develop quality vendors.
• Standardize the items bought, if possible.
• Purchase required items and services at the lowest ultimate prices.
• Maintain the organization's competitive position.
• Achieve harmonious, productive working relationships with other departments within the organization.
• Accomplish the purchasing objectives at the lowest possible level of the administrative costs.

Among the primary purchasing activities that influence the ability of the firm to achieve objectives are supplier selection and evaluation (sourcing), quality control, and forward buying.

Supplier Selection and Evaluation

In the acquisition process, perhaps the most important activity is selecting the best supplier from among a number of vendors that can supply the needed materials. The buying process is complex because of the variety of factors that must be considered when making such a decision. The process includes both decision - makers and decision influences, which combine to form the decision - making unit (DMU). The process has a number of stages, and includes the following 12 steps: identify needs, establish spec­ifications, search for alternatives, establish contact, set purchase and usage criteria, evaluate alternative buying actions, determine budget availability, evaluate specific alternatives, negotiate with suppliers, buy, use, and conduct post purchase evaluation. It may not be necessary. In go through all 12 stages of the buying process unless the decision is a totally new one. If the decision has been made before (routine buying), then many of the steps can be bypassed.

Purchasing managers may use some or all of the following variables when making the purchasing decision:

•Lead time.

•Lead time variability.

•Percentage of on - time deliveries.

•Percentage in _ stock availability.