B.Com Sem 6 | BA - Methods of Purchasing | VNSGU |

Different methods of Purchasing

Different Purchasing Methods

1) Bulk Purcahsing
When materials are purchased on a large scale, a small reduction amount is a big saving in total payments. This type of purchasing is called Bulk Purchasing and such purchasing makes the bargaining power of buyer very strong.
2) Purchase according to consumption
Instead of purchasing materials in bulk, purchases are made as need arises due to consumption. No advance planning is made for purchasing.
3) Purchasing for a specific future period
This method is used for the purchase of those goods which are regularly required.
4) Contract Purchasing
The purchasing under contract, usually formal, of needed materials, delivery of which is frequently spread over a period of time.” Under this method a specific quantity of materials is contracted to be purchased and delivery is taken in future
5) Market Purchasing
Market purchasing refers to buying goods for taking advantages of favourable market situations. Purchases are not made to meet immediate needs but are acquired as per the future requirements. This method will be useful if future needs are estimated accurately and purchases are made whenever favourable market situations arise. The market situation is constantly studied for forecasting price trends.
6) Speculative Purchasing
Speculative purchasing refers to purchases at lower prices with a view to sell them at higher prices in future. The attention in this method is to earn profits out of price rises later on. The purchases are not made as per the production needs of the plant rather these are far in excess of such requirements. A cloth mill may purchase cotton in the market when prices are low with the attention of earning profits out of its sales when prices go up.
7) Group Purchasing
Sometimes a number of small items are required to be purchased. The prices of these items are so small that costs of placing orders may be more than prices. In such situations the buyer places order with a vendor for all these items. The purchase price is agreed to be by adding some percentage of profit in the dealer’s cost.
8) Emergency Purchasing
This method refers to purchasing made in emergency to replenish the materials out of stock. In case of companies with weak financial positions, this method is often resorted to.
9) Hand to mouth purchasing
It is mild form of emergency purchasing. Goods are purchased only when needed and in quantities needed for a short period of time. This is sound business policy, when not carried to excess.
10) Purchasing by requirements
This method refers to those goods which are purchased only when needed and in required quantity. The goods which are not regularly required are purchased in this way. On the other hand it refers to the purchase of emergency goods. These goods are not kept in store. Purchasing department must be in knowledge of the suppliers of such goods so that these are purchased without loss of time.
11) Stockless purchasing
In stockless purchasing the seller gives a guarentee to the purchaser that he will supply the goods of reasonably good quality at a reasonable price as per the demand of purchaser. The purchaser also gives assurance to seller that he will purchase the goods in specific quota.
12) Blanket purchasing
The manufacturers need so many types of materials and so they make an agreement in respect to the wholesellers who can provide to supply in one lot. Purchasing with such type of agreement is said to be blanket purchasing.

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