Stage 1: Need Recognition:
The need is recognized for the product , as we saw in our case above the demand for the fabric is a derived demand, the company wouldn’t have that need if it has not received any orders to manufacture the new design.
Stage 2: General Need Description:
As the operation department analyzed the fabric and accessories requirement according to the specification of the design, it orders the procurement bill to the purchase department which is responsible for the purchases in the organization. In its procurement letter it will specify what it will require and how much it will require.
Stage 3: Product Specifications:
The operations department is specialist in the fabric area it with specify each and every detail to purchase department. What sort of fabric to be purchased how much to be purchases. What are the accessories requirements of the design and in what quantity they will be required.
Stage 4: Supplier Search:
Once the order is approved, the purchase department will search for the suitable supplier in the market. The purchase department will keep in considerations the key points highlighted in the product specifications so that when it buys the fabric it can get the best bargains on the order. The question here arises is if the operations department knows so much why not it go ahead and buy itself. The answer to it that as the organization has to deal and negotiate with different buyers and suppliers at various times, it is better that the company presents a uniform face as it will help in building long term relationship with the suppliers. Few people dealing again and again will also leads to familiar negotiation. Apart from that the question of specialization comes in picture — specialization in building supplier development opportunities. It will help the organization in securing long term suppliers with mutual trust and confidence.
Stage 5: Proposal Solicitation:
As a few number of competent suppliers are selected, a bid request is sent to them so that they can apply for the order.
Stage 6: Supplier Selection:
Once the proposal solicitation is over the supplier or set of suppliers are chosen to fulfill the requirement of the company. The company can go for different fabric supplier for different fabrics required in making of the new garment. Similarly it can decide upon the accessories suppliers.
Stage 7: Order Routine Specifications:
This stage is involved in machinery maintenance other continuous purchases like stationary etc. Often Blanket contracts are the way to go ahead for maintenance, repair and other Operating items.
Stage Eight: Performance Review:
This is more important in business buying decision making then consumer buying decision as the organization has to keep on needing the same products time and time again. In fact positive performance reviews leads to successful re-ordering and building strong business relations.
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