The profitability and the demand of any product rely on its design. It is designed according to the pre-fixed specifications and guidelines. The buyers purchase particularly ordered goods which have been manufactured by following fixed quality standards. The following issues are considered before making purchasing decisions:
The cost factors: The price of the materials is a main deciding factor. The transport, operation, installation, duties and taxes are taken into account.
The cost factors: The price of the materials is a main deciding factor. The transport, operation, installation, duties and taxes are taken into account.
Delivery: Delivery is the routing and freight charges
Legal fees: The government guidelines, warranties, patents and public liabilities are considered.
Three major methods are employed to assess the past record of the suppliers. They are:
The cost factors: The price of the materials is a main deciding factor. The transport, operation, installation, duties and taxes are taken into account.
The quality plan/rating: The quality of materials is fixed by the extent of acceptance and rejection. The acceptance rate is determined by the percentage basis which is computed as:
Approved material/lots * 100 / (Total lots)
The cost-ratio plan: The price is fixed depending on the net price charged by the supplier. The cost- ratio plan is as well employed to decide the supplier or vendor. This is completed on the basis of costs acquired for procuring the materials from the suppliers. The cost-ratios are fixed for factors like quality, price, and timely delivery and so on.
The buyer seller negotiations are completed to agree on a fair competitive price, deliver the goods at commonly agreed time, fix terms of delivery and to finally build a trusting and sustained relationship. The price is the primary and the most important issue because every supplier expects to make a neat profit out of each contract. The purchasing department negotiates hard for a lower price whereas still not compromising on quality and standards.
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