POLICIES AND PROCEDURES Subjects for Purchasing …

1 1994, 1999, 2002 American Purchasing Society, Inc., Port Richey, FL, rights reserved. No portion of this publication may be reproduced or copied without permission from the Purchasing SOCIETY, East Galena Blvd., Suite 203, Box 256, Aurora, IL 60506, (630) 859-0250 FAX (630) 859-0270 policy and procedure manuals help a Purchasing de-partment function better. They give easy to refer to guidelinesto establish uniformity and consistency to the Purchasing opera-tion. Written manuals help clarify thinking and lead to a moreefficient operation. They make training of new employeeseasier.

2 They document rules and regulations to make enforce-ment easier. Written manuals provide a way of comparing thestated POLICIES and PROCEDURES with actual practices. Operationsshould be required to follow the written manuals or the manualsshould be revised to correspond to better SubjectsORGANIZATIONAL STRUCTUREThis policy describes the organization indicating who does thebuying and where it is done. With a centralized system allbuying is from one location. It is handled from many locationsin a decentralized organization. A modified system delegatessome functions to a central location and others are AND AUTHORITYAn essential policy to pinpoint what products and services arehandled by the Purchasing function and the scope of purchasingdepartment activities.

3 A clear definition of Purchasing authorityand the limitations of the authority are PRACTICESAn expanded statement of ethical conduct for anyone involvedin the Purchasing process or for anyone who may come incontact with AND USING BIDSThis is information about when and how the bid process will beused. The policy determines if first bids are final bids or if allbids are subject to GUIDELINESA policy statement favoring the use of single or multiplesourcing and criteria for supplier HOURSThis is a policy indicating when appointments are required forinterviews or if buyers may set their own PURCHASESA statement by management on the use of Purchasing or com-pany relationships for personal purchases by AND CONDITIONSA helpful policy specifies desirable and undesirable terms andconditions.

4 A list of payment terms in each category may COMMON POLICIESP roduct SpecificationsLegal RequirementsSecurity and Confidential InformationUse of Minority SuppliersProcedure SubjectsPREPARING REQUESTS FOR BIDSD etailed information provides the buyer with what should beincluded in requests for quotations. The standard form to usemay be shown with the instructions on how to fill it out and whento use SELECTIONThis procedure describes the approved supplier selection pro-cess. It gives details for finding a supplier and what is requiredto evaluate the supplier's REQUIREMENTSA necessary procedure to provide efficient communication andspells out how requirements are received by Purchasing .

5 Arequired requisition form is described with instructions on whatshould or need not be REQUIREDA critical procedure that delegates who may requisition variousproducts or services and in what quantities. It also delegates whomay commit to buy at various dollar on backBUYERS CHECKLIST NUMBER 10 POLICIES AND PROCEDURESS ubjects for Purchasing Department ManualsProcedure SubjectsBUYERS CHECKLIST NUMBER 10 1994, 1999, 2002 American Purchasing Society, Inc., Port Richey, FL, rights reserved. No portion of this publication may be reproduced or copied without permission from the Purchasing SOCIETY, East Galena Blvd.

6 , Suite 203, Box 256, Aurora, IL 60506, (630) 859-0250 FAX (630) 859-0270 from frontDOCUMENTING ORDERSThis is the procedure that provides the guidelines for prepara-tion of purchase orders or Purchasing contracts. The standardsample form is usually included in the procedure with adescription of each copy and how it is , REPORTS, AND FILE RETENTIONO ften more than one procedure is required to adequately coverthese Subjects . The PROCEDURES indicate the purpose of thedocument, how often they are prepared, and the method ofstorage and length of time that they need to be AND NEGOTIATINGThis procedure discusses the responsibility of the buyer to shopfor the best sources and the best products or services andnegotiate the most favorable terms and conditions.

7 It providesguidance on when to shop or negotiate and how much timeshould be spent on various types of INFORMATIONA procedure to control the amount of time spent on obtaininginformation for users is helpful. The procedure should clarifywhat information the buyer must obtain and the priorities thatshould be AND EXPEDITINGA procedure should be written that indicates who is responsiblefor follow-up of orders and who is responsible for OR CANCELLING ORDERSIt is very important to have a procedure that stresses the propermethod of handling revised or cancelled orders so the company'sliability is AND CONTROL OF TOOLINGAny organization that buys tooling or supplies tooling tovendors should have a carefully written procedure on how suchtransactions are controlled.

8 For example, the material shouldbe properly maintained and insured while in the possession ofthe supplier. Such material includes cutting dies for packagingand artwork or photographs sent to OF VALUE ANALYSISAn effective value analysis program needs top managementsupport. An approved and accepted procedure on the utiliza-tion of a VA program will help insure its OF SCRAP, OBSOLETE, OR SURPLUSEQUIPMENT AND INVENTORYIt is often the responsibility of Purchasing to dispose of un-needed material or equipment. There should be a detailedprocedure on how to sell or otherwise get rid of such OF UNSOLICITED IDEAST here can be serious legal consequences of accepting productideas from non-employees.

9 A procedure is necessary to informbuyers how to avoid problems of this FROM INTERNATIONAL SOURCESS pecial attention should be given to international buying meth-ods. A procedure explaining the differences and the methods touse is AND USE TAXA procedure explaining when sales or other taxes on purchasesshould apply assists the buyer in controlling unnecessaryexpense. It is even more important for organizations withlocations in more than one COMMON PROCEDURESUse of Release FormsInspection and Quality ControlUnauthorized PurchasesPreparation, Use, and Control of Blanket OrdersUse of Patented ProductsReceiving Goods and ServicesSelection of Carriers and Other Traffic ConcernsResolving DiscrepanciesUse of EDIS etting Up and Using Systems ContractsAvoiding Anti-Trust ViolationsObtain POLICIES and PROCEDURES EasilyMost managers agree that it is important to have a good policyand procedure manual although many do not have one.

10 Thereason is that they take a long time to write and the personnelto do the job are not available. If this is your situation, you cansubstantially shorten the time to prepare a manual by orderingthe American Purchasing Society's Generic Policy and Proce-dure manuals. With the printed loose leaf manual you willreceive a computer disk containing a text file of each policy andprocedure that you can customize to meet your own needs withany word processor. The cost of the manual including the diskis only $195 to members and $295 to non-members.