| 4. Establish Price and Terms |
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Prior to talking to any supplier, a buyer should know the nature of the market and the market value of the material or service. This type of information can be found in past purchasing records, industry magazines and other sources. The final price and terms established depend on the nature of the material or service. |
| Commodities Those products or services, such as fixing an air conditioning system or doing renovations, that are readily available from any number of services are referred to as commodities and are selected on price or service. In these circumstances a request for quotation (RFQ) is sent to three or more sources. Terms and conditions are standard so the evaluation is calculated on price and availability. |
Special
Materials or Services When a special material or service is required, such as a computer program or forklift maintenance, the purchaser will negotiate with the supplier. The focus of the negotiation will focus on continued availability, performance standards, labour qualifications and expected performance results. |
| Regardless of the type of material or service, the buyer must choose the best method based on knowledge and experience and keep the interest of the company in mind. | Once the buyer has determined reliable sources and established terms and conditions he/she will obtain quotes (usually 3), evaluate the quotes and decide on a supplier. |