Type of Purchasing

 Type of Purchasing:

There are two types of Purchasing. One is Centralised Purchasing and second is Decentralised Purchasing.

1. Centralised Purchasing- The purchasing in which one department of organisation procurement and purchase all requirements of organisation like raw material, coal, petroleum, iron ore, equipment, tools and so on. This type of purchasing is known as centralised purchasing.

Advantage:

1. It saves financial resource of organisation because experts performs A to Z function of puchasing.

2. It performs all function of purchasing by effective, efficient and economical way.

3. It purchase cent percent feature possessing raw material.

4. It stores raw material according to pre-define inventory control process.

5. Its supervision is world class.

Disadantages:

1. It is beneficial for large scale and multi national company.

2. It is beneficial for concern level of production.

3. It is used for high class technical internal value of raw material.

4. It is time consuming process.

5. It is not useful for multi product producing company.

2. Decentalised Purchasing- The purchasing in which concern organisation procuremet, purchase, raw material, mineral according to concern plant or factory. This type of purchasing is known as decentralised purchasing.

Advantages:

1. Every plant purchase raw material according to their own requirement, need. So, it is beneficial for small scale company, middle scale comppany and so on.

2. Concern department purchase raw material at right time, right quantity because they have better knowledge of market.

3. It requires less finance because purchasing is performed according to need, requirement basis.

4. Replacement of defective raw material by proper way.

5. Transportation cost is minimum.

Disadvantages:

1. It pays more price of raw material beacuse wholesale purchasing is not performed.

2. It is not suited large scale company, multinational company because their terms and conditios, rules- regulation is not applicable.

3. It is Not perform supervuision and controlling by an effective way.

4. Many technical, financial problems may happen in purchasing process because purchaser are not expert.

5. Proper coordination of purchasing funcyion is not possible.