Every organisation maintains a list of vendors, trade group-wise whom they approach for their need of materials. This list is under constant review. Unsatisfactory suppliers are eliminated and new suppliers are added to enhance competition.
Also new suppliers have to be found for newer materials required on ever expanding business. How does one obtain information regarding potential suppliers? An important function of the purchase research section will be to obtain this information from the following sources and keep a classified record for reference when necessary.
The sources of information regarding the potential suppliers are:
ADVERTISEMENTS:
1. Newspaper advertisements
2. Trade directories
3. Catalogue, price lists etc.
4. Trade journals
ADVERTISEMENTS:
5. Salesmen
6. Advertised tender
7. Telephone directories
8. Exchange of information between similar companies
ADVERTISEMENTS:
9. Trade exhibitions and fairs
10. Personnel from other departments of the company
11. Enquiry
12. Yellow pages.
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1. Newspaper advertisements:
Newspapers columns are full of advertisements from various firms indicating the items of stores which they manufacture, import, and stock or specialise in.
2. Trade directories:
Indian and foreign directories are available which give classified information of suppliers industry wise. Very detailed information is available there in regarding names and addresses of manufacturers, their regional and branch offices, their authorised agents and their range of products.
3. Catalogue, price lists etc:
Prices obtainable from catalogues and price lists are generally not final and are subject to confirmation at the time of placing the order. Catalogues and price lists should be properly classified and arranged to enable easy reference. Either they could be kept according to commodity groups as such as pipes and fittings, tools, alloy steel, abrasives, etc., or numbered serially and covered with index cards or lists prepared according to commodity groups.
If necessary, a supplier wise card index or list may also be maintained to facilitate locating catalogues of various firms. The card or list will be arranged alphabetically and will show supplier’s name, particulars of their catalogues and the serial number.
4. Trade journals:
Most leading companies advertise in trade journals like the Indian Trade Journal. Sometimes excellent articles appear in them regarding specific industries. Valuable information can be obtained from such journals.
5. Salesmen:
Salesmen are excellent sources for supply and material information. Not only are they usually well informed about the capabilities and features of their own products, but they are also familiar with similar and competitive products as well.
By the very nature of their specialised knowledge, sales people can often suggest new applications for their products which will eliminate its search for new suppliers. From their contacts with many companies, sales men and sales women learn much about many products and services and all of this information is available to the alert, receptive buyer.
This is a key reason why sales personnel should always treated courteously and given ample time to make their sales presentations. To deny them this opportunity is to risk the loss of valuable information, including information concerning new and reliable sources of supply.
6. Advertised tender:
Tender is the process of ascertaining availability and price of materials in sealed covers which are opened and scrutinized, at a predetermined time by a tender committee. It is implied that the materials covered by the tender should give scope for competition.
The tender system induces the bidders to quote the lowest Price, safeguards the interests of both the buyer as well as that of bidder, ensures impartially and fairness, inspires confidence in the suppliers and leaves no room for malpractice such as favouring a particular bidder or tampering with prices in the purchase section.
7. Telephone directories:
Telephone directories of large cities contain classified advertisements from suppliers.
8. Exchange of information between similar companies:
If satisfactory trade relations are maintained, even one’s own competitors will part with the information he has.
9. Trade exhibitions and fairs:
Visits to exhibitions and fairs should give valuable information regarding potential suppliers. Such exhibitions and fairs are held industry wise and also for specific purposes, e.g., import substitution. Some such exhibitions are held regularly at specific intervals when available information can be updated.
10. Personnel from other departments of the company:
Personnel from other departments of a firm can often provide purchasing with helpful information about prospective suppliers. Through their associations in professional organisations, civic associations, and social groups, these employees often learn about outstanding suppliers.
Scientific, technical and research personnel who use sophisticated materials or services always have many valuable suggestions to make regarding possible sources of supply. From their attendance at conventions and trade exhibits, and from their discussions with associates, these personnel are particularly well informed regarding new products, new methods and new manufacturers.
11. Enquiry:
This is a simple method of ascertaining availability and price of materials through open offers. It is adopted when there is no room for competition on account of (a) the value being very small, (b) the materials being of a proprietary nature, (c) the policy being to buy only from one particular firm, (d) the source of supply being limited or not established as in the case of machined components and fabricated parts. The buyer may, however endeavour to obtain price reduction by negotiation. The enquiry form (form7) is simpler then the tender form (form 8) but both call for price, terms of payment, delivery time, etc.
12. Yellow pages:
Another commonly known directory is the classified yellow pages section of telephone directories. This source of information is frequently of limited value to industrial buyers because local telephone books list only local companies.
However, buyers can readily obtain telephone books for all major cities from the telephone company. The size and capability of companies are also difficult to determine, as management and financial data are normally not included in the advertisements.
The yellow pages do, however, have the virtue of being well indexed. Also, they can serve as a useful starting point if other sources have proved fruitless, and if local sources are desired.