Industrial buying process

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Industrial market??

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 Individuals and organizations
that acquire goods and
services to be used, directly or
indirectly in the production of
other goods and services
or to be resold.

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 Three types of industrial markets

• Producers and manufacturers.

• Trade industries (wholesalers and
manufactures).
• Governments.

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Industrial Buying process

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 Problem recognition

General need description

Product specification

Supplier search

Proposal solicitation

Suppliers selection

Order-routine specification

Performance review

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 Problem recognition

• Starts with the recognition of the

problem triggered by internal and external
stimuli.
• Company decides to develop a new
product and new equipment.

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 General need description and
product specification.

• General characteristics and required

quantity is determined.
• General characteristics like reliability,
durability, or price are considered.
• Technical specifications are considered.
• Product value analysis (pva) is done.

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 Suppliers search

• Most appropriate suppliers is searched

according to the product.
• Suppliers are searched via trade
directories, other companies,
e-hubs and e-procurements

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 Proposal solicitation
• Qualified suppliers are invited to submit
proposals.
• If item is complex, then detailed proposal
is required for each qualified supplier.
• Evaluation of proposal is done and then
suppliers are invited for presentation.

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 Suppliers selection
• Before selection of the supplier, the
industry centre will specify the desired
supply attributes ----
1 . For routine order products.
2 . For procedural-problem products.
3 . For political-problem products.

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 Order-routine specification
• After selecting supplier, the industries-
1. negotiates the final order.
2. listing the technical specifications
3. quantity needed.
4. expected time of delivery .
5. return policies
6. warranties.

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 Performance review
• The performance of the supplier is periodically
reviewed by three methods-
1. End user is contacted and asked for
EVALUTAION.
2. Supplier may get rated on several criteria.
3. The cost of poor supplier performance is
adjusted with adjusted cost and price.

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