6. If the item being requested has been previously purchased it denotes that there is already a pool of approved-suppliers from which to choose. The choice of supplier will be based on the best price quotation and trade credit being offered.
7. If the item to be procured is extraordinary and costly, the traditional system requires a formal method of seeking suitable suppliers by way of issuing a bidding notification through newspapers and other forms of media publication. Interested suppliers will then submit their proposals by detailing their price offerings and their credit terms, as well as the manner by which they handle the processing and delivery of the goods or services to be acquired.
8. The proposals and bid prices shall pass through a selection committee in charge of determining which supplier has the capacity and capability to deliver the specific goods or services. After that process, the purchasing department shall be furnished with a formal approval of the selected supplier.
9. The first document that will serve as record of the acquisition process is the purchase order (PO) which shall be forwarded to the selected supplier.
10. The requesting organization’s copy shall be acknowledged as received by the supplier to denote agreement and commitment to delivering the goods.
11. The receiving section of the purchasing department shall handle the receipt of all delivered goods by verifying if the specifications indicated on the PO have been met. In addition, a physical count and inspection shall be performed by a representative of the auditing department, to determine if all goods are intact and received in good condition.
12. Receipt of the goods shall be acknowledged by the receiving section on the delivery receipt issued by the supplier while the audit representative shall indicate any exceptions noted. A separate document, the materials receiving report, shall be prepared to inform the supplier that the goods were received, which also contains the additional information if any defect or shortages were noted or if only a partial delivery was made.
13. If the entire delivery does not meet the specifications contained in the PO, the goods and the delivery receipt will be sent back to the supplier. No materials receiving report shall be prepared for rejected goods.
13. The warehouse or stockroom section of the purchasing department will receive the goods that passed inspection and will use the materials receiving report as a basis for keeping track of all incoming goods.
14. The accounting department on the other hand will receive all the documents--the materials requisition, the PO, the delivery receipt, and the materials receiving report--to serve as the bases for recording the amount payable to the supplier. The supplier, on the other hand, will subsequently issue a sales invoice to inform the accounting department that a credit purchase is currently outstanding in favor of the supplier.
15. The purchasing department shall notify the requesting unit that the item being requested is now available and ready for release. The warehouse section will prepare a stock release form as the basis for recording and monitoring the goods taken out of the warehouse or stockroom.
16. At the end of the accounting period, usually at year end, the warehouse or stockroom section will prepare an inventory report, which will provide in detail the remaining stock held as inventory. The accounting department will conduct a physical inspection and inventory count to verify the accuracy of the data provided. The said report will also be used by the accounting department to determine how much of the entire purchases during the year were actually sold.