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Unit 10: Purchasing in the Domestic and Foreign Marketplace

sales people and management; logistics and pricing, margin capabilities, service issues, quality Notes
issues, the company’s financial strengths and weaknesses, their product’s strengths, the marketing
strategy and tactics, their short term and long term objectives, their targets for growth, their cost
scheme, etc.

Meaning: know them better than they know themselves.

Having all that information, reviewed permanently to keep it up fresh, will help tremendously
to get your business relationship focus on business and problem solving. Become an expert in
your supplier. The results will be extraordinary. There will be no opening for them to mess
around in negotiation room. Once your supplier knows and sees you cannot be fooled, the
games in negotiations are finished and all is left for them to do is to discuss straightforward,
serious business.
Getting whole the knowledge will not take an hour or a day; it can take sometimes weeks or
months. Gather all the facts and data, learn it, work with it, play with it and confront it regularly

The merchandise budget plan specifies the inventory investment in a category over time. It isn’t
complete buying plan since it doesn’t indicate the specific assortment to buy or the quantities.
The plan just specifies how much money should be spent each month to support sales and
achieve turnover objectives.
The buyer needs to plan how much merchandise should be delivered in each month to achieve
the financial goals for the period.
Actual sales might differ from the sales forecasted in the merchandise budget plan. Even with
this uncertainty, the plan is used to coordinate the supply and demand for merchandise and to
ensure that the financial goals are realized. In addition, the plan coordinates the activities of
buyers for different merchandise categories, so that there is not too much merchandise in some
categories and not enough in others. From a global perspective, the merchandise variety could
become off balanced and be less appealing to customers.
10.1.3 Early Decision Making

Following are the major advantages of early decision making in purchasing:
 See the line in its entirety
 Guarantee early delivery
 Obtain exclusive agreements
 Obtain seasonal discounts
Disadvantages

Following are the major disadvantages of early decision making in purchasing:

 Purchased items may be eliminated if vendor does not receive minimum order level
 ‘Winners’ are yet to be determined
Lead Time Requirements

 Definition: the amount of time it takes to receive the order once the order is placed
 Greater for fashion items; less for staple items
 May require six months
 Delivery must coordinate with catalog presentation

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