Purchase planning is the process of assessing the needs of the items and services being purchased, analyzing the various options in terms of suppliers or service providers, analyzing the pricing of the products and devising a product delivery timeframe. For any commercial organization, effective purchasing planning is essential in order to make sure that the purchasing decision taken by the company is beneficial to the company in terms of financial growth and strategically maneuvers. The boundaries and degree of the purchase planning depends on the type of the purchase and it’s the potential effects of the purchase. The planning phase of the purchase should be conducted by the team members who are fully aware of the potential impact of the purchase and various other aspects of it. It is also essential that the said team has enough experience in supply chain management. The various components of a purchase plan includes factors like sourcing assessment, assessment of the organizational demand, having a pre-qualification process for the various potential suppliers, a supplier selection criteria, and resource allocation process. In every case of an organizational purchase, the effectiveness of the purchase planning is a direct measure that contributes in the success of the purchase itself.
The procedure of purchase planning is the process of defining objectives and strategy to obtain the products and services needed by the organization from external providers. The process is carried out by a team of professionals representing various aspects of the purchase. For example- a typical purchase planning team would include professionals who are familiar with the supply chain management aspects, financial aspects, and people who are well familiar with the objectives, need and functioning of the particular product that needs to be purchased. Based on the purchase planning, the need of the product is defined, a supplier is selected, and the purchase process is divided into smaller scheduled tasks.