Problem Recognition â€“ A problem identified within the organization is brought to the attention of the management. The management may decide either to manufacture a new product or purchase it from the market. The management takes the buying decisions based on the complexity of the issue and the best alternative is chosen. For example â€“ In a production situation, a business might be facing issues with product quality. The quality of the finished goods may not be better because the supplier was delivering inferior quality raw materials.
General Need Description – A need is identified, and a clear description of the general need is prepared. The description depicts the general characteristics and the product quantity required. A team of professionals, including buyers, engineers, and others, work together to make decisions concerning the desired product. The team evaluates the characteristics of reliability, price,and durability concerning the product or service.
Product Specification â€“ A detailed list of technical specifications of the desired product is prepared with the help of value analysis. The engineering team assesses the value. A buying organization uses the skills of professionals to determine the cost-related aspects in the production process (especially for the redesigning and standardization of the desired product). Similarly, a selling organization can use this step to increase its sales.
Supplier Search â€“ A search for a better supplier is initiated by the management. A list of competitive vendors is prepared with the help of technology and previous experiences.
Solicitation of a Proposal – Proposals are sought from the enlisted suppliers. The proposals are generally made via sales representatives, catalogs, PowerPoint presentations, etc. This stage demands skill and professionalism from the marketers to present their proposals in a sophisticated manner.
Supplier Selection – A supplier is selected out of the list of potential suppliers by the selection team of the buying organization. The potential suppliers are ranked, and a supplier is selected based on certain attributes that include product, quality, delivery time, ethical behavior, reasonable price, swift communication, past performance and reputation, and maintenance services provided by the supplier, etc.
Order-Routine Specification – It includes an order that describes the final list of the specifications, the selected supplier, delivery time, required quantity, price and other service details, etc.
Performance Review â€“ It is the last stage of business buying that reviews the performance of a supplier. The buying organization uses its contacts to receive feedback from users or customers. The consumer Behavior or their satisfaction level acts as the basis of the performance reviewing. A performance review assists businesses to make futuristic decisions. A selling organization also considers the same factors to refine its services and represent its proposal to the buying organization.
Risks and Challenges in Business Buying
Business clients are different from individual customers. A business buying process depends on several situations, and a business deploys a comprehensive decision-making process to finalize a purchase transaction. The group responsible for buying decision is called Decision Making Unit (DMU). A business buying decision is not spontaneous and involves various groups in decision making.
A business buying process is much more complex and larger than a consumer buying process. Higher risks in the business transaction facilitate a collaborative relationship between a buyer and supplier. High risk involves deeper information search to define product specifications and search for the best suppliers. A team takes a business buying decision, and the larger stakes of the entire business is at stake in the transaction. Any shortcoming or loophole in the product quality, underestimation of raw material need, and cost discrepancies could pose severe challenges for the buyers. The management is accountable to many stakeholders, and a wrong decision would not receive support from any stakeholders (investors, employees, board, and customers), etc.
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