The most frequently used is comparison shopping. The purchasing staff must come up with quotations from three or more suppliers. The purchasing staff either selects the lowest supplier.
Or there is documentation that the best value for money was selected.
Many organizations use this approach. However, it is important to note that "shopping around" is not the only and best way. Comparison shopping does not guarantee that these three suppliers are the lowest in the market, nor does it guarantee that these three are quoting the lowest products.
Extended information;
Purchasing decisions cannot be made in isolation and cannot be made solely with the goal of optimizing purchasing performance. Procurement decisions should be made with consideration of their impact on other key activities. Therefore, purchasing decisions need to be made on the basis of balancing all total costs.
For example, when purchasing a new packaging line, it is important to consider not only the initial investment, but also future costs for ancillary equipment, spare parts and services. In addition, the supplier should ensure that unplanned downtime is kept to a minimum over the techno-economic life of the packaging line.
It is one thing for a supplier to sell equipment, it is quite another for the same supplier to service the same equipment satisfactorily over many years. This example demonstrates the complexity of sourcing and the different types of choices that need to be made. Therefore, decision making in a given environment requires a cross-functional, team-based approach across all areas affected by it.
Purchasing and supply strategies can only be developed effectively by working closely with all areas and managers involved. The Purchasing and Supply Manager will guide the development of this view and vision.
Baidu Encyclopedia-Procurement