PURCHASING

by Joseph H. Schultz, Director Westmont Park District

At this moment, budgets are being adopted by Park Boards throughout the State and now the park and recreation executive initiates the request to expend funds. Many park district executives would do well to consider instituting centralized purchasing in their agency. In earlier years, a few city officials assumed all the duties and responsibilities of a limited government. Purchasing was handled by each municipal official as a sideline in his/her own particular department. But as park district budgets have grown to thousands of dollars, and in most medium sized cities to multi-million dollar businesses, the need has grown for specialized activity of purchasing in one central place for all departments of a park district operation. Good municipal fiscal management now recognizes the worth of Central Purchasing, one man purchasing, which can be handled by the administrator or business manager of your particular district.

Many problems can be alleviated in Districts by central purchasing. A bill crops up—where did it come from? Who bought it? Where is the item now? All these problems can be answered by the use of purchase orders. Purchase orders give administrators control of budget and an awareness of what is bought, where the equipment is going and who purchased the item.

Many small park districts purchase mainly when they are in need of an item. They "put out fires" so to speak. Advance planning alleviates emergency purchasing. Advance planning by all staff gives administrators leverage for seeking long range price protection from vendors. This long range price protection can free warehousing items where storage space is a problem.

Administrators must insist on concise complete purchase orders showing what is being purchased and the exact cost. Many companies bill by computer and only show catalog number or part number. By referring to the P.O. book, you will know if you received all items by price-checking.

A few benefits of central purchasing include:

1) Lower costs due to quantity purchasing. (Previously different departments purchased like materials in competition, one with the other.)

2) Standardization of procedures and processes. (One system easy for all employees to familiarize themselves with, and simpler for the vendor.)

3) Elimination or reduction of small orders and emergency orders.

4) Less "rush orders" or late delivery.

5) Reduction of paperwork (combined purchasing reduces number of purchase orders, bid forms, vendor notices, invoices, vouchers, checks, etc.)

6) Uniform prices (standardization of commodity makes for same price in all departments.)

There are some purchasing time savers that many administrators should consider:

1) Traveling requisition. Use it for frequently ordered items. It works like an ordinary requisition form, but has permanent requisition date for a single item written in space at top, with room for a series of requisitions at the bottom. Requisitioner fills it out, sends it to purchasing, which places the order. When order is received, purchasing sends the form back to the requisitioner for use when he needs additional supplies.

2) Requisition forms designed so the requisitioner (not purchasing) does most of the work. One part of the snap-out form is the requisition. Another part becomes the purchase order when purchasing adds information and confirms it. The other part goes to accounting, inventory, etc. There could be parts that can serve as requests for quotes. The administrator or purchase agent simply mails them to suitable vendors. When the request for quotes are returned, one of them becomes a purchase order.

3) Self-Ordering. For some frequently used expendables, let the salesmen check inventory and order what is needed. The salesmen would fill out the order form too.

I feel that too many administrators or purchase agents concentrate only on price! It's of prime importance, but consider this:

For most manufacturers, transportation of purchased materials is the third most costly expense. So when you are negotiating price, be sure they

Illinois Parks and Recreation 10 May/June, 1977

are negotiating shipping costs too. The most costly expense of manufacturers is labor, and materials are second in that order.

There are points to negotiate when purchasing. These include delivery schedules, warranty, technical support, packaging, quality, quantity, return value, consignment, make and hold agreement (to free your warehouse space), deferred payment, extended terms, volume discounts, terms on future purchases, rebates, and price protection. Two of the biggest headaches in any purchase are delivery and quality.

How many vendors? There's no simple guideline on how many vendors you should have for any item. It's probably safe to say that the ideal number is less than what you now have for many items. In general, it's best to have a few major suppliers than many supplying smaller amounts. The reason: LEVERAGE.

Many district's auditors can supply forms that division heads or program supervisors should submit to the agent in charge of purchasing. These include "requisition to purchase" and "price inquiry forms."

Regarding purchasing, the rules should cover questions such as:

1) Who will be authorized to make purchases?

2) On what basis will purchases be made? Will they be made on a competitive bid basis? If so, under what conditions will bids be taken?

3) What controls will be followed to insure that money will be available to pay for a purchase?

4) Are the board members free of conflict of interest when purchases are made?

Buying is 70% learning, 20% negotiating, and only 10% deciding. Park and recreation administrators must ask questions, read available literature and keep abreast of developments. The smallest agencies can benefit from centralized purchasing. It acts as a control on expenditures and assurances that no item in the budget is exceeded.

Illinois Parks and Recreation 11 May/June, 1977