One of the fundamental responsibilities of procurement function in an organization is source selection. It deals with the entire process of how prospective suppliers are being surveyed, evaluated and determine policies relating to those who can most suitably meet the requirement of the organization, before they are being considered for a buyer and supplier relationship. However, this assessment is base on a number of essential instrument which price is one of the such.
Price in general term refers to the amount offered for the purchase of an item. It can also be value pay for obtaining something, it is quite crucial to purchasing as price play vital role on the product manufacturing and its sales value.
Negotiation among other relevant tools in sourcing selection function that purchasing employ in making an organization to actualize their goals to arrive at a most judgment on which suppliers are to be selected.
Negotiation usually requires that the buyer have a face discussion with the suppliers in order to arrive at a common understanding on essence of a purchase/sale contact among which is price. Infact, price determination is the main focus of negotiation.
In negotiation, to determine purchase price buyers and supplier usually discuss such element, as cost of production overhead market conditions. Speeds needs of the buyer and supplier eventually arrive at a mutual price, that both deliver the best value of item and at reduced cost to the buyer as well as favours the supplier fair interest to ensure a continued supplier-buyer rapport.
This study set out to investigate some related problems having to do with purchasing a high item cost also looks at how negotiation as a tool for effective material pricing can be deployed to determine the right price of supply.
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