What is the definition of formal buying?

The definition of formal buying refers to purchasing that is conducted through automated computer systems. This method typically involves predefined procedures, specifications, and often integrates inventory management systems, allowing for streamlined processes in sourcing, ordering, and tracking inventory. This formalization helps businesses maintain efficiency, improve accuracy in orders, and potentially reduce costs through better management of supply chains.

In contrast, purchasing done manually may involve negotiation and does not rely on automated systems, which can lead to inefficiencies and potential human errors. Buying in bulk without contracts tends to lack the formal agreements that accompany structured purchasing, leading to higher risk and less control over supply terms. Finally, purchasing from local markets and suppliers usually involves less formalized processes and could include varying degrees of negotiation, which is not characteristic of formal buying as it lacks the systematic approach provided by automation.