Introduction•Purchase is the procurement ofgoods or services from someexternal sources.•Acquisition of some kind in lieu ofaccepted price on consideration inreturn.•“Purchasing is the procurement ofthematerials, supplies, machines,tools andoperation of amanufacturingplant.”---------- Alford &Beatty
Objectives of Purchasing•To acquire the goods or services atminimum cost.•To ensure the continuous flow ofproduction.•To develop the main and attenuatesources of supply.•To ensure timely delivery.•To make optimum utilization of capital.•To acquire quality product so that qualityoutput is served to the consumer.
Types of Purchasing•Purchase made as per requirement:Nopurchase is made in advance.•Purchase is done as need arises.Method usually applied foremergencyrequirement orinfrequent goods.•Contract Purchasing: Contract ofmaterial is given to an agency. Ithas anadvantage that low price ofthosematerials whose costfluctuates highly
•Market Purchase: Purchase is madefrom the market to take advantageof price fluctuations.•Schedule Purchasing: It is a cyclicpurchase model. A schedule ofpurchase is made and it is used forthose commodities whose price donot fluctuate.
Purchasing Procedure•Purchase Requisition: All thedepartments of the organization areasked to make a requisition forpurchase.•Decision of Purchase: Collectingrequisition from variousdepartmentsand handed it toPurchase department /committeehead. Purchase head decidewhat topurchase and in what quantity.
•Study of Market conditions: Markettrends are analysed to generate anidea of price and availability ofproduct.•Selection of Vendors.•Placing of Purchase order.•Receiving of order.
Functions / Responsibilities ofPurchaseDepartment•Obtaining prices•Selecting vendors•Placing Purchase order•Settlement of complaints•Making and maintaining harmoniousrelations with vendors.
•Purchasing Management Processconsists usually of 3 stages:•Purchasing Planning•Purchasing Tracking•Purchasing Reporting
Purchasing Planning•Purchasing Planning may include steps asfollows:•creating purchasing projects and tasks•providing related information (files, links,notes etc.)•assigning purchasing tasks to employees•setting task priorities, start/finish datesetc.•assigning supervisors•setting reminders•control and evaluation
Purchasing Tracking•Purchasing Tracking consists of:•Checking task's status and/orhistory of changes•Receiving status notifications•Sorting, grouping or filtering tasksby current status•Highlighting overdue tasks,
Purchasing Reporting•Purchasing Reporting includes:•Comparing actual and estimatedvalues•Calculating purchasing task andproject statistics•Sorting, grouping or filtering tasksbyattributes•Creating charts to visualize keystatistics and KPIs