Materials Management II

Purchasing, Definition, Objectives, Steps, Methods.

Purchasing

It is a first phase of MM. It means procurement of goods and services

from external agencies. The purchased item should be of right quantity and desired quality at right price on desired time.

It is a market exploration to procure goods and services.

It is selection of suppliers who can supply standard items at competitive price.

DefinitionPurchasing is procuring of materials,

supplies, machines, tools and services required for equipment, maintenance, and operation of manufacturing plant. -Alfred & Beatty.

Procurement of proper materials, machinery, equipment and supplies for stores used in the manufacture of a product adopted to marketing in the proper quality and quantity at proper time and at the lowest price, consistent with quality desired.

- Walters.

Objectives of Purchasing.

1. Purchase of satisfactory material.

2. To control the quantity of material.

3. Proper negotiations with suppliers.

4. Controls proper use of material.

5. Co-ordination with other depts.

6. Maintenance of Company’s goodwill.

7. Other objectives.

Steps in purchasing procedure.

1. Various departments (authorized person) are requested to send their requisition form.

2. Consolidation of Purchase requisitions.3. Market exploration.4. Potential suppliers are identified.5. Purchase orders (PO’s) are sent.6. Follow up.

Steps in purchasing procedure.

7. Receipt of items.1. Checking rates

2. Checking quantity

3. Checking quality

8. Return of defective items.

9. Dispatching the goods to concerned department.

Methods/types of purchasing.

1. Purchase according to requirement.

2. Purchasing for definite future period.

3. Market purchasing.

4. Speculative purchasing.

5. Contract purchasing.

6. Scheduled purchasing.