PURCHASE FUNCTIONS AND MANAGEMENT
Purchase functions and procedure
Purchasing is an
important function of materials management. In any industry purchase means
buying of equipments, materials, tools, parts etc. required for industry. The
importance of the purchase function varies with nature and size of industry.
Objectives of
Purchasing
To avail the
materials, suppliers and equipments at the minimum possible costs:
These are the inputs in the manufacturing
operations. The minimization of the input cost increases the productivity and
resultantly the profitability of the operations.
To ensure the
continuous flow of production: through continuous supply of raw
materials, components, tools etc. with repair and maintenance service.
To increase the
asset turnover: The
investment in the inventories should be kept minimum in relation to the volume
of sales. This will increase the turnover of the assets and thus the
profitability of the company.
To develop an alternative
source of supply: Exploration
of alternative sources of supply of materials increases the bargaining ability
of the buyer, minimization of cost of materials and increases the ability to
meet the emergencies.
To establish and
maintain the good relations with the suppliers: Maintenance of
good relations with the supplier helps in evolving a favorable image in the
business circles. Such relations are beneficial to the buyer in terms of
changing the reasonable price, preferential allocation of material in case of
material shortages, etc.
To achieve
maximum integration with other department of the company: The purchase
function is related with production department for specifications and flow of
material, engineering department for the purchase of tools, equipments and
machines, marketing department for the forecasts of sales and its impact on
procurement of materials, financial department for the purpose of maintaining
levels of materials and estimating the working capital required, personnel
department for the purpose of manning and developing the personnel of purchase
department and maintaining good vendor relationship.
To train and
develop the personnel: Purchasing department is manned with varied types of
personnel. The company should try to build the imaginative employee force
through training and development.
Efficient record
keeping and management reporting: Paper processing is inherent in the
purchase function. Such paper processing should be standardized so that record
keeping can be facilitated. Periodic reporting to the management about the
purchase activities justifies the independent existence of the department.
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