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Purchasing Management

Purchasing Management

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Published by shah faisal

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Categories:Types, Research
Published by: shah faisal on May 01, 2009
Copyright:Attribution Non-commercial


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 All

production firms have the need of supplies of materials and services from external sources. This makes purchasing, one of the most significant functions of any Production Manager. Purchasing function may include the purchase of Raw Materials.  In simple words we can say that Purchasing is the act of exchange of goods and services for money or money’s worth.

 According

to LEVIS:“Purchasing is the acquisition by manufacture of any necessary primary material suppliers, equipments by any method whatsoever.”

 To

make available materials at minimum cost  To maintain the continuity of production  To establish and maintain good relations with the suppliers  Develop alternative source of supply  To reduced the cost of finished goods  To maintain proper records for reporting to the management  To keep the activity of purchasing with in the limit of material purchase budget  To contribute towards higher productivity

Right Source

Right Quality

Right Quantity

Right Price

Right Time

Right Place

 The

very first issue in PM is the selection of proper SOURCE. Allocation factors are dependent upon the source. A source is proper only if it can satisfy the customer as regards other factors

 The

another issue purchasing management is right quality. The manager must properly define the quality requirements. Whether quality will be costly. But in many of cases, cheaper goods prove out to be costly in the long run. Thus what is the quality of inputs desired must be clear in the mind of the purchase manager. This description then should be clearly mentioned in the purchase order. Further once the delivery is received it should be properly checked the actual material the specified materials.

 The

another issue in purchasing management is right quantity. The issue of quantity generally relates with the decision as to how much to purchase. This is more of a mathematical question. By using different models regarding inventory control, the optimum order quantity has to be decided.

 The

another issue in purchasing management is right price. Price is the major factor for a purchase decision. For most of the people, price comes first than even quality. The equation used in this concern is:VALUE = QUALITY/PRICE This is both a mathematical formula and an axiomatic truth. It implies that the value & quality do have a positive relationship while value & price share an inverse relationship. It means to say that the lower the price, the more the value, and viceversa.

 The

another issue in purchasing management is right time. Delivery schedules are a very-very important part of effective purchasing. All purchasing orders should be made and implemented in such a way that these are made available in time when needed. Timing is very crucial for every part of human activity and purchasing is not an exception.

 The

last issue in purchasing management is right place. Right place means right place of delivery. Every purchase contract, in addition to time of delivery, must clearly state the place of delivery and such other terms like free delivery or ex-factory delivery

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