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.
Definition
 Purchasing 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
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.

1. Receipt of items.
1. Checking rates
2. Checking quantity
3. Checking quality
2. Return of defective items.
3. 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.