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Purchasing is a spending Function and every rupee saved in purchasing goes directly to the profit column of the concern.

An Experience Contribution by Nagesh Talekar

When an Organisation has several plants located in different geographical regions, there are two alternatives. One, to have a centralised purchase department located at the headquarters. The other, to have a decentralised purchasing department set up in each plant.
Joint Managing Director
Executive Staff Centralised Purchase

Purchase In-Charge Dharwad Plant

Purchase In-Charge Verna Plant

Purchase In-Charge Bangalore Plant

An Experience Contribution by Nagesh Talekar

 Combining the requirements of Plants and buying in bulk leads to substantial reduction in purchase cost. There is only one department dealing with limited items, a high order of purchase skill can be expected. Inter-Plant transfer of materials in an emergency is possible. Surplus Materials in one Plant can be utilized in meeting the requirements of another. The Centralised Purchase Department at Headquarters may lay down common policies, procedures and systems for all the plants. A periodic reporting system may be established between the plants and the Centralised Purchase Department at Headquarters. Organisations having Multi-plant operations would benefit by adopting a judicious blend of decentralised setup with centralised control.

An Experience Contribution by Nagesh Talekar

Material Requisition

Enquiry Quotation

Plant
Goods Arrival Info. Follow Up GRN & Invoice

PO Copy

Domestic Supplier
Purchase Order Follow Up

Payment

Centralised Purchase
Enquiry Quotation Purchase Order Follow Up Payment

Overseas Supplier

An Experience Contribution by Nagesh Talekar

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Of Right Quality

At Right Place

In Right Quantity

Purchase Tasks
From Right Source At Right Price
An Experience Contribution by Nagesh Talekar

At Right Time

The Centralised Purchase Department at Headquarters has to work in close coordination with all Decentralised Purchase Departments at Plants and Finance Department at Headquarters. Only an atmosphere of mutual trust will ensure that these departments will work towards the total organisational objectives.
Verna Plant

Dharwad Plant

Centralised Purchase

Finance HO

Bangalore Plant

An Experience Contribution by Nagesh Talekar

 Lead Time Index Order Cost Index Rush Order Cost (Index) Process Time Index Purchase Efficiency

= Average Lead Time (Current Year) Average Lead Time (Previous Year) = Total Purchase Department Cost Total No. of Orders Placed = Price Paid for Rush Order Material Price Normally Paid for this Material = Total Time Taken To Process Indents Total No. of Indents Processed = Total Purchase Value

Total Expenses of Purchasing Dept.

An Experience Contribution by Nagesh Talekar