Every business entity has got a procurement department or a executive who handles all purchases depending upon The size of The organisation .Big organisations have multilocational purchase unit or in some case purchases are made from central unit .
Purchase deptt plays a very critical and crucial role in smooth functioning of organisation The Head of Purchase deptt is called Chief Procurement Officer(CPO) .Now days CPO has considerable say in any company policy.
Purchase deptt primary role is to get material at right cost , from right buyer , of right quality and in right time .
Major role of purchase are following
Raw Material , Ingredients , fuel buying
Service contract
Vendor Development
Vendor Analysis
Value Analysis
Annual Contract
Capital Purchases .
Maintenance and Repair contracts
Payments to vendor .
Inventory control
Negotiations & long term contracts
scrap management
Getting licenses for storages etc.ie liasioning with govt deptts
Imports
Maintaining and Updating Vendor Master.
Standard procedure for any purchase deptt
INDENTS(purchase order requistion form ) : First step for any purchase activity is a clear indent from
the userdepartments . The indentshould have authorised signatory .Its should clearly metion the quantity delivery time and specifications .
QUOTATION : Purchase executive then floats inquiry as per the details given in the indents.it could be
given to one vendor or to any numbers as stipulated in their organisations standards , the best practice is to get from one alternate source . In case of emergency or in vendors reluctance to send quotation in telephonic or verbal inquiry could be floated . Once the inquiries are sent with clear instruction to vendors for response within stipulated time .Vendors then submit their quotation to the purchase Deptt.
BID SHEET OR COMPARISON SHEET :Comparison is then made for the best vendors taking into
account various factors such as :
a. Price , b. Quality , c. Delivery time , d. Payment terms , e. Warranty , f. After Sales Service
NEGOTIATIONS : Then Vendors are called for negotiations to further claarification and finalisation
5.PURCHASE ORDER : Purchase orders are then gnerated for the agreedupon terms and conditions Purchase order are then either faxed or couriered to the suppliers with clear terma and conditions .
AMENDMENT : There is provision to amend purchase order for terms and conditions due to some unfore seen circumstances which are beyonds vendors control .
6. FOLLOW UP : After orders are faxed the purchase executive monitors orders for delivery .
7. RECIEPT OF MATERIAL: Vendor then delivers the materials to the store and after inspection reciepts are made for accounts to release payments for the material.
8.PAYMENTS : The purchase executive then ensures that payments are made to the vendors as per the agreed upon terms and conditions .
9.IMPORTS : With integration of local economies with global market ,Import has become one of the method for cost reduction.
INCO TERMS : Common terms used in international trade.
