Moreover, the purchase manager also frames purchasing policy, purchase procedure and rules and regulations. The production department is concerned with manufacturing the products, where inputs raw materials are converted into finished output through a series of production process. If the latter condition prevails, creative performance by analytical procurement professionals is required; this typically is a top-level group. In a small business, this means working closely with the accounting department to ensure that there is sufficient capital to buy the items purchased and that cash is flowing smoothly and all payments are made on time. It is mandated to regulate, assess and ensure full compliance by entities to all the provisions of the Act.
In addition trims and thread. At first glance, it may seem to be to find and purchase a quantity of material for the best price. End users do not care why a product or service is defective, all they expect is satisfaction. Clearly, the purchasing function involves more than obtaining the best price. The main job is to keep a vendor matrix of each product that one buys. Daily a number of letters, bills, quotations, notes, challans, railway receipts, parcel, way bills, bills of ladings, goods received notes, lorry receipt, goods receipt transport delivery notes , inspection notes have to be dealt with.
Making arrangement for return of materials received in excess or materials not received as per specification. In larger organizations this role will extend right through to preparing the financial statements with an external auditor engaged for assurance purposes. It is a big responsibility, and even a slight error amounts to delay in consignment required at a particular time. When an organisation is very small, one or perhaps a few people will undertake all of the necessary functions and processes, and there is no need for a formal organisational structure. Generalists buyers Under this type of arrangement, a buyer focuses on serving a particular customer group, either a product-line or a project, and buys all items for it regardless of the item type.
A Person, appointed to look after the purchase of materials in a purchase department of an organization is called a Purchase officer. In larger firms considering public share offerings the finance department will assist with the preparation of the offering documents but will likely also use outside consultants to advise on this complicated process. These items may be important because they are either of high total procurement value or critical to the operations of the firm. The department may also offer training and assistance with employee manuals to ensure that the company and its employees are kept up-to-date on workplace law and handles filing of legal documents on government agencies. Before making a purchase, the purchasing department must ensure that it heeds the proper protocols for purchase and budget approval and must ensure that any items are purchased in accordance with the overall purchasing policy of the organization.
Those in the purchasing department often meet with sales representatives, administer contracts, resolve purchasing-related issues and maintain purchasing records. Better supervision is possible for using specialised skills and equipment. Forward buying and speculation: The purchase managers of many companies are required to operate in the forward markets. Preparing manual of sources of supply. In a retail environment, the purchasing department makes sure there is always sufficient product on the shelves or in the warehouses to keep the customers happy and keep the store well-stocked. So, it is desirable that store should be located centrally to discharge its responsibilities efficiently.
Fixing quality or grades of materials. Compliance with Business Protocols The purchasing department also must ensure that it is complying with all company policies. Small businesses typically employ a purchasing professional who procures all the items needed for the business. Generally, purchasing refers to the process involved in ordering goods such as request, approval, creation of a purchase order record a Purchase Order or P. This information can be used to plan staffing levels, asset purchases and expansions and cash needs, before they become necessary. The key influencing factors on the organisation of Procurement department Organising a Procurement department involves determining not only what we have discussed earlier: 1. For example, the function of a hammer is to strike something nearby whereas its purp … ose what to strike and why could be anything the hammer-wielder has in mind.
While the content of this site is provided in good faith, we do not warrant that the information will be kept up to date, be true and not misleading, or that this site will always or ever be available for use. Apart from information regarding the market, the purchase department should also have forecasts anticipating market changes, especially in the context of the changing economic scene, and projections of agricultural and industrial production. In such a case, a few specialist buyers are each made responsible for developing and implementing procurement strategies for a specific portfolio of important procurement items required across a number of product-lines or projects. They also handle customer complaints in a professional style and represent the company if sued. Advantages of a Centralised Store : i. There is no single point of contact.
Selection of sources of supply: Most important function of a purchasing department or officer is the selection of the sources for the requisitioned items of stores. In summary, some organizations know the finance department should be considered a resource to assist managers in the running of the business. Uninspected materials are a burden on the economy of the organisation. Absolute dollar volume of procurements: If a firm spends a large amount of money for materials, the sheer magnitude of the expenditure means that top-flight procurement can usually produce significant profit. Where there are cash needs beyond the day to day working capital, the finance department is responsible for advising and sourcing longer term financing. This can be challenging for a small business that may purchase in lesser quantities than a larger vendor and which thus may not receive the same type of bulk discounts.
What do I do now? The department is a cost optimizer, always looking for ways to secure the best deal from suppliers. Many individuals, even some who work for these companies, are unaware of what the purchasing department does, why it exists or what purposes it serves. Types of materials procured: Perhaps even more important than the preceding considerations is the amount of control procurement personnel actually have over materials availability, costs and services. Bidding For items needed in bulk, or specialist items, purchasing departments often use competitive bidding to chose a supplier. Gargoyle rain scupper pictured at link below:.