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PURCHASE SYSTEM




 PRESENTED BY:-
 PRIYANKA
CHAUDHRY(99)
 AVISHEK
KUMAR(121)
 NIDHI
SUYAL(88)
 SAMRANA
RAO(111)
 HEMANTA KR
Purchase System

Purchasing refers to a business or
organization attempting to acquire goods
or services to accomplish the goals of the
enterprise.

There are several organization that attempt
to set standards in the purchasing process,
processes can vary greatly between
organizations.
Purchasing cycle

Establish & Origin:-


communicate the •I.C section (P.I. Items)
need •Stores (consumables)
•PCD ( S.B Items)
•Maintenance (spares)
•Operating departments ( non-
STD)

Scrutiny of •Specs qty., dely. Date


indents •Authorised
•Routed through stores
•Action: Indent register.
C’sign indentor’s
copy.
•Grouping of indents
Identification •Identifying potential sources of supply
and selection of •Inviting quotes/ tenders
source •Comparative statement
•Price negotiation & finalisation of
terms

Preparation of Control :- P.O serial no.


- Duly acknowledged
purchase order - P.O Copy

Depends upon:-
Follow up •Criticality of item
•Urgency of need
Pre dely. shortage
•experience with supplier
•Alternative source
• Incoming receipt register
• Challan receipt given with a note
Receiving &
insepection “ subject to qty. verification &
inspection”
• Shortage/ report (discrepancy)
• GRN/ GRR/ GIN/ MIN
Storage & • GRIN/ RCIA

records

Control :-
GRIN ( duly stamped by inspection
along with qty. inspected, passed &
Invoicing & rejected with reasons)
Payment
BILL PASSING PROCEDUER

Supplier raises bill & Give to purchaser

Bill entry in purchase Register , passed for payment

A / C verifies for correctness & prepared cheque

Purchase department ( calls supplier )

Cheque handed over to supplier


LeaRNING CURVE
Learning Curve for Price
Negotiation :
 Developed by U.S aircraft industry.

 Identification of Learning factor:


 Trail & error method

 Applicable for “repetitive labour intensive jobs”.


 Relationship between productivity and experience.


 Also referred as %age curve.



LEARNING CURVE TABLE :
Varies with different programmes.

Can be developed by taking the ratio of the


average hours of the total programmes to the
average hours for the first half of the total units.

EXAMPLE:
 A special set of gears is being supplied to our
co. at Rs. 1150 each. The supplier cost break
up for this is
 Material Rs 550
 Labour Rs. 200
 Overheads Rs. 250
 Sub total Rs. 1000
 Profit @15% Rs. 150
 Total Price Rs.1150
 We have paid Rs. 1150 each for the 1st 5 gear
set and we want to buy 5 more. However the
supplier is now willing to make corrections for
a learning of 95%. What amount should we
pay for the 2nd lot of 5 gear set?
Some points to be
considered while
purchasing

Finding and approving of suppliers.




Purchasing best quality, quantity at least
total cost.


Ensuring the delivery of goods and
services at the right time.

Verification of invoice.

Organizing all discussions with suppliers.





Speculative buying.


Advising on prices.


Acting as a window-on-world.

JUST IN TIME
JIT inventory systems expose the hidden
causes of inventory keeping and are
therefore not a simple solution a company
can adopt.

Just-in-time inventory system is all about
having “the right material, at the right
time, at the right place, and in the exact
amount”, without the safety net of
inventory.

The JIT system has implications of which are
broad for the implementers
Vendor Rating :
Vendors are monitored and evaluated
periodically for their performance.

Objective:
To help the buyer in future source selection
To provide the buyer with information,
helpful in subsequent negotiations.
To provide the buyer with important
information which he can act upon for any
corrective measure.
Contd ….
Vendors can be rated on the basis of various
characteristics:
 1.Timely delivery
 2. Adherence to quality
 3. Price
 4. Other factors such as
 a. Meet emergency orders
 b. Supplying useful market
information
 c. Willingness to try out new
designs.
Methods :
1. Categorical plan
2. Weighted point plan

Categorical plan:
 - This is a subjective method.
 - Managers of concerned department
prepare a list of factor important from
their point of view/use.
 - Each of the major supplier is
evaluated against each evaluator’s list of
factors.

Contd …
Evaluation is done in terms of :

Good / Superb
Satisfactory / Favourable
Poor / Unfavorable

 Weighted point plan:
 The buyer decides on
 A. Factors important for the evaluation
 B. Weightages for each of the factor
 C. The vendors performance in respect of
each factor.
Contd ..
 No. of timely
deliveries
Index of delivery service =

-----------------------------------
 Total no of order
placed

 %age of good quality items


supplied
Index of Quality =

----------------------------------------------
 100

 Average price
Index of Price = ------------------------------
EXAMPLE:
S o n e p a t S u p p lie rs is 1 o f th e ve n d o rs.

* Ithas made 17 deliveries on time out of 20 orders


p la ce d o n th e m .

* Has given an average of 5 % rejects and

* Delivered items at the performance index of Rs . 110


w h e n th e a ve ra g e p rice p e rfo rm a n ce in d ex is R s. 1 0 0 .

Q . W h a t is th e o ve ra lle va lu a tio n / ra tin g fo r S o n e p a t


S u p p lie rs?
Factor Weight Performance Performance
evaluation
Delivery 40 17 out of 20 deliveries on 40 * (17/20) = 34
time

Quality 30 5% rejects 30* (100 - 5 )/ 100 =


28.5

Price 30 Rs.110 as against average 30 * (100/110) = 27


price performance index
of 100

100 Total 89.8

The overall evaluation of Sonepat Suppliers is 89.8.


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