Purchase Department

8/6/2019 Purchase Department

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Air or tank compresor bore well compressor

Company historySuguna pneumatics pvt ltd., was established in the year 1987 it started as a small unit with a

work force of ten members initially they undertake small job works for the government

department in the year 1989, the company has proposed to manufacture bore well compressor

which plays a vital role in agriculture sector during 1991 the unit got isi certificate for its high hp

compressor. After successful running of the industry the unit has achieved a remarkable

turnover, compared to its previous year sale in the same year they manufactured air

compressor which is also one of the major Inputs in the industry

In the year 1995 the company introduced mono block compressors which are a domestic

model with changes of existing bore well compressor. The mono block compressor sale rapidly

shot up to a remarkable extent in 1997. The unit has bloomed into a private limited in 1997.

MR.C.B.srinivasan and MR.V.lakshmi narayanswamy are the directors of the company, in

the same year the company established its branches in the major cities of andrapredesh.


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The company has a wvide dealer network and tremendous marketing strength all over the

country the company is having a dedicated and sincere workforce of 50 members

Profile of the company

Suguna pneumatics (p) ltd is an organization which is developing fact as every year pass on .It is

located at

No:87,sidco industries estate,

Sidco, pollachi main road,

Cbe_21

It has many branches all over India this company is one of the group suguna industries this

company supplies its products to other popular companies like FORD,CHEMICAL

PLANTATION,LMW,LEY LAND etc

The company manufactures the following products

Bore well compressors

Air compressors

Piston pumps

car washers (high) pressure

Bore well (bare mounted)

Some time the company purchases raw material also from outside also for the production

of nipple, brass items, stud, indicator air filter and also bolts and nuts etc...

This group also has some other outstations at cochin, banglore, pune, hydrabad, Chennai,

Calicut etcThe activities of the concern are

Purchase

Sales

Bank transaction

Cash transaction

Division of the company

Foundry division

Motor division

Service division

Compressor division

Memorandum and articles of association

All companies must be registered under the companies act and must register in the

register office. The memorandum and articles of association contains the following

Incorporation certificate

Share capital


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Main object clause

Details of equity shares

Articles of association

Transmission of shares

Calls and issue of certificates

Details regarding the director of the company General meeting

Accounts audit

Dividend

Seal

Widening up

The company must issue a share certificate which contains the detail regarding the equity share

must have a common seal and the directors signature

Structure of organisation

Purchase

Department

Production

Department

Account

Department

Sales

Department

Stores

Machine shop

Assembling

Painting


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Purchase department

Purchasing is the function which is responsible for getting the right material at the right

place at the right time in the right quantity at the right price.

This includes the selection of vendors, deciding the price and negating for quantity and

delivery.

Purchase procedure

Complete satisfaction of the material required.

Quantity of the material to be purchased.

Date by which the material is required.

Place at which the material should be delivered.

Budget provision.

Sample is required.

Inspection criteria.

Warranty required.

Special instruction about source.

Special instruction about source supply.

Tender enquiry

A tender or a quotation is a written offer to a work or to provide material at a given price

within a prescribed period and under specific conditions.

Types of tender

Single tender.

Limited tender.

Open tender.

Single tenderWhen the quality is of extreme importance, only a reliable firm will be asked to

supply the material at a rate as decided by the material negotiation.

Limited tender


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When the material is required from which are registered by the organization will

invite to tender their rates and the most economy offer will be consider for placing the

order.

Open tender

This tender system is adopted when quantity is to be purchased involve largeamount it is also known as unlimited tender.

Placing of orders on suppliers

Purchase order must contain the following

Complete description of the materials requirement.

Item wise quantity unit, rates and values.

Date of delivery. Terms of delivery.

Prices provisions of tax and duties..

Clause for liquidated damages.

Payment terms any paying authority.

Warranty.

Consignee address.

Place of inspection.

General purchase conditions.

Follow-up

Supplying firms should be contracted constantly so as to ensure timely supply of material

.if the delivery date is expired, the firm should be asked to indicate the expected date of supply

of material and extension might be grouped subject to such penalties as may be specified in the

contract the following functions are to be considered .

To secure an acceptance of order from the seller.

To secure a commitment of delivery schedules.

To ease various activities from placement of orders till final payment offer receipt of

satisfactory.

Receipt and inspection of materials

All incoming material on receipt is physically checked, counted and then referred to

inspection section or quality control department to ensure whether it makes the purchase

requirement.


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Record keeping

Record of open orders concerning the status of outstanding order.

Record of used order provides the historical record of all complete purchases.

Purchase log provides an outgoing record.

Commodity record(materials).

Supplier records(about supplier details).

Contract record(about contract document).

Methods and conditions of purchase

In the company 95% purchase is credit purchase. The company followed according to the

conditions when purchasing from suppliers.

Technical terms

Supplying should be based on the size, thickness and mentioned in the drawing given

by the company.

Sampling techniques are used for selecting the materials.

Accounting terms

Normally 30 days of credit are needed by the company and settlement is made during

the day.

If the supplier sends the material through bank and the payment also send through

bank. The payment is made by cheque or demand draft.

(TNGST) and (CST) number are must in the form.


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Sales department

Sales are the backbone of a company without sales department the company cannot be able to

run efficiently sugna industry have a well established sales department.

They are selling the quality product at competitive rates, only then they can with stand intheir field. Companies are selling product by way of cash and credit sales.

Credit sales

As for as credit sales are concern the management has to fix some names and condition for

sale of the product there may be a short credit to their dealers like 10 days, 20 days and so on.

Discount

The suguna industry allow on their sales by cash of quantity discount,cash discount and so

on

Trade discount

It is generally allowed to their dealers and distributors. They enjoy their discount at the very

little portion of the product price where as dealers are empowered to get more commission

than distributor. In the recent years dealer have to sell their product to the customer even

taller than MRP rate. When quantum of sales is high the margin of product is also high.

Cash discount

It is allowed as soon as they are ready to pay cash immeditly while purchasing the goods.

Cash discount is very useful to dealer as well as it increase the sale of the company.

Debit collection policy

Normally the collection of dues from the dealer is highly risk job. In some cases when the

sales people are deputed from collection of dues they will be asking some questions of which is

not related to the service part of the product. In order to curtail this kind of purchase the

management sells their product through bank.

In some cases the management has to look their system. In this type where the company is

engaged in a computer version the system will not allow to raise the invoice those who are

having out standingmore than the stipulated period.

But in some cases the management issues debit note by way of interest to the dealer from

the date of invoice. The company may have forego the debit particularly or fully even sending

reminder to the dealer. In this cases dues are accounted as bad debts.


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Special discounts

During the off season festival season the company may offer special discount to their

product . in some cases whenever the company has to capturethier market by the way of

applying tender. This kind of special discount at the rate of 16%.

Preparation of invoice

When the order received from the company it has to issiue order acknowledgement.

Where in the mode of desdespatch,mode of payment should be specifically mention in the

invoice to make the delivery.

Profit sharing

The bonus sharing plan is in addition to the regular remuneration. Thre profit or loss depend

upon the policies of the firm. Making reserves,increasing case of depreciation under valuation

of stock can reduce the amount of divisible profit.

Market research

It means study of the market which includes forecasting,intelligence and statistics it is

important step for sales.

Advertisement

Advertisement is publication of information method regarding product put uo for sale ans a

method for bringing the product in to touch with customer .


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Production department

Another important department is production department without production no sales will

happen and also purchase is not necessary. So production takes an important part in the

company the factory manager and supervisor is the head of the department.

Factory manager duties

Gives production planning according to requirement of sales department.

To ensure the quality of the final product and quality of the raw material.

Supervisors duties

Supervising the product materials in every stage of production is his primary duty he

executes the plans of the factory manager and co-ordinates with various section are involved in

production department.

Production planning and control


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Input production policies output

Raw material operation product

Man inspection services

Machine storage

Power production

Plant planning

Facilities control

Functions of production planning and control

Planning

Routing

Scheduling

dispatching

The various activities involved in production department


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Production department

Store keeping

Inspection report

Machine shop section

Assembling section

Painting section

Dispatching section

1. Store keeping

In store keeping the purchase material are stored in it and issued at the time of

need to other section in the production department. A store keeper who maintains the

following books and cardex.


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Store receipt book

when raw material are received from the suppliers its particulars are noted in it.

Ceardex

Job order material issued and received is noted in it.

Indent memo

If any material internally sent to any section of production department are noted.

Register of component to machine shop

If any components sent to the machine shop is noted on the register.

2. Inspection report

In this section job order material are inspected two books are maintained.

Inspection report

Report of the order items remark of any are noted in the report.

Indent memo

Any material noted from this section to other are noted in it.

3. Machine shop section

In the machine shop section rough casting and forged steel items are machined

various operators of machine shop are

Machine operation

Key way milling Heat treatment operation

Surface grinding operation

Cylinder grinding operation

Here four books are maintained


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Stock maintaince book

Indent memo

Rejection report

Required materials

4. Main raw materials

Casting

Cylinder, cylinder head, fan pully , motor pully, trank case.

Forging

Connecting rod, web

Mild steal items

Trank shaft

Aluminum items

Central cooler, after cooler, piston

5. Assembling section

Materials received from machine shop and stores are assembled here three books

are maintained in this section

Job card

Indent memo

Issue requisition

6. Painting section

Preparations of motor (i.e.) assembling motor are painted in this section.

7. Dispatching section


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After painting the motors they are sent here motors are safely packed and

dispatched to the dealers

Methods of production

Job production Batch production

Continuous or mass production

Job production

Each job order is kept alone and is not likely to be repeated. This type of

production has a lot of flexibility of operation and hence general purpose machines are

required.

Batch production

This type of production is generally adopted in medium size enterprises

Batch production is bigger in scale than the job production while it is smaller than that

of mass production

In this type of production two or more products are manufactured

Mass production

In this method of job production factory works only when orders are required. When

orders are not received for some time , then for that period work may made to a stand still. It is

only for large scale industries.

Accounting department

In small units the necessity of preparing accounts and communicating information may not

arise as the owner is in close contact with all the happenings in the business but in the big unit


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the necessity of preparing and computing accounting is greatly felt. as the owners and top

management are not in direct contact with all the activities of the business.

Here the company maintains software for preparing accounts its accounts are fully

computerized .to maintain the secrecy the company has a secret password .the director alone

knows the entire password

Through the computerized accounts the company maintains the following

Bank books

Cash books

Purchase register

Sales register

Journal register

Debit and credit note register

Party ledger

General ledger

1. Bank books

Bank books contain two sides which are of receipt and payment side. All receipts

are received in the form of cheques and demand drafts are entered in the receipt side

payments through cheques are mentioned in the payment side.

2. Cash books

Cash books is a record of all receipts and payment if cash. The objective of cash book

is to keep a daily record of transaction relating to receipts and payments of cash. The number

of transaction relating to cash is usually large because most of the business dealings are mainly

involving in cash transactions.

3. Purchase register

The book is kept to record all TNGST and CST purchases for resale to be eligible for

taxes are recorded in purchase book.

4. Sales register


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Sales book is also known as day book. It is used to record all TNGST and CST of sales

of gods in which firm normally deals.

5. Journal register

A journal register mostly contains the journal entries as expenses. Purchase andsales are also entered in journal register.

6. Debit and credit note

Debiting and crediting items are separately listed in its own note.

7. Party ledger

Two types of ledger are available they are sundry suppliers or creditors ledger and

sundry customers or debtors ledger.

8. General ledger

A general ledger is maintained for passing the general ledger other than the parties

ledger etc...

Sources of finance

Since the company is a private limited concern the major source of finance is share

holders. Investment is in the form of equity shares and deposits. Every year the company isgenerating profit. So it is also funded by general source of finance (I.e.) reserves and surplus.

The company is also availing working capital facility from the state bank of India. The company

also gets over draft facility from the bank.

Marketing department


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Objective of marketing

To analiyse the statistical position of the company

To furnish functions and various activities that to be carried on by the marketing

department

To summarise the function of sales department

To study the function of the process of planning department

To increase the profit motive by earning more profit

Functions of marketing

Marketing functions

Selling function transporatation financing

Assembling storage risk bearing

standardization

market information

promotion

Function of exchangeFunction of physical

supply

Facilitating functions


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marketing structure

Marketing of product is very different activity as compared to production department even

though this department plays a vital role on every industry the persons may assist this as a

regional sales manager, area sales manager, sales officer and finally sales executive.

Role of marketing manager

He is the person who controls and motivates the sales of the product he may

assist his subordinates by way of getting orders from dealers, outlet and other areas. In

potential areas he can also control the credit limit of the dealers with regard to dealers

performance both sales and collection.

MARKETING

MANAGERREGIONAL SALES

MANAGER

SALES EXECUTIVEAREA SALES MANAGER


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He is also in charge of government suppliers and institution supplies.

Survey report

Regarding technically qualified people they may be given opportunity to survey

the market condition of product after receiving the survey report, the management has tocomplement some projects to develop their products, which is suitable for prevailing market

conditions.

Stores department

Stores management


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It is responsible for receipt custody and issue of materials .stores can be

classified in to the following categories

Raw material

These are used in the marketing of products like raw cotton on textile mill thesestored according to the type of material.

Finished products

There are products which are ready for being transported to consumer for use

and are stored in package properly.

Spare parts

These are parts purchased from outside source and used in the assembly of

final products or for the repair of production equipment.

Stores ledger:

It is a detailed record of the receipt and issue of material with respect of quality, and

quantity and value of all the items kept in the store. It contains the name, description etc. It

records the receipts issued and balance on hand of cash and every article. At the time of

physical verification officers inspection and record his recommendations in the remarks

column.

QUALITY CONTROL DEPARTMENT

Control and Maintain the quality is now a days very essential keeping the particular

place in the market. So Quality Control is the backbone of every industry.

This department having a well experienced engineer of others normally Quality

Control department people can inspect that material structuring from raw material to finished

product.

There may be rejection in the stage of raw materials it has to go to the production

department.


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In the field of checking first they will inspect each and every raw material in a

random type.

The color code for each raw material had been maintained to determine their

quality.

Green-approved

Red color-Rejection

Green color- OK

Yellow color- Rework

The suppliers are to get their inspection report from their inspection report

from their department.

In order to raise a invoice against the company normally the suppliers are

raised, their bills only for the acceptance as quantity in number. They will take back or replacethe material, which was rejected by the company.

Measuring instrument in the quality control department

Pneumatic control device

Used for accuracy measure

Air plugage

Height vernier caliper

Rock harness tester

Bore dial gauge Screw gauge

Thread ring gauge

Thread plug gauge

PERSONNEL DEPARTMENT

Personnel department looks after the recruitment selection, development,

utilization and accommodation to human resources. The human resources organization consists

of all individuals activities regardless of their role.

Totally 5 staff members & 50 workers are working here.

Skilled workers-10


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Semi Skilled workers-10

Unskilled workers-30

Overall the workers get an average salary of Rs 7000 and staff member get

Rs 13000 per month bonus is also provided according to the performance of the company and

as per the Bonus act. The company is providing excellent working atmosphere and also provides

uniform and shoes to the workers. Also they guide extend the following facilities.

Provident fund

Employees state insurance

Leave wages

Gratuity

The relationship between the management and workers are very smooth and hence there are

no labours in this company.

Documents

Purchase Department