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PURCHASE SYSTEM
PRESENTED BY:- PRIYANKA
CHAUDHRY(99) AVISHEK KUMAR(121) NIDHI SUYAL(88) SAMRANA RAO(111) HEMANTA KR BAID(68) PUSHKAR DEY(103)
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.
Establish & communicate the
need
Scrutiny of indents
Origin:-
• I.C section (P.I. Items)
• Stores (consumables)
• PCD ( S.B Items)
• Maintenance (spares)
• Operating departments ( non- STD)
• Specs qty., dely. Date
• Authorised
• Routed through stores
• Action: Indent register.
C’sign indentor’s
copy.
Identification and selection of
source
Preparation of purchase order
Follow up
Pre dely. shortage
• Grouping of indents
• Identifying potential sources of supply
• Inviting quotes/ tenders
• Comparative statement
• Price negotiation & finalisation of
terms
-
Depends upon:-
• Criticality of item
• Urgency of need
• experience with supplier
• Alternative source
Control :- P.O serial no. - Duly acknowledged P.O Copy
Receiving & insepection
Storage &
records
Invoicing & Payment
• Incoming receipt register
• Challan receipt given with a note
“ subject to qty. verification &
inspection”
• Shortage/ report (discrepancy)
• GRN/ GRR/ GIN/ MIN
• GRIN/ RCIA
Control :-
GRIN ( duly stamped by inspection along with qty. inspected, passed & rejected with reasons)
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. 200Overheads Rs. 250Sub total Rs. 1000Profit @15% Rs. 150Total Price Rs.1150We 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 TIMEJIT 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 ordersb. Supplying useful market
informationc. 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 onA. Factors important for the evaluationB. Weightages for each of the factorC. The vendors performance in respect of each
factor.
Contd.. No. of timely deliveriesIndex of delivery service = ----------------------------------- Total no of order placed
%age of good quality items supplied
Index of Quality = ---------------------------------------------- 100
Average priceIndex of Price = ------------------------------ Price at which supplied
EXAMPLE:
Sonepat Suppliers is 1 of the vendors.
* It has made 17 deliveries on time out of 20 orders placed on them.
* Has given an average of 5% rejects and
* Delivered items at the performance index of Rs. 110 when the average price performance index is Rs. 100.
Q. What is the overall evaluation / rating for Sonepat Suppliers?
Factor Weight Performance Performance evaluation
Delivery 40 17 out of 20 deliveries on time
40 * (17/20) = 34
Quality 30
5% rejects 30* (100 - 5 )/ 100 = 28.5
Price 30 Rs.110 as against average price performance index of 100
30 * (100/110) = 27.3
100 Total 89.8
The overall evaluation of Sonepat Suppliers is 89.8.
THANK YOU
YOUR QUERIES ARE WELCOME