Purchasing Function
Purchasing Functions or Activities
The purchasing department in a big industrial concern has to perform the following functions in order to procure at right time, in the right quantity and at the right price:
1. Studying the market and sources of supply. Having decided to purchase a material, the purchasing agent studies the market and various sources of supply by inviting tenders or inquiries in a prescribed form from the pro-
spective suppliers with full details or by examining catalogues and samples received from time to time or by paying the visits to the prospective supplier’s place of work. After detailed study of market and supplier, the agent decides to select the sources of supply. The purchases departments should not only have the knowledge of the market or the sources of supply where such items are available but he should also have full details of the manufacturer.
The purchasing department must have full knowledge of the specification of materials requirement of the concern and the resources of supply of these requirements. The purchasing officer or agent must obtain the necessary information from personal knowledge, past records, catalogues,
buyers guide and guiding materials about the vendor and he should record all these information properly classified schedule of quotation and suitably indexed in a comparative statement called With the help of these records, the purchasing of ficer approves the supplies having regard to the reliability of the supplier in supplying the goods in the past, his price movement history, his delivery record and other service required such as technical service, attitude towards rejected
materials or scrap etc. Before finalising the deal, he should also consider the current and expected change in government import-export and industrial licensing policy and emergence of substitute etc.
2. Placing of order. Having approved the supplier,the next task is to place an order with the supplier so approved in the prescribed form which forms a contract between the company and the supplier to supply the materials in the desired quantity and quality at the stated price within a stipulated period.
3. Follow-up of purchases order. The purchase department must contact the supplier from time to time before
the date of requirement of the materials as ordered in order to get the assurance for the delivery of goods at the right time as its follow-up measure. It will facilitate the purchase department to arrange for the materials in case the supplier
fails to deliver the goods on due date duc to any unavoidable circumstances with him so that the production work will not suffer.
4. Verifications of invoices. On receiving the goods from the supplier, the purchase department will check the invoice presented by the supplier with the order placed by the company.
(a) To ensure that the quality and quantity of materials received is strictly according to the order. At this stage it can obtain the services of experts to ensure the quality of the goods.
(b) To examine the prices and the total amount of the invoice. If there is any change in the price, it should see whether it is approved in advance. If invoice is found correct, it should approve the invoice for payment.
(C) To secure the adjustment on claims for goods received and found not in accordance with the quality and quantity specifications or which are being damaged in transit
5. Other functions. Besides above noted activities,the purchase department has to perform the following other
functions;
1. Giving intimation to the department concemed if deliveries are not going to be made on due dates so that
necessary steps may be taken to maintain the flow of production
2. Interviewing the suppliers representatives who call on the purchasing agent.
