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How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
How to improve the effectiveness of purchase function - Beginners Guide
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How to improve the effectiveness of purchase function - Beginners Guide

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This ebook is aimed at helping small and medium businesses in their Purchase Management. The module starts with an introduction to the function, Roles and Responsibilities of executives in the …

This ebook is aimed at helping small and medium businesses in their Purchase Management. The module starts with an introduction to the function, Roles and Responsibilities of executives in the function, Key tools and methodologies, covering ABC Analysis, Various Ordering Techniques like Re-Order Level & Two Bin System and various templates for MIS analysis. Please visit http://www.businessense.in/app/how_to_improve_the_effectiveness_of_Purchase_Function.php to download this document.

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  • 1. A Business Sense Publicationwww.businessense.inHow toImprove the Effectiveness ofYour Purchase FunctionA Step-by-Step Approach
  • 2. Is this book right for me?Not quite sure if this ebook would be useful for you?If you belong to any of the category of people mentioned below, then thisebook is right for you!www.businessense.in 2HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONBusinessOwners /DirectorsPurchaseManagers /ExecutivesAnyoneinterestedin learningthe bestpracticesYou are the Promoter / Director, runninga manufacturing business and looking atways to improve your sourcing andinventory managementYou are employed as a Head of Sourcing/ Purchase Manager / Purchase Executivein a manufacturing companyYou are a fresh graduate / employee /new recruit in a manufacturingenvironment looking at improving yourknowledge on the best practicesAll the concepts in this ebook are practical and easy to implement. werequest you to implement them in the workplace and share yoursuccess stories with us.Share this ebook!
  • 3. What are our businesses?www.businessense.in 3HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTION1Business Sense: Web Application to help Small andmedium business owners take better businessdecisionsThis application would provide them MIS reports and daily updates fromtheir business anytime and anywhere. This enhances the decision makingabilities and provides more control and visibility over the businessE.g. Picture of the MIS charts shown by Business Sense:Contact Us Login Sign UpShare this ebook!
  • 4. www.businessense.in 4HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTION2Hash Management Services LLP : ManagementConsulting services to Small and Medium ScaleEnterprises (SMEs) in improving their OperationalEfficienciesConsulting engagements focusing on improving the operations throughLean Manufacturing Implementation covering 5S, SMED, Kaizen and othertools, Supply Chain Management and Business Process Re-Engineering.We promise to double the productivity in less than 33 days of our effort*Testimonial:"Now we are able to make about 12 to 16 dryers a day in the cell where wewere making about 7 to 8 a day.“- Industrial Refrigeration Systems Manufacturer based in South IndiaWhat are our businesses?Contact UsAuto Ancillaries, Steel, Castings and Forgings, Pumps, Leather andFootwear, Fabrication, Plastics, Electrical and Electronic components, HeavyEngineering are some of the sectors we have worked on.Share this ebook!
  • 5. What are the reasons behind publishing this ebook?www.businessense.in 5HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTION1. Our initiative to empower the professionals and students in performingmore efficiently and effectively in the organization2. This publication is aimed at bridging the gap between the institutionsand the industry by providing the fundamentals of manufacturingmanagement which are not offered by any of ourinstitutions/curriculum3. In addition, this gives us immense satisfaction that we are givingsomething back to the ecosystem we are working in and are able tochallenge the traditional way of thinking and practicesShare this ebook!
  • 6. www.businessense.in 6HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONContents1. Introduction2. Material Classification Techniques3. Ordering Techniques4. Vendor Management5. MIS reports and Analysis Points6. Excel Templates
  • 7. www.businessense.in 7HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTION1. IntroductionLet’s ask this question to ourselves, “How effective is our purchasingfunction ?”. To determine whether your purchasing function is effective,you would require at least the following:1. Inventory Turnover2. No of stock-outs in a month / period3. No of quality issues faced in the incoming materials4. No of pending purchase orders at any point of timeIn many SMEs, we found large opportunities of inventory optimization(increasing the inventory turnover) and reducing the stock outs.The key reasons for this situation is the purchase team is not aware of thebest practices in the industry. In India, there is a huge gap between theindustry expectations and institutions output. Only a few employees aretrained in managing the Purchase function properly.This ebook aims at bridging this gap and provide the basic knowledge ofmanaging the Purchase Function.Share this ebook!
  • 8. www.businessense.in 8HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTION1. Introduction• Purchasing refers to a business or organization attempting foracquiring goods or services to accomplish the goals of theenterprise• Purchasing role in any organization is considered to be important asit handle raw materials & Sub-assemblies which have significant costimpact on material manufactured.• Purchasing is key element of Supply chain management of anyorganization more ever in recent times as sourcing are increasinglydone from many countries. Companies with robust purchasingdepartment and experts give better business results than others.CompanyPurchaseFunctionSupplier /VendorShare this ebook!
  • 9. www.businessense.in 9HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONOrganization Structure• This is a standard organization structure for Purchase Function• Purchase Manager reports to the CEO of the company• There would be a few Purchase Executives / Assistants reporting tothe Purchase Manager• Each Purchase executive would typically focus on a single rawmaterial category*We have explained a typical functional hierarchy. It may vary accordingto each organizationCEOPurchaseManagerPurchaseExecutive /AssistantPurchaseExecutive /AssistantPurchaseExecutive /AssistantShare this ebook!
  • 10. www.businessense.in 10HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONJob Responsibilities of a PurchaseManager• Acquire quality goods and services in a professional, timely and costeffective manner• Help develop and maintain a supplier/vendor community capable ofsupporting the organization’s needs with emphasis on superiorservice quality and cost effectiveness• Creation / Preparation of the Management Information Systems (MIS)that enable better decision making processes for the present and thefuture, and present it to the Senior ManagementShare this ebook!
  • 11. www.businessense.in 11HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONJob Responsibilities of a PurchaseExecutive• Classification of all the materials (including packing materials) as A, Band C Class items (methodology described later in the presentation) –to be done jointly with Stores function• Tracking of the lead time of all A & B Class items and make necessarychanges in the purchase process• Maintaining Nil Stock-Out situation all times• Scheduled Purchase for all regular/fast moving A Class items• Re-Order level based ordering for all A&B Class items• Two Bin System / Min-Max for all C Class items• All Purchases through formal PO only – no telephone based/othermeans of ordering• Updation of records daily including Pending Order StatusShare this ebook!
  • 12. www.businessense.in 12HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONThings-to-do in Purchase Function• Material Ordering based on the category of items• Regular follow-ups with the suppliers to ensure that the quality andquantity specified in the PO are met consistently• Any item which does not meet the quality requirement specified bythe company should be sent back to the supplier for rework• This would have an impact on the Vendor Performance Report.Supplier with frequent quality problems would be taken action basedon the company’s vendor policy• Coordinate with user departments for strengthening the supply chain– by providing necessary technical support to the suppliers. (manycompanies now provide financial assistance also for suppliers in caseof expansion/purchase of machinery, etc…)• Tracking Monthly Purchase Status and Inventory analyses• Follow-up on the Pending POs• All POs would be raised through ERP/mails. No telephonicordering/through other means which cannot be recorded, viewedand analyzedShare this ebook!
  • 13. www.businessense.in 13HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONProcess Flow – Activity 1• Stores Assistant/Executive sends a Purchase Indent (PI) to thePurchase Executive depending on the status of the material availablein the stores. The quantity is based on the Production Planning /requirements discussed with the other functions. Pending Orders,Items in transit etc. Each PI should have a unique no which would bementioned in the PO laterShare this ebook!
  • 14. www.businessense.in 14HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONProcess Flow – Activity 2• Purchase Executive then collects the Purchase Indents and creates aPurchase Orders (PO) and sends them to Purchase Manager forapproval. The POs’ can be supplier-wise / item-wise. Each PO shouldhave a unique PO number which should be mentioned in the PO,tracking sheet/systems, should be mentioned by the supplier whilesending the Invoice back to the companyShare this ebook!
  • 15. www.businessense.in 15HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONProcess Flow – Activity 3• Purchase Manager approves the POs’ within 1 day ( can be fixed bythe senior management) and send back to the Purchase ExecutiveShare this ebook!
  • 16. www.businessense.in 16HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONProcess Flow – Activity 4• Approved POs’ should be sent to the Suppliers on the same day (hard copy / email)• Once the POs’ are sent, the suppliers should be followed-up for thedeliveries. Lead time based tracking should be done and once thelead time is crossed it should be informed to the Purchase ManagerShare this ebook!
  • 17. www.businessense.in 17HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONProcess Flow – Activity 5• Supplier sends the materials to the company with the Invoice andDelivery Challan (DC)• Once the materials are received, the Stores Assistant / Executivechecks for the quality and quantity and prepares a Goods ReceiptNote (GRN) and updates the stock on the same dayShare this ebook!
  • 18. www.businessense.in 18HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONSnapshot of Purchase Function• Please note these only the basic processes in the Purchase Function.• Any emergency purchases / part shipments/ Quality issues / changesfrom the above mentioned processes are not covered in thispresentation.• Those would be discussed with the Senior Management andnecessary actions would be taken.StoresAssistantPurchaseExecutivePurchaseManagerSuppliersShipmentsWarehousePurchaseIndentPurchaseOrderFor ApprovalApprovedPurchaseOrderPurchaseOrderSent to SuppliersInvoice,Delivery ChallanGoods Receipt Note- Stores AssistantPurchase ProcessShare this ebook!
  • 19. www.businessense.in 19HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONContents1. Introduction2. Material Classification Techniques3. Ordering Techniques4. Vendor Management5. MIS reports and Analysis Points6. Excel Templates
  • 20. www.businessense.in 20HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONConcept / Thumb Rule: Pareto PrinciplePareto Principle – Vital Few and Trivial Many!Pareto Analysis / 80-20 rule• 20% of the items would constitute 80% of the valueFew other examples:• 20% of the causes results in 80% of the defects• 20% of the population controls 80% of the wealth20%80%80%20%Items ValueMismanagement inthese items would havesignificant impact onthe business1Share this ebook!
  • 21. www.businessense.in 21HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONClassification of the items into A, B and CcategoriesUse Pareto Principle to find out the important items inyour purchase listWhile analyzing the raw materials it would be clear that the top 20% ofthe items would constitute about 80% of the purchase value. Next30~40% items would constitute about 15% of the purchase value.Remaining 50% of the items constitute 5% of the purchase value.Few Items = Moreconsumption in valueMore Items = Lowconsumption in valueA CategoryB CategoryC CategoryFocus on A classitems to reduceyour inventoryShare this ebook!
  • 22. www.businessense.in 22HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONHow do you arrive at the consumptionvalue ?Multiply the price of the product and the totalconsumption for the month to know the consumptionvalueOnce you calculated the total consumption value of all items, sort themin descending order to find out the A, B and C category items. Top 20%of the items would be contributing to a total of 80% or more of theconsumption value. Next 30% items would contribute to the remaining15% of value and the last 50% of items contribute to the bottom 5% ofthe total value.This is the methodology of calculating A, B and C Categories.Share this ebook!
  • 23. www.businessense.in 23HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONHow to manage seasonality ?Some industries are seasonal and their variation in salesis high that production and purchase have to bemodified accordingly. E.g. Air Conditioners, Waterheaters, etc…In such cases, ABC classification has to be done separately for eachseason. If the product line is same as the previous year, you can use theconsumption trend of the previous year’s similar time period for analysis.This ebook do not cover the detailed calculations followed for theseasonality analysis. However,, contact us to help you understand thisbetter.Share this ebook!
  • 24. www.businessense.in 24HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONContents1. Introduction2. Material Classification Techniques3. Ordering Techniques4. Vendor Management5. MIS reports and Analysis Points6. Excel Templates
  • 25. www.businessense.in 25HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONHow to order based on the categories?Each category of items have to be ordered in a differentmanner!In A category items, there would be some items whose consumptionremain constant (on an average) through out the season. These itemscan be ordered in schedules. For items whose consumption varies in theseason depending on the orders, a Re-order level should be followed.For C category items, Two bin system / Minmax model should befollowedCategory Characteristics Ordering Techniques ReasonAVery High Value. Needto monitorcontinuouslyScheduled Shipments /Standard Order Quantity(SOQ)For items whoseconsumption isregular through-out the seasonRe-Order levelFor items whoseconsumption donot follow apatternBModerate Value –Moderate Impact onthe Inventory HoldingRe-Order levelOrder based on theRe-Order levelCLow Value – No majorimpact on theInventory HoldingCostMinMax / Two Bin SystemDo not focus moreon the C CategoryitemsShare this ebook!
  • 26. www.businessense.in 26HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONScheduled Shipments – A Category ItemsFew items in the A category whose consumption doesnot vary across months can be ordered with a singlepurchase order asking the supplier to deliver the items asper the schedule the company gives the supplier.Please refer the table below: Average consumption of this item is around1200 kgs per month. This item can be ordered with a single PO to thesupplier for the entire season. Every week the company requires 300Kgs(4 X 300 = 1200). The supplier can send the items every week (300kgs).Payments can be made to the supplier month-wise.Quantity in Kgs Week 1 Week 2 Week 3 Week 4October 300 300 300 300November 300 300 300 300December 300 300 300 300January 300 300 300 300February 300 300 300 300March 300 300 300 300Share this ebook!
  • 27. www.businessense.in 27HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONRe-Order Level – A& B Category ItemsThis method can be followed for most of the A and Bcategory items. Lead time of all these items should beknown with a fair degree of accuracy. Safety stock (SS) tobe determined (25% of the lead time X dailyconsumption- can be taken initially).MaterialArrivalMaterialArrivalMaterialArrivalSafety Stock – 90 kgsLeadtimeconsumption-360kgsAverageStockholdingRe-OrderPointDay1 Day10Averge Monthly consumption in kgs - A 900Per day consumption in kgs - B=A/25 36Lead time in days - C 10Leadtime Quantity in kgs - D=C*B 360Safety Stock in days - E=C*25% 2.5Safety Stock Quantity in kgs - F=E*B 90Re-Order Level in kgs - G=D+F 450Re-Order Quantity - D 360Share this ebook!
  • 28. www.businessense.in 28HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONRe-Order Level – A& B Category ItemsExplanation:On Day 1, the company has 360+90=450 kgs of stock. Purchase Orderfor 360 kgs should be placed now. At the end of 10th day, the stockremaining will be 90Kgs. On that day, 360kgs arrive from the supplieragainst the purchase order. In case of 1~2 days delays, the safety stockwould be consumed. This would be adjusted in the subsequent purchaseorders.Sometimes, the Re-order quantity can be set as twice the lead timeconsumption (720kgs, in this case).Re-Order Level (ROL) = 360+90 = 450 kgRe-Order Quantity =720 kgs.i.e. Every time the stock reaches 450 kgs, Purchase Order to be raised for720 kgs.Share this ebook!
  • 29. www.businessense.in 29HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONTwo Bin System – C Category ItemsExplanation:This system is similar to the Re-Order level system except that it followssimple calculations. A minimum level is set for each of the items coveringthe lead time of the item and the safety stock. A maximum level is setwhich is 3 times~4 times the lead time consumption.FULL300kgsFULL300kgsEMPTY0 kgFULL300kgsFULL300kgsFULL300kgsBoth the bins are fullDo not order. Wait till one binbecomes emptyOne Bin is empty. Order 600 kgs.(By the time the materials arrivethe second bin also nears emptylevel)Both the bins are fullDo not order. Wait till one binbecomes emptyStage 1Stage 2Stage 3The idea is notto focus toomuch on theseC categoryitemsShare this ebook!
  • 30. www.businessense.in 30HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONBenefits of these ordering techniquesAll the three methods of ordering the materials requireclose coordination with the Stores.Effective use of these three methods would bring downthe inventory by around 25~30% of the current levels(from our past experience in various firms acrossindustries)BeforeImplementationAfterImplementation25~30%reduction ininventoryShare this ebook!
  • 31. www.businessense.in 31HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONContents1. Introduction2. Material Classification Techniques3. Ordering Techniques4. Vendor Management5. MIS reports and Analysis Points6. Excel Templates
  • 32. www.businessense.in 32HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONVendor ManagementThis ebook would cover only a few points in VendorManagement. However, we could help you in improvingyour Vendor Management System. Contact us for moredetails.Purchase Manager should create and manage at least 2vendors for each itemEach ItemSupplier 1 Supplier 2Share this ebook!
  • 33. www.businessense.in 33HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONVendor Evaluation Report1. Any addition/modification of the vendor should becarried out through proper Vendor Evaluation Report.2. Following are the parameters that have to beconsidered in a Vendor Evaluation ReportS.No Parameters Weightage in %1 Quality 302 Adherence to Delivery 203 Price 154 Average Lead time 155 Credit Period 106 Support during emergencies 10Please note that the weightages are based on general managementprinciples. They can be modified according to theindustry/company’s preferences.Share this ebook!
  • 34. www.businessense.in 34HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONVendor Master List1. A Vendor Master Sheet should be maintained in thepurchase function.2. Following are the details to be recorded:S.No Details to be recorded1 Item Code2 Item Description3 Vendor Code4 Vendor Name5 Address6 Contact Person7 Phone No8 Email Id9 Vendor rating (based on the weightages)Share this ebook!
  • 35. www.businessense.in 35HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONContents1. Introduction2. Material Classification Techniques3. Ordering Techniques4. Vendor Management5. MIS reports and Analysis Points6. Excel Templates
  • 36. www.businessense.in 36HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONMIS reports and Analysis Points1. The list below explains the various parameters totrack, the reports to generate, the frequency and theperson-in-charge in the Purchase function:Report #1Report Name Monthly Purchase reportNature of Report Item-wise - descending in value termsFrequency MonthlyWho prepares it Purchase ExecutiveAnalysis PointsIs there a significant increase in thepurchase value compared to the lastmonthIf yes, what are the major itemscontributing to this increaseShare this ebook!
  • 37. www.businessense.in 37HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONMIS reports and Analysis PointsReport #2Report Name Pending Order ReportNature of Report Item-wise / Category-wiseFrequency Updated DailyWho prepares it Purchase ExecutiveAnalysis PointsIs there a significant increase in thepurchase value compared to the lastmonthIf yes, what are the major itemscontributing to this increaseShare this ebook!
  • 38. www.businessense.in 38HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONMIS reports and Analysis PointsReport #3Report Name Stock-Out reportNature of Report Item-wise / Category-wiseFrequency MonthlyWho prepares itPurchase Executive + ProductionSupervisorAnalysis PointsWhat is the trend of number of stock-outs? What are the items contributingto the stock outs? Are these itemsfrequently figuring in this list? How toavoid this in the future?How many times the lead time hasexceeded ? By how many days? Is thishappening for the same item? Samesupplier? Is this time to update the leadtimes ?Share this ebook!
  • 39. www.businessense.in 39HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONMIS reports and Analysis PointsReport #4Report Name Incoming Quality ReportNature of ReportItem-wise / trend chart comparing thelast 3 monthsFrequency MonthlyWho prepares it Purchase ExecutiveAnalysis PointsWhat is the Pareto of the quality issues inthe incoming materials ? What is thetrend ? Is it for the same item / fromsame supplier? What is the time taken bythe supplier to rectify/send newmaterials ? How to avoid this in thefuture ?Share this ebook!
  • 40. www.businessense.in 40HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONMIS reports and Analysis PointsReport #5Report Name Price Change ReportNature of Report Item-wise with explanationFrequency MonthlyWho prepares it Purchase ManagerAnalysis PointsHow many of the price revisionshappened for A & B category items ?what is the impact of the price change inour costing? How to minimize the effect?Is the relevant departments(Accounts/Bill Passing) aware of the pricechange ?Share this ebook!
  • 41. www.businessense.in 41HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONContents1. Introduction2. Material Classification Techniques3. Ordering Techniques4. Vendor Management5. MIS reports and Analysis Points6. Excel Templates
  • 42. www.businessense.in 42HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONExcel TemplatesAll the reports and documents you require for managing thePurchase Function are available on our Scribd Store.The links are given below:Share this ebook!S.No Title of the Template1 Job Description of Purchase Team2 Enquiry Letter3 Purchase Order Template4 Revised Purchase Order Template5 ABC Classification6 Incoming Quality Report7 Rejection Note Template8 Monthly Purchase Report9 Pending Purchase Orders Report10 Price Change Report11 Capital Purchase Checklist12 Quotation Analysis Template13 Stock-Out Report Template14 Vendor Assessment Form15 Vendor Master List Template16 Vendor Rating Template
  • 43. www.businessense.in 43HOW TO IMPROVE THE EFFECTIVENESS OF THE PURCHASE FUNCTIONConclusionTraining theemployeesContinuousImprovementFollowing thebest practicesFollowing the practices, Training the employees andcontinuous improvement of the activities mentioned inthis ebook would definitely help your PurchaseFunction perform effectively!Share this ebook!Send us your feedback. Wewould love to hear from you!
  • 44. A Business Sense Publicationwww.businessense.inHow toImprove the Effectiveness ofYour Purchase FunctionA Step-by-Step Approach

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