Definition of purchasing, Importance of purchasing, Objectives of purchasing, Purchase organization, Purchasing cycle

1. PURCHASE
MANAGEMENT Unit 6
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 1

2. PURCHASE MANAGEMENT
One of the most important activities of Materials Management is
Purchasing.
Purchasing ensures the following:
• RIGHT MATERIALS are purchased, at
• RIGHT PRICE, from
• RIGHT SUPPLIERS, at
• RIGHT TIME, & delivered to the
• RIGHT PLACE.
The Purchasing Department is the interface between the Supplier
of Materials and the Production Function.
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 2

3. OBJECTIVES
To buy competitively
 To buy wisely
 To keep inventory investment and inventory
losses at a practical minimum
 To develop effective and reliable sources of
supply.
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 3

4. OBJECTIVES
To develop good relationships with the supplier community
and good continuing relationships with active suppliers.
 To achieve maximum integration with other departments of
the firm.
To handle the purchasing and supply management function
in professional, cost-effective manner.
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 4

5. PURCHASING CYCLE
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 5

6. UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 6

7. PURCHASE
ORGANIZATION
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 7

8. PURCHASE ORGANIZATION
Definition
The Purchase organization is an
organizational unit within logistics.
Almost all business transactions related to
procurement are carried out in a
purchasing organization.
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 8

9. MANAGING
DIRECTOR
DIRECTOR
HRM
DIRECTOR
FINANCE
DIRECTOR
MATERIALS
DIRECTOR
PRODUCTION
DIRECTOR
MARKETING
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 9

10. DIRECTORMATERIALS
PURCHASE EXECUTIVE
TRANSPORT EXECUTIVE
STORES EXECUTIVE
MATERIAL PLANNING AND CONTROL EXECUTIVE
VENDOR DEVELOPMENT EXECUTIVE
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 10

11. IMPORTANCE OF PURCHASING
Purchasing function provides materials to the factory
A one percent saving in materials cost is equivalent to a 10
percent increase in turnover.
Purchasing manager is the custodian of firm's purse as they
spends more than 50% of company's earnings on purchases.
Purchasing can contribute to import substitution and save
foreign exchange.
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 11

12. Purchasing is the main factor in timely
execution of industrial projects.
Material management organizations that exist
now have evolved out of purchasing
departments
UKA TARSADIA UNIVERSITY PREPARED BY DIVYA PAULOSE 12