Table of Contents
Objectives and Functions of Industrial Purchasing Department
Some of the major objectives and functions of industrial purchasing department are as follows:
1. Market Information:
In view of the fast changes in market conditions, the purchase department must keep up-to-date information regarding the price movements, technological factors, delivery schedule, reliability of supplies and the various terms at which goods can be supplied.
The purchase department can take advantage of the best possible opportunities only if it has an efficient system of marketing information. This is particularly true in case of industries like vanaspati industry, where the major cost is the cost of oils.
Since the prices of oils are subject to violent fluctuations, timely and efficient purchasing has a great impact on profitability. Apart from information regarding the market, the purchase department should also have forecasts anticipating market changes, especially in the context of the changing economic scene, and projections of agricultural and industrial production.
2. Purchasing Procedure:
The procedure can be effectively carried with the help of properly managed purchase department in an organisation.
A systematic purchase procedure is explained as under:
(a) Determination of Purchase Budget.
(b) Receiving Purchase Requisition slips.
(c) Tapping the sources of supply.
(d) Placing the order.
(e) Receipt of Materials.
(f) Checking the Invoices.
3. Determination and description of quality:
There are a number of problems in deciding about best buy and often the purchase manager needs considerable technical knowledge before he can purchase goods of the best quality.
4. Control of quality and quantity:
On receipt of goods, the purchase department has to ensure that goods are of the same quality and quantity as were ordered. This may be done through inspection and laboratory tests.
5. Selecting adequate sources of supply:
The purchase manager on the basis of his previous experience, marketing information and market survey has to maintain a list of the suppliers who could supply him materials of the requisite quality, quantity and at the right time.
6. Forward buying and speculation:
The purchase managers of many companies are required to operate in the forward markets. In view of the large scale fluctuations in the prices, they have to keep in touch with the market trends.
The historical behaviour of prices is required to be analysed in great depth so that they can protect the company from large scale losses on account of price fluctuations.
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