OBEJECTIVES

To maxmize its contibution to company overall

perfomance . To get the best-suitable quality at minimum cost To pay reasonably low prices,negotating & executing all company commitments. To develop satisfacation sources of supply maintain goods relationship with them. To secure optimal supplier performance by seeing process improvements across boundries between partner.

 To locate new ,better materials & products. To keep inventory through the supply chain as row. To carry out program to continually reduce total cost

of purchases. To develop effectiveness control procedures To keep cost at the minimum compatible with optimal performance.

 Span of control, also known as span of management, refers

to the number of subordinates a supervisor can effectively manage the purchasing deparments or as responsiblities. that fall within their span of control.

Purchasing must have legimate authority to make decision

Span of control is estabilsed through senior management

policies and support.

TASK UNDER SPAN OF CONTROL OF THE PURCHASING DEPARTMENT

EVALUATE AND SELECT SUPPLIERS. Purpose of this process is to select a suitable supplier with the requirement of the company and satisfying the customers demand. The organization shall determine the criteria to evaluate the supplier's ability to supply goods. *Discounts,Reasonable price,Long-term supply agreement in order to obtain large discount,quality of goods,delivering on schedules,creditbilty,meeting customer requirements.
1.

2. REVIEW SPECIFICATION Purchasing personnel work hard to develop knowledge and expertise about wide variety of materials but also must make this knowledge work to an organizations benefit.

The right to question is allow purchasing to review spefication where required.Example:Purchasing may question a lower-cost material can still meet customer satisfication

3. ACT AS THE PRIMARY CONTACT WITH SUPPLIERS Some organization having policy of only allowing contracts between suppliers and purchasing staff.
These are best to be handled by direct contact. So this policy is becoming more flexible,allowing

efficient and accurate communications between supplier and internal.

Purchasing must act as the primary contact with

supplier with controlled access by other functions.

4. DETERMINE THE METHODS OF AWARDING PURCHASE CONTRACTS. An important area of control is that purchasing has the right to determine how to award purchase contracts.
Purchasing also lead or coordinate negotations with

suppliers.
Purchasing retain the right of overall process.

1.

Determining the purchases order specification A functionalspefication A detailed technical spefication Quality spefication Logistic spefication A maintenance spefication A legal and enviroment requirement A target budget

2. SUPPLIER SELECTION Determining the method of subcontracting. Preliming qualification of supplier and drawing up the bidders list. Prepareration of the request for qualitifaction and analysis of the bids received. Selection of the suppliers. 3. THE PURCHASING CONTRACT Prices and terms of delivery. Fixed price plus incentive fee. Cost plus contract. Agreement with price-adjustment(Long-term delivery)

 Terms of payment

-Penalty clouses and waranty conditions Insurances and safety regulations Transfer of rights and obligations Contracting out to third parties. Terms of delivery. 4.ORDERING AND EXPEDITING Routine buying situation. Suppliers is requested to send in an order confrimation

5. FOLLOW UP AND EVALUATION OF THE BUYING PROCESS Setting warranty claims and penalty clauses. Setting the results of work in excess. Organizing the purchases and supplier documentations Recording project evaluation.

1. RAW MATERIALS A material or substance used in the primary

production or manufacturing of a good. Raw materials are often natural resources such as oil, iron and wood. Before being used in the manufacturing process raw materials often are altered to be used in different processes. Raw materials are often referred to as commodities, which are bought and sold on commodities exchanges around the world.

2. SEMI-FINISHED PRODUCTS AND COMPONENTS A product which is partly finished. Example : Steels , aluminium. 3. FINISHED PRODUCT Product that will not undergo further processing and are ready for sale to the final demand user, either an individual consumer or business firm. This includes unprocessed foods such as eggs and fresh vegetables, as well as processed foods such as bakery products and meats. This also includes durable goods such as automobiles, household furniture and appliances, and Nondurable goods such as apparel and home heating oil.

4.MAITANANCE,REPAIR AND OPERATING ITEMS(MRO) Supplies consumed in the production process but which do not either become part of the end product or are not central to the firm's output. MRO items include consumables (such as cleaning, laboratory, or office supplies), industrial equipment (such as compressors,pumps, valves) and plant upkeep supplies (such as gaskets, lubricants, repair tools), and computers, fixtures, furniture, etc.

5. PRODUCTION SUPPORT ITEMS Production support items are those items that are used to complete final products. Example : Tape,wrapping,master shipping cointainers 6. SERVICES Intangible products that are not goods(tangible products), such as accounting, banking,cleaning, consultancy,education insurans medical treatment,transportation. No transfer of possession or ownership takes place when services are sold, and they : (1) cannot be stored or transported (2) are instantly perishable (3) come into existence at the time they are bought consumed.

7.CAPITAL EQUIPMENT The equipment that a factory or office uses in operating its business. Example : vehicles, computer equipment, furniture 8.TRANSPORTATION Any device used to move an item from one location to another. Such as bikes or motorcycles,Planes,trains,ships