Functions Of Purchase Department

 Introduction

                     Purchasing is the process a business or organization uses to acquire goods or services to accomplish its goals.  Although there are several organizations that attempt to set standards in the purchasing process, processes can vary greatly between organization. Purchasing is part of the wider procurement process, which typically also includes expediting, supplier quality, transportation, packaging and logistics. 

Definition 

                   A purchase means to take possession of given assets, property, items or right by paying a predetermined amount of money for the transaction to be completed successfully. It means purchase is an exchange of money for a particular goods or services. 

              A purchase is a routine operational work, carried by both individuals and corporations. The purpose of this financial transaction is to transfer the ownership of a piece of property physical, intellectual, virtual or else. Purchase can be made in cash or credit. Both typically transfer ownership when the transaction is initiated even though the latter doesn't pay cash for goods or services until some date in the future. 

Purchase Manager

                            Purchase Manager is the person, who is responsible for doing the purchasing activity. Purchase Manager also known as the Materials Manager and Buying Manager in some manufacturing industries. He is guide the organization's acquisition procedures and standards. 

                           Purchasing Manager seek the best available quality of the lowest price. They evaluate suppliers, negotiate contract and review product quality. The rolls and responsibilities of a purchasing manger vary depending on the industry to industry. Those who works for manufacturers purchase raw or consumable and minimally processed materials. Those who work for wholesalers or retailers purchased finished goods. 

                  Their duties include studying the market to identify price trends and future availability of materials and goods, develop vendors, negotiate rates, preparation of comparison sheets, approval notes, and purchase orders.  And maintaining purchase records such as Purchase Requisition (PR) or Indents, Purchase Orders, Vendor Quotes,  Vendors Contact Details, etc. A purchasing manager should have good management skills, market researching tactics, negotiation skills and marketing capabilities.

Basic Documents 

                             To performing the purchase activity, there will be used some documents, and that are the - 

1) Purchase Requisitions (PR)

                                                Purchase Requisition is a internal document, which transfer the information to purchase department, what is to purchase, what quantity to purchase, descriptions of goods and materials codes. It is generally raised by stores department. But in some manufacturing industries, it is also directly raised by marketing department, production department, maintenance department, dispatch department and accounts department. Purchase Requisition is must be signed by head of the department. 

2) Purchase Order Or Work Order (PO / WO)

                                               Purchase Order is the one type of agreement, between Buyer And Seller. It includes, Buyer what to purchase, What quantity to purchase, At what price to purchase, Materials descriptions, Delivery Date, PO And WO Number & Date, Suppliers Quotations Reference, And what is the agreed terms & conditions, such as payment terms, transportation, loading / unloading, toll and any other expenses, etc.  

                              Purchase Order made by purchase manager. If the purchase requisition received by the purchase department is in order, then it will call for tenders or quotations from vendors or suppliers of materials. He will send enquiries to prospective suppliers giving details of requirement and requesting details of available materials, price, terms & conditions, etc.  Purchase Manager will make the comparison sheet as per collected quotations. And place the purchase order with those suppliers who will provide the necessary goods at competitive prices. The purchase order will print generally in four sets of copies. i.e. Supplier Copy, Stores Department Copy, Finance Department Copy, and Purchase Department Copy.  The printing of purchase order copies may be vary as per industry to industry. 

3) Materials Test Or Inspection Report And Invoice 

                                  After receiving the purchase order from purchase department, the vendor will dispatch the materials as per purchase order. While dispatching the materials, the make assured that, he will send materials test report and invoice copy along with materials. Materials test report also called as Pre Dispatch Inspection Report (PDIR). PDIR must be contain category of materials, composition of chemicals and elements, dimensions of components or parts. 

And in invoice part , contain purchase order number and date, quantity of materials, price of materials, delivery address, and detailed commercial terms and conditions. 

Rolls & Responsibilities Of Purchase Manager

                      The Purchasing Department support the company operations as the primary buyer of goods and services in private sector, government sector, trading agencies or any other type of organizations. 

                      The purchasing manager purchase the goods in right time, right quantity, right price, right goods and from the right suppliers.

The purchasing department must understand the complexibilities of the operation it supports as well as the markets that provide the goods and services required to meet its objectives.

                     The purchasing manager has to maintain close communications with department heads to better understand their need and the role their purchases play in the company. 

                     The rolls and responsibilities of purchasing manager may vary depending on an organisations size and priorities. 

         The basic rolls of purchasing manager are - 

1) Collect the purchase requisitions from stores and internal department. 

2) Floats RFQ (Request For Quotes) OR RFI (Request For Information) to the vendors for getting the         quotes.

3) Prepared comparison sheets and negotiate the rate from vendors. 

4) Prepared purchase order and shared to vendor, stores and finance department. 

5) Follow up for materials.

6) Processed vendors invoice for payment. 

Conclusion 

                  The purchase department is very important department of an any organization. It is also called cost saving department. The purchase department is intermediator between the organization and supplier to provide the goods and services to its customers. The purchasing department is helpful to prepared the budget of an organization.