purshasing cycle

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SD.M.BHASHAM.PHARM 1ST YEARDEPT OF PHARMACEUTICS : 

Purchasing cycle and procedure in material management SD.M.BHASHAM.PHARM 1ST YEARDEPT OF PHARMACEUTICS

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INTRODUCTION The purchase department takes the purchasing decisions Each company develops its own operating procedures to implement the purchasing policies These policies act as guide for the individuals involved in a specific work The procedures framed should be simple & result oriented

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One type of complete purchase cycle is given below: Need recognition Spell out of specifications & requirements Official requisition Check specifications, prices/supplies Specifications file Purchase records

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Select suppliers Inquiry tender Suppliers records Quotations & analysis Prices & terms, Negotiations, Finalization. Purchase order for supply

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Suppliers acceptance Follow up Delivery of materials Materials & reports, analysis Checking of invoice with purchase order Payment made

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Basic elements in the purchase transactions are discussed in the following sequence They are : Recognition of need and receipt of requisition Selection of potential sources of supply Receipt and analysis of quotations Selection of right source of supply Issuing of purchase order Follow-up of the order

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Receipt of materials , reports and analysis Checking and approving of vendor Closing of completed orders Maintenance of records & files

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RECOGNITION OF NEED & RECEIPT OF REQUISITION: After the identification of need for a particular item , an official indent is sent in duplicate to purchase department The requisition includes the following information: Name Quality specifications Quantity specifications

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Date by which material is required Place at which material is to be delivered SELECTION OF POTENTIAL SOURCES OF SUPPLY: It is more economical to purchase items directly from firm(manufacturing) itself The department usually maintains an approved list of suppliers It is desirable to know more details about the capacity of the supplier

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The details requested include company’s annual sales,accounts,type of operations, facilities,company’s location. RECEIPT & ANALYSIS OF QUOTATIONS: After receiving quotations from different suppliers,they are compiled and a comparative statement of prices is prepared which helps in taking quick decision The following aspects should be given adequate considerations

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Material specifications & quality Price of the material Taxes Terms of payment Place of delivery Delivery period Guarantee period Validity of tender

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Comparative statement is analyzed on the above points and the right quotation is selected for ordering. SELECTION OF RIGHT SOURCE OF SUPPLY: Price is an important consideration for finalizing the purchases Apart from that several aspects should be considered . They are: Will the vendor maintain quality? Will vendor supply material in time? Does the vendor possess adequate facilities to handle the contract? How far the vendor’s plant is situated

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Based on the personal experience , reputation of the company and comparative statement,the right supplier is selected ISSUING THE PURCHASE ORDER: After selecting the right supplier, the purchase order is prepared and dispatched to the supplier. The purchase order constitutes a legal document When the vendor accepts the purchase order,it acts as a contract for the delivery of items.

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FOLLOW-UP OF THE ORDER: After placing the order ,the purchase service-section contacts the vendor to know the progress of the order,meeting the delivery date, mode of shipment etc. Specially designed postcards containing the following information is employed for routine follow-up: Purchase order number Pre-decided delivery date

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All verbal communications are confirmed by writing A good follow- up will produce delivery of items in time RECEIPT OF MATERIALS,REPORTS AND ANALYSIS: The company receives the materials along with the analytical reports After verification of the reports and purchase order ,the material is warehoused

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The Q.C department collect the samples randomly and analyze for it's specifications Once the material is approved, a label is attached to the package or container CHECKING & APPROVING OF VENDOR’S INVOICE FOR PAYMENT: Copies of bills are received along with materials The bill should be checked to ensure that the correct material is supplied

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The prices are checked as per the purchase order and verified whether agreed discounts are given or not Finally bill is payed in the form of cheque to the vendor CLOSING OF COMPLETED ORDERS: Before closing the executed orders the file copy of the purchase order must be checked against delivery reports and vendor’s bill once again. Then purchase order is closed finally.

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MAINTENANCE OF RECORDS AND FILES: The final step in the purchasing procedure is the maintaining of order records.

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THANK YOU