For this follow up the purchase order after waiting for some reasonable time is essential. In open tender system, advertisements are given in the newspapers, different trade journals of repute. Follow-Up of Purchase Order: A purchase order normally bears a date by which the goods must be delivered It is in the interest of the organization that goods are received in time for keeping uninterrupted flow of materials. Demands for end items are independent. Classification of Material In the first step of purchasing procedure, purchase department will classify all the its material according to the nature of material.
After carefully fixing up the quantity to be purchased, the purchasing department must place orders with the chosen suppliers. After making full checking the invoices are sent to accounts department for payment. Specification of Materials or Bill of Material 6. The City Administrator, who oversees the General Service Agency, including the Office of Contract Administration and the Department of Public Works, should direct the Office of Contract Administration to develop Citywide guidelines and procedures on storeroom operation and management. Limitations : The following are the limitations of Centralised Buying: a Expensive The administrative cost of the purchasing department is likely to be very expensive as a result of which the total cost is sure to increase and the very purpose of costing to reduce cost is defeated.
Purchase Policy and Procedure : The most important activity of materials management is the purchase policy of an organisation. Selection of Source There is the big source of suppliers. For things to be maintained in an effective manner as planned for managing materials, an effective control ought to be there for every single process in the department. The decision to purchase the components from sub-contractors depends on many factors viz. The absence of a Materials Management Policies and Procedures Manual, which in addition to this current audit report, the Budget Analyst has reported on in recent audits of the Port of San Francisco, three divisions of the Public Utilities Commission, and the Recreation and Park Department stems from a lack of appreciation by management of the power of policies and procedures as administrative controls. · The Department of Public Works should also develop formal materials policies and procedures to ensure standardized and efficient materials management.
It is initiated in the Production Control department or in the department of plant and maintenance engineer. Whether they are dealing with or , understanding the needs of internal and external customers is key to success. Control stores operation of receiving the items from vendors and issuing it to concerned department of the organisation. This quality measurement is key for a business if they are to produce finished goods that are reliable in the eyes of their customers. Order is given to the supplier who offers the lowest price. The Department of Public Works should work with the Controller's Office to develop materials management internal control guidelines and audit schedule, as part of the Department's work order for City Services Auditor services.
After some time of placing the order, follow up process starts to get quickly delivery of the items. It establishes a contractual relation between the buyer and the vendor. The objective of the purchase policy should be to purchase the required material in the right quantity from right source at the right time and price, to obtain the maximum advantage from the amount invested in the purchases. The centralised agencies gather information from its various constituents branches about the needs of the buyers and enter into contract with the probable suppliers by undertaking tender system. The purchasing cycle determines the frequency that products are purchased. All designated employees are required to attend a Purchasing training class.
Each department manager must inform the purchasing department about the exact item required, the specifics of the items desired and the quantity necessary to operate the respective department. For example, on a household item such as a washing machine, the rubber belt that is used must be able to withstand certain forces and not fail within a certain number of revolutions. Once the suppliers are identified they should be asked to submit quotation or tender. Inviting Tenders and Quotations For saving money and placing the order to best vendor, purchase department will invite the quotations and tenders. A follow-up of purchase order is necessary to receive stocks in time.
Guidelines and procedures recommended for the Department of Public Works may also be extended to other City agencies. Advantages of Bill of Materials : The following advantages can be obtained by various departments from Bill of Materials: i On receipt of Bill of Materials the purchase department can place order with the selected supplier. The benefits of implementing the recommendations 15. Advantages of Centralized Purchase: The following advantages can be derived from the Centralised buying: a Advantages of bulk purchase: Since materials are purchased in bulk, materials can be bought at a much cheaper rate because of higher rate of trade discount, better credit facilities and increased bargaining power, quantity, discount. After the item has been received, the purchasing department ensures the order is correct and within the contracted specifications.
Tender form is an important document which contains various columns requiring information from the prospective suppliers. Periodically the total of the Purchase Journal is debited to Purchase Account in the General Ledger. The Store-keeper places requisition to the purchase officer as soon as the materials reach the re-ordering level. The purchasing procedure outlines the process by which the purchasing department makes quote requests from suppliers and vendors. This is very important for sourced materials that are used in the chemical process.
With some purchase orders, this is reasonably automatic. However, three Department of Public Works' staff regularly approve purchase orders without formal authorization. Particulars of goods should then be entered in a Goods Received Note given below. Even though companies have different purchasing guidelines, all companies have standard purchasing procedures. By having an item that conforms to a particular industry standard, the customer will have a level of confidence in the product. In a 1991 management audit, the Budget Analyst recommended implementation of Citywide guidelines and protocols to operate and maintain storerooms and to provide internal controls.
Purchase Quantity: Before placing an order with the supplier the purchase officer is to ensure that only the right quantity of stores is purchased. The amount is subject to limit per year. No matter how good your staff is, without the right data at the right time, any gains from selecting the best strategic sourcing methodology is lost in execution. . It is suggested to group the items to be purchased on cash basis of different sections should be purchased on a single visit to the market. It makes the list of important material requirement.