The purchasing department
PURCHASING IS simply buying anything from suppliers. However, in any business organisation, items must be purchased in a systematic manner for the smooth operation of the business. In the department, one person may be in charge of purchasing.
The staff responsible for purchasing is to ensure that materials and equipment are available immediately when required in the organisation. Purchases must provide value for money and be within budget. Purchases must be authorised by the manager.
RESPONSIBILITIES OF THE PURCHASING DEPARTMENT
Sourcing suppliers: The purchasing manager will source the best materials that will be of benefit to the business. There will be a list of frequently used suppliers. These suppliers are expected to provide quality goods at competitive prices. Catalogues and brochures are usually given to the purchasing department. A catalogue is a book containing a list of items, including pictures, that can be bought from a particular supplier. They may or may not show the prices of the items listed, but more than often the prices are shown is a separate list.
Negotiating: The purchasing manager will negotiate with the suppliers to get the best price for goods and prompt delivery. When a decision has been made as to who is the supplier, an order is placed.
The following should be included on the order form.
Purchase order number
Name and address of buyer Name and address of supplier Supplier’s quotation
Full details of goods
Delivery date
Delivery address
Trade discount
Terms of payment Signature of person authorising the order.
Placing contracts: A supplier must provide goods or services at stated times. A contract is a legally enforceable, binding agreement between two or more parties. A contract involves an obligation on the part of the contractors. This contract may be expressed verbally or in writing.
Maintaining suppliers records: The purchasing department must monitor stock records so that supplies can be reordered in good time so as not to stall the production process.
RELATIONSHIP WITH OTHER DEPARTMENTS
In order for the purchasing department to carry out its functions effectively, it requires input from the other departments in the organisation.
The stockroom must clearly monitor levels of stock so that the purchasing department can be given sufficient time to select the best supplier.
The receiving department reports to the purchasing department about the condition, quantity and the quality of the goods received. This information enables the purchasing department to decide whether to continue ordering from the supplier.
The accounting department checks the accuracy of figures shown on invoices and makes payment.
DUTIES OF A PURCHASING CLERK
The following are the duties of a purchasing clerk.
Receiving and checking requisitions against stock issued and stock held. Filing of purchase records. Maintaining stock records. Maintaining database of suppliers. Recommending suppliers.
ACTIVITY FOR TODAY
Your supervisor has reacted to a particular problem with a decision to send a letter to all 3,000 staff, today if possible, otherwise first thing tomorrow morning. You put in a requisition for 3,000 C5 envelopes to be delivered today. The storeroom clerk rings you to say that they have no stock of C5 envelopes although the stock record (on computer) shows that there should be 1,500 in store. He has contacted the organisation’s usual supplier, who says they can deliver tomorrow afternoon.
1. What would you do?
2. Why might there be the discrepancy between the stock record and the actual stock?
3. Which of your ideas do you think is most likely?
This is all for this week.