PURCHASING PROCEDURE

A large proportion of a firms costs are represented by bought in materials, the purchasing function is of great importance. The responsibility of the purchasing function includes price, quality and delivery. The purchasing process begins when the production department needs materials. It will send a material requisition form to the store to request for the materials. The store clerk will issue materials to them. If the materials need to be replenished, he will then issue a purchase requisition note to the purchasing department. It is now the duty of purchasing manager to make contact with the supplier. If the normal type of material is required the purchasing manager will send a purchase order to his regular supplier. If a new type of material is needed, the manager will have to go to several procedures such as open tenders etc. once supplier received the purchase order, they will send: 1. Materials with a copy of invoice and delivery note to the Good Receiving Department and, 2. Invoice to the purchasing department. On arrival at the goods receiving department, the quantity of the materials received will be checked against the actual details of invoice and purchase order, and a goods received note will be prepared. Materials together with the goods received note will then be sent to an inspection department. This department will check as to the quality of material and acts as the initial checkpoint for quality control cycle. When the department is satisfied with the quality of the materials received, they will send: 1. Inspection report together with ht e goods received note to the purchasing department, and 2. A copy of goods received note together with materials to the store. To minimize movement of materials, good received department, inspection department and the store should be located as near to each other as possible. Breakage, damage and theft can be then be avoided. The suppliers are paid after the account department has determined that all is in order (proper documentation and goods received).