Purchasing is the formal process of buying goods and services. The purchasing process can vary from one organization to another, but there are some common key elements. The process usually starts with a demand or requirements this could be for a physical part (inventory) or a service. A requisition is generated, which details the requirements (in some cases providing a requirements speciation) which actions the procurement department. A request for proposal (RFP) or request for quotation (RFQ) is then raised. Suppliers send their quotations in response to the RFQ, and a review is undertaken where the best offer (typically based on price, availability and quality) is given the purchase order.

1. Prepared By:
Paras Joshi
A presentation
on
MATERIAL PURCHASING PROCEDURES

2.  Background & Origin
 Purchasing Procedure Diagram
 Purchasing Requisition
 Tenders or Quotations
 Purchase order
 Receiving and inspecting material
 Checking and passing of bills for payment

3.  Material is one of the essential element of
production.
 The term “material” refers to raw material.
 Purchasing involve acquiring materials of
right quality in a right quantity at a
reasonable price and at right time.
Material & Material Purchasing

4. Purchasing
requisition
Tenders or
quotation
Purchase order
Receiving and
inspecting materials
Checking and
passing of bills for
payment

5.  It is a formal request initiated by the store
keeper or a specific department for the
purchase of specific items. IT has three
purposes which are as follows:
 To inform the purchasing department about
the need to purchase a material.
 To fix the responsibility of the department
making the purchase requisition.
 To use for future reference.

6.  After receiving purchasing requisition, the
purchasing department has to find the best
source to purchase the material from.
 Selection of a particular supplier is made after
inviting quotations or tenders from possible
sources of supply.
 Invitations for tender in a prescribed form are
sent to prospective suppliers.

7.  The purchase order is a contractual
agreement with the supplier for the supply of
materials.
 It is prepared in five copies.

8.  The receiving department should perform the
function of unloading and receiving of
materials dispatched by the suppliers.
 It has to verify the quantity and condition of
materials.

9.  When the invoices are received from the
supplier, they are sent for verification.
 After the verification, the store department
requests the accounting department to make
the payment to the supplier.
 Payment will be made according to the terms
specified in the contract.

10.  It is the first process set by a manufacture
to control materials.
 Material purchasing process may be different from
one company to another.
 It starts with the issue of material requisition and
ends with the receipt of materials and payment of
the cost of materials.