Description
procurement mgnt
Right Time and Right Quantity
Presented By Sarita Das(Lecturer)
Kind Of market
y Agricultural commodities timing of purchase is determined
by two factors y Availability y Price
y Market of agricultural product are unstable because supply
and price fluctuate substantially producing a high unstable short run situation. y Vegetable market start its operation in early morning, certain vegetables are available in certain seasons, highly perishable crops like green leafy vegetables loose their value if they are not sold early in the days.
y Whereas wheat and rice ,oilseeds cotton ,onion, potatoes are
seasonal crops which are not perishable in short periods as vegetables and fruits they can be stored. y Market for agricultural commodities are unstable where as market for industrial product and hardware are Stable.
Timing of purchase
y Policies for purchasing-These should be in relation
to
quality,source,price and quality. y Speculative Buying-Buying at one price and selling it at higher price later. Purpose of buying here is to making profit by this transaction. y Forward buying-In this case company purchase quantity which is more than its current requirement. The surplus quantity is stored for its future use.
y Hand to Mouth Buying-Companies which do not keep any
inventory of material but buy the quantity according to daily or weekly capacity or demand for the processed product. y This method is especially followed by small and medium companies producing fruit pulp,pickles,rice and wheat flour and cooking oil. y Even this strategies is also follow by large enterprises due to nature of raw materials.
Buying Practices used in fluctuating Markets
y To reduce average price for the material by using fluctuation
of the market to purchase advantages. y The buyer constantly keeps a watch on the prices at different mandis,buy in large quantities when price are low and reduce purchase when price are high. y Some times price for the same commodities vary in different mandis .So a efficient procurement manager keep in constant touch with his staff or commission agent at different mandis and order purchase from those mandis where price are low, while taking these decision he also take into account such as cost of transport and service.
Reduce financial risk resulting from market fluctuation
y Time budgeting of purchase-it follows purchase of short
intervals that financial risks are reduced. y Hedging
Right quantity
y Total quantity needed by the buyer y Time, price and source
Total quantity needed by the buyer
y In a processing industries plant capacity determines what is
y y y y
the total quantity of raw materials needed by the company through sale forecast and production schedule. Production schedule depends upon company·s policy and delivery schedule for the finished products. Right quality factor is associated with inventory and storage issues related to raw materials as well as finished goods. Time, price-volume together decides the right quantity at a specific transaction. Quality and quantity are interrelated to each other
Determining the right quantity
y Agricultural commodities are perishable and biological in
nature. y They are affected during transport and storage ,weight loss due to loss of moisture, losses due to poor packaging and handling during transportation and storage,spoliage due to unscientific storage, pest attack and fungus etc. y External matter such as small stones, sticks ,mud unripe or over ripe seeds affect the quantity and quality of the materials y Quality ²quantity factor and logistics are critical as the agriculture raw materials are easily perishable and consumer satisfaction is paramount.(Retail Business)
Buy or Produce
y It is a critical factor for every retail industry and commodities
processing industries whether they will buy or produce. y Similar problems faced by the companies is whether they will buy raw materials or buy semi finished from any companies and further process it and sell the finished branded product.
Buy or produce raw materials
y Should company buy the needed the raw materials from out side y y y y y y y
or produce of its materials from its own plantations/farm. Buy in large regulated markets, small towns and villages mandis. Through commission agents, traders etc Through direct participation of company staff in auctions Directly from farmers at village level or at company¶s collection centers Directly buy from selected farmers through contract farming Import the materials. Company is also having its own plantation will helps the company to have control on quality ,quantity and price factors
Buy or produce semi finished product
y .A company may buy fresh fruits ,convert these in pulp and
further processing produce finished products such as soft drinks,jelly,jam etc and sell these under company·s brand name. y It can also procure mango pulp from other small processor and convert these to finished product
Reason for company buying the raw materials and processing the materials in its own factory
y Quality consideration y Reliable supply y Vertical Integration y Cost Consideration
Reasons for companies depending on outsides source for semi finished products
y To avoid capital investment which is otherwise needed for
producing semi-finished products . y Cost advantages y Company may exercise indirect control on the supplier by quality control checks and supervision y Little knowledge of purchasing of raw materials in open market for new companies
Transportation
eep in constant touch with supplier and the transporter to expedite and trace the shipment. y On delivery check the quality and quantity and the loss or damage to the materials. y Check the transportation rates prevailing in the market at the time of delivery. y Continuous of tracing of shipment at railway station,airport,harbour can help in avoid such expenses
y
Receiving and storage
y Visually check the shipment for any damage and losses y Check the quality y Keep a record of shipment ,date ,time ,type of carrier, carrier
y y y y
number, driver·s name ,transporter·s name ,supplier's name and place from where shipment received Report the details of shipment to procurement manager. Fix specific responsibility to check the quality and quantity of material Develop a storage system so that the goods are not damaged during storage and can be moved easily to place of processing. Work out cost implications of receiving and storage of materials.
Thank You
doc_423573733.pptx
procurement mgnt
Right Time and Right Quantity
Presented By Sarita Das(Lecturer)
Kind Of market
y Agricultural commodities timing of purchase is determined
by two factors y Availability y Price
y Market of agricultural product are unstable because supply
and price fluctuate substantially producing a high unstable short run situation. y Vegetable market start its operation in early morning, certain vegetables are available in certain seasons, highly perishable crops like green leafy vegetables loose their value if they are not sold early in the days.
y Whereas wheat and rice ,oilseeds cotton ,onion, potatoes are
seasonal crops which are not perishable in short periods as vegetables and fruits they can be stored. y Market for agricultural commodities are unstable where as market for industrial product and hardware are Stable.
Timing of purchase
y Policies for purchasing-These should be in relation
to
quality,source,price and quality. y Speculative Buying-Buying at one price and selling it at higher price later. Purpose of buying here is to making profit by this transaction. y Forward buying-In this case company purchase quantity which is more than its current requirement. The surplus quantity is stored for its future use.
y Hand to Mouth Buying-Companies which do not keep any
inventory of material but buy the quantity according to daily or weekly capacity or demand for the processed product. y This method is especially followed by small and medium companies producing fruit pulp,pickles,rice and wheat flour and cooking oil. y Even this strategies is also follow by large enterprises due to nature of raw materials.
Buying Practices used in fluctuating Markets
y To reduce average price for the material by using fluctuation
of the market to purchase advantages. y The buyer constantly keeps a watch on the prices at different mandis,buy in large quantities when price are low and reduce purchase when price are high. y Some times price for the same commodities vary in different mandis .So a efficient procurement manager keep in constant touch with his staff or commission agent at different mandis and order purchase from those mandis where price are low, while taking these decision he also take into account such as cost of transport and service.
Reduce financial risk resulting from market fluctuation
y Time budgeting of purchase-it follows purchase of short
intervals that financial risks are reduced. y Hedging
Right quantity
y Total quantity needed by the buyer y Time, price and source
Total quantity needed by the buyer
y In a processing industries plant capacity determines what is
y y y y
the total quantity of raw materials needed by the company through sale forecast and production schedule. Production schedule depends upon company·s policy and delivery schedule for the finished products. Right quality factor is associated with inventory and storage issues related to raw materials as well as finished goods. Time, price-volume together decides the right quantity at a specific transaction. Quality and quantity are interrelated to each other
Determining the right quantity
y Agricultural commodities are perishable and biological in
nature. y They are affected during transport and storage ,weight loss due to loss of moisture, losses due to poor packaging and handling during transportation and storage,spoliage due to unscientific storage, pest attack and fungus etc. y External matter such as small stones, sticks ,mud unripe or over ripe seeds affect the quantity and quality of the materials y Quality ²quantity factor and logistics are critical as the agriculture raw materials are easily perishable and consumer satisfaction is paramount.(Retail Business)
Buy or Produce
y It is a critical factor for every retail industry and commodities
processing industries whether they will buy or produce. y Similar problems faced by the companies is whether they will buy raw materials or buy semi finished from any companies and further process it and sell the finished branded product.
Buy or produce raw materials
y Should company buy the needed the raw materials from out side y y y y y y y
or produce of its materials from its own plantations/farm. Buy in large regulated markets, small towns and villages mandis. Through commission agents, traders etc Through direct participation of company staff in auctions Directly from farmers at village level or at company¶s collection centers Directly buy from selected farmers through contract farming Import the materials. Company is also having its own plantation will helps the company to have control on quality ,quantity and price factors
Buy or produce semi finished product
y .A company may buy fresh fruits ,convert these in pulp and
further processing produce finished products such as soft drinks,jelly,jam etc and sell these under company·s brand name. y It can also procure mango pulp from other small processor and convert these to finished product
Reason for company buying the raw materials and processing the materials in its own factory
y Quality consideration y Reliable supply y Vertical Integration y Cost Consideration
Reasons for companies depending on outsides source for semi finished products
y To avoid capital investment which is otherwise needed for
producing semi-finished products . y Cost advantages y Company may exercise indirect control on the supplier by quality control checks and supervision y Little knowledge of purchasing of raw materials in open market for new companies
Transportation
eep in constant touch with supplier and the transporter to expedite and trace the shipment. y On delivery check the quality and quantity and the loss or damage to the materials. y Check the transportation rates prevailing in the market at the time of delivery. y Continuous of tracing of shipment at railway station,airport,harbour can help in avoid such expenses
y
Receiving and storage
y Visually check the shipment for any damage and losses y Check the quality y Keep a record of shipment ,date ,time ,type of carrier, carrier
y y y y
number, driver·s name ,transporter·s name ,supplier's name and place from where shipment received Report the details of shipment to procurement manager. Fix specific responsibility to check the quality and quantity of material Develop a storage system so that the goods are not damaged during storage and can be moved easily to place of processing. Work out cost implications of receiving and storage of materials.
Thank You
doc_423573733.pptx