Table of Contents
There are different methods of purchasing. The choice of the purchasing will depend upon the item to be purchased, frequency of requirement, quantity to be purchased and the market situation, etc., none of the methods is best for all purchases.
Open Market Purchase:
This method of purchasing is used for products that are not purchased frequently. A committee of 3 persons (purchase officer, accounts men and one person from f & B) who knows about quality of food items goes to the market and finds out the rate of the product to be purchased. After considering the rates and the quality the most advantages is selected. Quality must not be sacrificed while comparing the prices. The advantage of this purchased is that only desired standard of quality will be purchased at lowest possible rate.
Purchasing by contract
The food items that requires frequent purchase calls for contract purchases. The tenders are awarded for items like mutton, fish, poultry, egg, dairy products, fruits and vegetables. The annual requirement is marked out and the tenders are invited. The tenders should be evaluated for their total value depending upon the estimated consumption of the year. The contract is signed with the supplier who has to deposit security money to ensure that he will supply these items regularly. They are bound to supply the specified quality only. If the supplier fails to supply the indented items we have a clause in the contract according to which we can buy the indented items at the market rate prevalent and debit the amount to the supplier’s account, this is known as risk purchase.
Centralized Purchasing:
It is based on the principles that the purchasing activity is done by one person or department. In operations that have centralized purchasing, HOD usually reports to the top management who has overall responsibility for making of profit. In this kind of purchasing all the H.O.D. combine together under a single head and purchase all the necessary items on a large scale.
Advantages
- Better control and co-ordination because all the H.O.D. are working under single head or department.
- Better discount is gained.
- Few people are involved in purchasing.
- Economic and profit potential of purchasing policy making it a profit rather than a cost center.
Standing order purchase
In this method the purveyor sends merchandise at a fixed pre-determined interval of time. The purchase may involved fixed quantity every time or may involve replenishing a stock from time to time. Milk and dairy product purchasing are normally made by this method, which is often used for specific items only. The deliveryman will replenish the stock and this saves a considerable amount of time for receiving person. Formal agreement are made for this type of delivery in advance and reviewed from time to time. One of the disadvantages of this system is that there is dependence on one vendor and delays may be caused by unexpected problems. However it works out well for those items that are purchased daily or weekly or several times in a week or month.
Periodical purchasing/ fortnightly quotation list/ purchasing bi weekly:
This method is used to purchase grocery items where delivery once a week or a fortnight is adequate. H.O.D. would complete the stock in hand and fill in the wanted quantity of each item based on a normal order quantity and volume of business expected on the master list. Meanwhile the purchase officer would sent out a copy of the list of each supplier in which the supplier is required to quote the rates on receipt of quotation. These would be entered into a master quotation list and the decision is then made about where the order for each items are to be placed. This would be based on the requirement in the next week/ Fortnight and the storage space available. It should be noted that the specifications for items will usually be judged by brand names of the product together with size, weight and count.