What is Purchase Management?

What is Purchase Management?

  • June 07, 2019

Managing purchases in an organisation is concerned with theprocurement of proper equipment, materials and supplies of the rightquantities, at the right prices at the right time.

Considering the complex nature of the manufacturingactivities today, purchasing has become a specialised function and separatepurchase departments are established in almost all large concerns. In largesized companies, the major activities consist of ordering material uponrequisition by the users, checking receipt of the material and maintainingfiles and records of orders and price movements.

Objectives of PurchaseManagement

The first scientific objective of purchase management is toprocure proper quantity of materials so that production goes onuninterruptedly.

To make sure that goods purchased are of proper quality.

It sees through that the supplies of materials are made atthe time it is needed by production department.

The losses of materials due to spoilage, obsole­scence,duplication etc. are kept at the minimum.

Setting up of purchase by keeping in view of short- term andlong-term production policies of the concern.

To preserve suitable sources of supplies and also to keep intouch with alternative sources.

Bargaining for a reasonable price for materials so thatinvestments in stores are minimum.

Maintaining competitive position of the firm by maintainingquality standards positively comparable with those of competing firms.

To maintain good supplier relationships this will ensure thebest terms of supply of materials.

Deploying the most advantageous method of purchase to ensuresmooth delivery of materials from suppliers and to avoid the risks of anydisputes of financial loss.

Key Aspects of Sales Management

Controlling Cost : – Controlling the cost is a criticalfactor in purchase management. The managers here analyze which suppliers areselling the necessary inputs for production and at what cost.

Stability in price : – An important role of purchasemanagement is achieving price stability. With the fluctuations in cost ofproduction, other departments experience obstacles.

Here the managers keep the cost of production stable in anumber of ways, one of which is negotiating with vendors to achieve the lowestprice and to lock in the value for a lengthy contract.

Maintaining a healthy supply chain management : – Securingthe supply chain is another critical role of purchasing managers. Here thestores managers are held responsible for ensuring that all of the necessarymaterials appear on time, intact and of expected quality. Any delay inshipments of materials or any defect in the quality of materials, all theseeffects reverberate throughout the production chain.

Achieving customer satisfaction : – Here the purchasemanagers play a fundamental role in ensuring customer satisfaction. They havethis obligation in two ways: quality of product and on-time deliveries.

How to SuccessfullyManage Purchase With Tally.ERP 9?

Tally.ERP 9 Solution  gives illustration of anextensive experience in delivering comprehensive solutions and services, toempower every aspect of business operations of Manufacturing Organization.

By deploying this solution, one can effectively streamlineand integrate the business processes, optimize the entire supply chain, andquickly identify customer needs, eventually contributing to an improved bottomline.

Purchase order processing in Tally.ERP 9 – A efficientpurchase management tool : -With Tally.ERP 9, you can manage your purchasesefficiently by creating purchase records, generating expense reports, andupdating to purchase records as and when needed.

What do we mean by purchase order ? – A Purchase order (PO) is a commercial document and first official offer issued by a buyer to a seller indicating types, quantities, and agreed prices for products or services. A PO or purchase order is used to control the purchasing of products and services from external suppliers.
To enable purchase order processing in Tally – To enable Purchase Order in Tally.ERP 9, click on “F – 11” : Features (F2 : Inventory Features). In the Order Processing section, set Allow Purchase Order Processing to “YES”, to create purchase order.
How to prepare purchase order
in Tally.ERP 9? –
Purchase Order Entry is done by
the following steps. Go to Gateway of Tally > Inventory Vouchers > Ctrl+F2 > F4 : Purchase Order to view the Order Voucher Creation screen. Enter the Party’s A/c Name. Enter the Order No. Select the stock item name from the List of Stock Items, or press Alt + C to create a new stock item. Enter the Quantity of the item, as required. Enter the Rate of the item. Press Ctrl + A to accept.
To view purchase order summary – Purchase Order Summary statement provides the users with detailed information on the outstanding purchase orders. To access purchase order Outstanding, Go to Gateway of Tally (GOT). Select Display and click on Statements of Inventory. Then click on Purchase Order Outstanding.
Components of purchase order
report –
Purchase order – Stock Group Report : – This report displays the Purchase Order Outstandings summary of all or a selected Stock Group. To view  Sales Order Stock Group Outstandings summary : – Go to Gateway of Tally > Display > Statements of Inventory > Purchase Order Outstandings > Stock Group. Purchase order – Stock Item Report : – This report displays the Purchase Order Outstandings summary of a selected Stock Item. To view Purchase Order Stock Item Outstandings summary : – Go to Gateway of Tally > Display > Statements of Inventory > Purchase Order Outstandings > Stock Item. Purchase order – Group Report : – This report displays the Purchase Order Outstanding summary of a selected Group. To view Purchase Order Group Outstandings summary : –   Go to Gateway of Tally > Display > Statements of Inventory > Purchase Order Outstandings > Group Purchase order – Ledger Report : – This report displays the Purchase Order Outstanding summary of a selected Ledger. To view Purchase Order Ledger Outstandings summary : – Go to Gateway of Tally > Display > Statements of Inventory > Purchase Order Outstandings > Ledger Purchase order – All Orders Report : – This report displays the Purchase Order Outstandings of all the orders which are pending. It provides information on the order number, date of order, party, ordered Quantity, pending quantity, rate, value of ordered stock, due date for receiving the goods and the number of days overdue. It also provides information on goods received but orders not sent. To view All Orders : – Go to Gateway of Tally > Display > Statements of Inventory > Purchase Order Outstandings > All Orders.

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