PLANNING AND CONTROL

1. Materials planning and control: Based on the sales forecast and production plans, the

materials planning and control is done. This involves estimating the individual requirements of

parts, preparing materials budget, forecasting the levels of inventories, scheduling the orders and

monitoring the performance in relation to production and sales.

2. Purchasing: This includes selection of sources of supply finalization in terms of purchase,

placement of purchase orders, follow-up, maintenance of smooth relations with suppliers, approval

of payments to suppliers, evaluating and rating suppliers.

3. Stores management or management: This involves physical control of materials,

preservation of stores, minimization of obsolescence and damage through timely disposal and

efficient handling, maintenance of stores records, proper location and stocking. A store is also

responsible for the physical verification of stocks and reconciling them with book figures. A store

plays a vital role in the operations of a company.

4. Inventory control or management: Inventory generally refers to the materials in stock.

It is also called the idle resource of an enterprise. Inventories represent those items, which ar

1. Materials planning and control: Based on the sales forecast and production plans, the

materials planning and control is done. This involves estimating the individual requirements of

parts, preparing materials budget, forecasting the levels of inventories, scheduling the orders and

monitoring the performance in relation to production and sales.

2. Purchasing: This includes selection of sources of supply finalization in terms of purchase,

placement of purchase orders, follow-up, maintenance of smooth relations with suppliers, approval

of payments to suppliers, evaluating and rating suppliers.

3. Stores management or management: This involves physical control of materials,

preservation of stores, minimization of obsolescence and damage through timely disposal and

efficient handling, maintenance of stores records, proper location and stocking. A store is also

responsible for the physical verification of stocks and reconciling them with book figures. A store

plays a vital role in the operations of a company.

4. Inventory control or management: Inventory generally refers to the materials in stock.

It is also called the idle resource of an enterprise. Inventories represent those items, which ar

Material planning is a scientific technique of determining in advance the requirements of raw

materials, ancillary parts and components, spares etc. as directed by the production programme.

It is a sub-system in the overall planning activity. There are many factors, which influence the

activity of material planning. These factors can be classified as macro and micro systems.

1. Macro factors: Some of the micro factors which affect material planning, are price

trends, business cycles Govt. import policy etc.

2. Micro factors: Some of the micro factors that affect material planning are plant capacity

utilization, rejection rates, lead times, inventory levels, working capital, delegation of

powers and communicatio

The basic objective of the purchasing function is to ensure continuity of supply of raw materials,

sub-contracted items and spare parts and to reduce the ultimate cost of the finished goods. In

other words, the objective is not only to procure the raw materials at the lowest price but to

reduce the cost of the final product.

The objectives of the purchasing department can be outlined as under:

1. To avail the materials, suppliers and equipments at the minimum possible costs:

These are the inputs in the manufacturing operations. The minimization of the input cost

increases the productivity and resultantly the profitability of the operations.

2. To ensure the continuous flow of production through continuous supply of raw

materials, components, tools etc. with repair and maintenance service.

3. To increase the asset turnover: The investment in the inventories should be kept

minimum in relation to the volume of sales. This will increase the turnover of the assets

and thus the profitability of the company.

4. To develop an alternative source of supply: Exploration of alternative sources of

supply of materials increases the bargaining ability of the buyer, minimisation of cost of

materials and increases the ability to meet the emergencies.

5. To establish and maintain the good relations with the suppliers: Maintenance of

good relations with the supplier helps in evolving a favourable image in the business

circles. Such relations are beneficial to the buyer in terms of changing the reasonable

price, preferential allocation of material in case of material shortages, etc.

6. To achieve maximum integration with other department of the company: The

purchase function is related with production department for specifications and flow

of material, engineering department for the purchase of tools, equipments and

machines, marketing department for the forecasts of sales and its impact on

procurement of materials, financial department for the purpose of maintaining levels

of materials and estimating the working capital required, personnel department for

the purpose of manning and developing the personnel of purchase department and

maintaining good vendor relationship.

7. To train and develop the personnel: Purchasing department is manned with varied

types of personnel. The company should try to build the imaginative employee force

through training and development.

8. Efficient record keeping and management reporting: Paper processing is inherent

in the purchase function. Such paper processing should be standardised so that record

keeping can be facilitated. Periodic reporting to the management about the purchase

activities justifies the independent existence of the department.