PROCEDURES

4. FOLLOW-UP OF THE ORDER

Follow-up procedure should be employed wherever the costs and risks resulting from the delayed

deliveries of materials are greater than the cost of follow-up procedure, the follow-up procedure

tries to see that the purchase order is confirmed by the supplier and the delivery is promised. It

is also necessary to review the outstanding orders at regular intervals and to communicate with

the supplier in case of need. Generally, a routine urge is made to the supplier by sending a printed

post card or a circular letter asking him to confirm that the delivery is on the way or will be made

as per agreement. In absence of any reply or unsatisfactory reply, the supplier may be contact

through personal letter, phone, telegram and/or even personal visit.

5. RECEIVING AND INSPECTION OF THE MATERIALS

The receiving department receives the materials supplied by the vendor. The quantity are verified

and tallied with the purchase order. The receipt of the materials is recorded on the specially

designed receiving slips or forms which also specify the name of the vendor PAYMENT OF THE INVOICE

When the goods are received in satisfactory condition, the invoice is checked before it is

approved for the payment. The invoice is checked to see that the goods were duly authorised

to purchase, they were properly ordered, they are priced as per the agreed terms, the quantity

and quality confirm to the order, the calculations are arithmetically correct etc.

7. MAINTENANCE OF THE RECORDS

Maintenance of the records is an important part and parcel of the efficient purchase function.

In the industrial firms, most of the purchases are repeat orders and hence the past records serve

as a good guide for the future action. They are very useful for deciding the timings of the

purchases and in selecting the best source of the supply.

8. MAINTENANCE OF VENDOR RELATIONS

The quantum and frequency of the transactions with the same key suppliers provide a platform

for the purchase department to establish and maintain good relations with them. Good relations

develop mutual trust and confidence in the course of the time which is beneficial to both the

parties. The efficiency of the purchase department can be measured by the amount of the

goodwill it has with its suppliersand the purchase

order number. It also records any discrepancy, damaged condition of the consignment or inferiority

of the materials. The purchase department is informed immediately about the receipt of the

materials. Usually a copy of the receiving slip is sent to the purchase department.

Selection of the right supplier is the responsibility of the purchase department. It can contribute

substantially to the fundamental objectives of the business enterprise. Different strategies are

required for acquiring different types of materials. The selection of supplier for standardised

products will differ from non-standardised products. Following factors are considered for the

selection of suppliers:

A. SOURCES OF SUPPLIER

The best buying is possible only when the decision maker is familiar with all possible sources of

supply and their respective terms and conditions. The purchase department should try to locate

the appropriate sources of the supplier of various types of materials. This is known as ‘survey

stage’. A survey of the following will help in developing the possible sources of supply:

1. Specialised trade directories.

2. Assistance of professional bodies or consultants.

3. The buyer’s guide or purchase handbook.

4. The manufacturer’s or distributor’s catalogue.

5. Advertisements in dailies.

6. Advertisement in specialised trade journals.

7. Trade fair exhibitions.

B. DEVELOPMENT OF APPROVED LIST OF SUPPLIERS

The survey stage highlights the existence of the source. A business inquiry is made with the

appropriate supplier. It is known as ‘Inquiry Stage’. Here a short listing is made out of the given

sources of suppliers in terms of production facilities and capacity, f