The success of any manufacturing activity is largely dependent on the procurement of raw materials of right quality, in the right quantities, from right source, at the right time and at right price popularly known as ten ‘R’s’of the art of efficient purchasing. They are described as the basic principles of purchasing. There are other well known parameters such as right contractual terms, right material,right place, right mode of transportation and right attitude are also considered for purchasing. 1.Right price:
It is the primary concern of any manufacturing organization to get an item at the right price. But right price need not be the lowest price. It is very difficult to determine the right price; general guidance can be had from the cost structure of the product. The ‘tender system’ of buying is normally used in public sector organizations but the objective should be to identify the lowest ‘responsible’ bidder and not the lowest bidder. The technique of ‘learning curve’ also helps the purchase agent to determine the price of items with high labour content. The price can be kept low by proper planning and not by rush buying. Price negotiation also helps to determine the right prices. 2.Right quality:
Right quality implies that quality should be available, measurable and understandable as far as practicable. In order to determine the quality of a product sampling schemes will be useful. The right quality is determined by the cost of materials and the technical characteristicsas suited to the specific requirements. The quality particulars are normally obtained from the indents.Since the objective of purchasing is to ensure continuity of supply to the user departments, the time at which the material is provided to the user department assumes great importance. 3.Right time:
For determining the right time, the purchase manager should have lead time information for all products and analyse its components for reducing the same. Lead time is the total time elapsed...
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