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2.2.3 Elements of Mater, , Material control is a systematic control over the procurement, storage and usage, of material so as to maintain an even flow of material., , , , | Control, , , , , , , , Material control involves efficient functioning of the following operations:, , . Purchasing of materials, , . Receiving of materials, , , , , , , , . Inspection of materials, , . Storage of materials, , ° Issuing materials, , . Maintenance of inventory records, , + Stockaudit, pe, , , , , , Bill Of Materials, , , , , Material Requisition, Production Department, , Engerineering / Planning Department, , * Goods Receive Note, * Material Returned Note, * Material Abstract, , , , juaunsedag aseysng, , , , — G&S Suppliers
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’ 2.3 MATERIALS PROCUREMENT PROCEDURE, , Material procurement procedure can be understood with help of the following, diagram. Documents required and the departments who initiate these documents, , are shown sequentially., , Engineering/Planning, Department, , ¥, Production Department/, zs Workshop, , , , 2. Material Requisition, , 3. Purchase Requisition, , 10. Goods delivery with, Challan or/and Invoice, , , , , sqy leualeW 'g}, , , , , re), JON panieday $poog “||, , SJON PAWN}oY jeua}eyy “Z|, , , , y ¥ v, , Cost/Accounting, Department, , , , 8. Payment etc., “- 9. Invoice, , , , 12. Material Returned Note, , , , , , , , 5. Quotation, , Jepig aseuding ‘9, , , , jesodosg JO} ysanbey Jo Japual, “y, , , , , , , , , Summary of Material Documents, , SJeUAIeY\ 40 [Id °L, , , , Purchase Department, , , , Name of Document Prepared by, , No. of Copies to be, , Copies senttothe |, , , , , , , , , , prepared Department, Purchase isition Stores Department Purchase, Planning,, Accounting, , of Materials Engineering/Planning Store, Purchase,, Set : Bevan Accounting, Production, Purchase | Purchase Department Supplier, Store,, , noes z Inspection, Accounting, , Goods Received Note | Receiving Department Purchase, Store,, , Accounting, , , , Inspection Report Inspection Department, , Transferee, Accounting, , , , Material Outward Return | Stores or Dispatch Dept., , Note, , Supplier, Store,, Accounting, , , , Material Requisition Production Dept., Note, , Stores, Accounting, , , , Material Transfer Note | Production Dept., , Transferee, Accounting, , , , Material Return Note/ Production Dept., Shop Credit Note/, , Stores Debit Note, , , , , , APB ECE GIG GE, , , , Stores, Accounting
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2.3.1 Bill of Materials, Materials Specification List br Materials List. It is a detailed, , , , , , , , , , It is also known as, , , , , , , , s ina standard form, This, is shared other concerned — like Marketing, Production, Store,, and Cost/ Accounting department., , , , Format and content of a Bill of Materials vary on the basis of industrial, peculiarities, management information system (MIS) and accounting system in, place., , Uses of Bill of Material, , , , Materials are Production is planned | It is used asa It is used to estimate, procured according to the reference cost and profit. Any, (purchased) on | nature, volume of the document while | purchase, issue and, the basis of materials required to issuing materials | usage is compared, specifications be used and to the against this, mentioned in it. | accordingly Material requisitioning document., , requisition lists are department., , prepared., , , , , , , , 237 Material Requisition Note, , It is also known as, , , , , , Is. If no Sater list has been prepare | it is desirable that the, task of the preparation of material requisition notes be left to the planning, department or by the department requires the materials. The note is shared with, Store and Cost/ Accounting department., , Format of a Material requisition note may vary on the basis of industrial, peculiarities, management information system (MIS) and accounting system in, place., , teangiteaans, It is the ae 1. It is prepared by the, _ or other, , ‘required for a particular job or work, , , , order., , 3. It Often serves the purpose of a] 3. It ja bill of |, as it shows the, of materials, lar job i, , 4. It can be‘ used for the purpose of | 4. It is in arriving historical |, , | CE |, 5. It ‘helps \in keeping a — ’, l=.
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234 Purchase Requisition, , This is a document which authorises the purchase department to order for the, , materials specified in the note. Since the materials purchased will be used by the, , production departments, there should be constant co-ordination between the, purchase and production departments. A purchase requisition is a form used for, , to the purchasing department to purchase, , ~ materials. This form is usually filled up by the store keeper*for'regular materials, , and by the departmental head for special materials (not stocked as regular items)., , , , , , , , 2.3.4hnviting Quotation/Request for Proposal (RFP), , , , After receipt of duly authorised purchase requisition from the store department, or other departments; rolevof purchase department comes into play. If a concern, can afford or the size of the concern is big enough, there should be a separate, purchase department for all purchases to be made on behalf of all other, departments. Such a department is bound to become expert in the various, matters to be attended to, for examples— units of materials to be purchased and, licences to be obtained, transport, sources of supply, probable price etc., , "Materials purchase department in a business house is ‘confronted’ with the), , i) | What to purchase?, , ii) | When to purchase?, , (, (, (iii) How much to purchase?, (iv) From where to purchase., (, , v) At what price to purchase., , To overcome these questions, purchase department make an enquiry into the, , market for the required material. The process of gathering information\about the, Tate, quantity, technology, services and support etc., purchase departmént sent, , RFP 'to'selected vendors in case if purchase policy allows this practice. Some, organizations) follow the open and transparent purchase policy and’ invite, quotations »from the interested vendors; This process is called Tender, Notification or Invitation of Tender., , , , 2.3.5]Selection of Quotation/ Proposal, , , , , , , , After invitation of tender from the vendors, interested vendors who are fulfilling, all the criteria mentioned in the tender notice send their price quotations/, proposals to the purchase department. On the receipt of quotations, a, comparative statement is prepared. For selecting material suppliers, the factors, which the purchase department keeps in its mind are—price, quantity, quality, offered, time of delivery, mode of transportation, terms of payment, reputation of, supplier etc. In addition to the above listed factors purchase manager obtains, other necessary information for final selection of material suppliers.
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2.3.6 Preparation and execution of Purchase Orders, , , , , , Having decided on the best quotation that should be accepted, the purchase, Manager or concerned officer proceeds to issue the formal purchase orderilit isa», , within a specified period. G i i enerally, copies of purchase order are given to Store, or order indenting department, receiving department and cost accounting, department. A copy of the purchase order with relevant purchase requisitions, is, held in the file of the department to facilitate the follow-up of the delivery and, also for approval of the invoice for payment., , 2.3.7[Receipt and inspection of materials, , (After executionyof purchasejorder and/advanceypayment (if terms of quotation so, specify), necessary arrangement is made to receive the delivery of materials After, , receipt of materials along with relevant documents or/ and invoice, receiving, department:(store dept.) arrange to:inspect the materials \for its conformity with, , purchase order. \After satisfactory inspection materials are received and_Goods, Received Note is issued. If some materials are not found in good condition or are, , not in conformity with the purchase order are returned back to the vendor along, with aj Material Returned Note., , 2.3.7.1|Goods Received Note, , , , , , , , , , , , If everything is in order and the supply is considered suitable for acceptance, the, Receiving department prepares a Receiving Report or Material Inward Note or, ¢ Generally, it is prepared in[quadruplicate] the copies being, distributed to purchase department, store or order indenting department,, receiving department and accounting department., , , , , , , , 2.3.7.4 Material Returned Note, Sometimes materials have to be returned to suppliers after these have been, , Such returns may occur before or after the preparation of, the receiving report. If the return takes place before the preparation of the, receiving report, such material obviously would not be included in the reportand, , hence not shown in the’stores ledgers. In that case, no adjustment in the account, books would be necessary. But if the materialjis returned after its entry in the, , receiving report, a suitable document must be drawn up in support of the issue so, , as to exclude from the Stores of Material Account the value of the materials, returned back. This document usually takes the form of a Material Returned Note, or Material outward return note., , 2.3.8 Checking and passing of bills for payment:, , The invoice received from the supplier is sent to the accounts section to check, authenticity and mathematical accuracy. The quantity and price are also checked _, , with reference to goods received note and the purchase order respectively. The, accounts section after checking its accuracy finally certifies and passes the invoice, , for payment.
