Published on March 5, 2014
What parameters should be kept in mind for purchasing new equipment
ABDUL RAHMAN 2011-mm-12
PARAMETERS OF PURCHASING • 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.
• • • • • • • • • • RIGHT PRICE RIGHT QUALITY RIGHT TIME RIGHT SOURCE RIGHT QUANTITY RIGHT ATTITUDE RIGHT CONTRACTS RIGHT MATERIALS RIGHT TRANSPORTATION RIGHT PLACE DELIVERY
RIGHT PRICE • It is the primary concern of any manufacturing organization to get an item at the right price. • But it is difficult to determine right price. So how to know actual price • 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.
RIGHT QUALITY • Right quality implies that quality should be available, measurable and understandable as far as practicable. • The right quality is determined by the cost of materials and the technical characteristics as suited to the specific requirements
RIGHT TIME • For determining the right time, the purchase manager should have lead time information for all products and analyses its components for reducing the same. RIGHT SOURCE • The buyer has to decide which item should be directly obtained from the manufacturer.
RIGHT QUANTITY • The right quantity is the most important parameter in buying. Concepts, such as, economic order quantity, economic purchase quantity, fixed period and fixed quantity systems, will serve as broad guidelines. • But the buyer has to use his knowledge, experience and common sense to determine the quantity after considering factors such as price structure, discounts, availability of the item, favorable reciprocal relations, and make or buy consideration.
RIGHT CONTRACTS • He should be aware of the legal and contractual aspects in international practices. • The buyer has to adopt separate policies and procedures for capital and consumer items. RIGHT MATERIAL • Right type of material required for the production is an important parameter in purchasing. • Techniques, such as, value analysis will enable the buyer to locate the right material.
RIGHT TRANSPORTATION • Right mode of transportation have to be identified as this forms a critical segment in the cost profile of an item. • It is an established fact that the cost of the shipping of ore, gravel, sand, etc., is normally more than the cost of the item itself. RIGHT PLACE OF DELIVERY • Specifying the right place of delivery, like head office or works, would often minimize the handling and transportation cost.
OTHERS FACTORS • • • • • • • Keep training in mind Think safety first Keep it green Maintenance Assess your business reality Get an external point of view Shop around for suppliers
TRAINING OF WORKERS • Should know about capabilities of workers • Either they can operate new equipment of not • Otherwise it may cause extra labor. KEEP IT GREEN • be sure that it's energy efficient • Not only will you be saving money, but you'll also be contributing to the health of the planet.
MAINTENANCE • Think about maintenance of new object and its repairing cost. • Cost of new upgradation related to new equipment. • Either local market can full fill required properties of this material or not.
THINK SAFETY • A healthy and safe work environment means your employees and your company can be more productive. • ensure that office equipment ergonomically designed to reduce employees' risk of injury and discomfort, while enhancing productivity. • Two standards – ISO 6385 – CSA Z412
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