Procedures for Material Procurement: Since the manufacturing processes and materials requirements vary from company to company or industry to industry, the procurement process as well as the use of materials also bears significant variations across companies. One company may have different purchasing policy compared to others. So, it is very likely to vary procurement procedures too. At normal, the procedures for material procurement involves the following important steps:
1. In the subject of material procurement process, I would like to say that the Production Process, Engineering, Planning and Process Routing determine the design of products, materials specifications and the requirements at every stage of activities or operations.
Engineering and planning not only determine the maximum and the minimum quantities to process and the BOM (bill of materials) for given products and quantities but also co-operate in developing acceptable standards where applicable.
2. The manufacturing budget gives the master plan from which details of required materials requirements are eventually developed.
3. The PR (purchase requisitions) inform the purchasing manager regarding the quantity and the type of materials required.
4. The PO (purchase order) stands for appropriate quantities to be delivered at specified dates to ensure uninterrupted business operations.
5. The receiving report (GRN) ensures quantities received in warehouse and may report the results of inspection and testing for quality (Quality Control).
6. The materials requisition informs the store or warehouse to deliver specific types and quantities of materials to a mentioned department at a specific time or is the authorization for the warehouse to issue materials to departments.
7. The materials ledger cards (BIN Card) record the receipt and the issuance of each type of materials and provide a perpetual inventory system.
To grow smoothly and be without risk of fraudulent purchase, an organization should have proper Procedures for Material Procurement and use in the company.
