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Purchase Functions

DO's

  • Raw materials and consumables should be procured as per the approved budget/production programme/Bill of Materials (BOM) efficiently and economically from the right source, at the right time and of right quality in order to ensure uninterrupted production.
  • While issuing an indent, it is the responsibility of the indentor to take into account stock position in the production floor as also in the stores, work in progress (WIP), consumption rate, correct specification of the material, existence of budget provision, lead times etc.
  • If the quantity ordered is much more than L-1 alone can supply, the quantity may be distributed in such a way that the purchase is done in a fair, transparent and equitable manner.
  • Deliveries of all high cost and high volume items should be staggered wherever possible to ensure that inventories are within the specified norm.

DON'Ts

  • The opening of quotes after the due date should not be delayed.
  • Don't miss to evaluate the consumption pattern of an item before placing indent for its procurement.
  • Quotes received in a format other than as specified in the tender/request for quotation (RFQ) should not be considered.
  • Don't follow post tender negotiation because the Central Vigilance Commission has banned all post tender negotiations with immediate effect except in the case of negotiations with L-1 (i.e. Lowest Tender) with exception, however, concerning the purchase preference policy of the Government regarding the Public Sector Enterprises. Nevertheless, under its shield, the PSUs should not be made conduits for getting costly inputs or for improper purchases.
  • Don't forget to seek the approval of the purchase proposals from the Competent Authority before issuing the Purchase Order.

DO's

  • Indents, which are complete in all respects, should only be accepted for processing. Incomplete indents should be returned to the concerned user department with a request to provide complete information.
  • It should be ensured that enquiries issued to vendors give technical specifications of the goods clearly and also indicate relevant commercial terms and conditions.
  • The enquiries should also indicate clearly the last date of submission of quotes and must insist on submission of quotes in a sealed cover with the reference no. of the enquiry and the last date of submission super-scribed on the same.
  • Different types of tendering - Single, Limited, Public and Global - should be resorted to as per the norms laid down by the Company.
  • The new vendors /subcontractors dealing with the Company must be approved by a designated committee as per the Purchase Procedures (P.P.) of the Company.

DON'Ts

  • Don't forget to put serial number on pages of purchase file before sending it to other Department (s).
  • Don't call quotations on the ground of created urgency.
  • Never refuse or allow delay tactics in supply of tender documents.
  • Don't keep a file pending for decision by the Approving Authority after the recommendations of the tender committee have been received.
  • Don't forget to keep the concerned Departments informed of the delivery schedules so that they may plan their work-schedule accordingly.
  • For any recurring type of consumable items, it is not proper to procure the same in piecemeal manner from whatever source. Better go for rate contracts.
  • Don't forget that no repeat order can be given at the same rate, terms and conditions, as agreed upon at the time of initial order, after six months, for which fresh quotations need to be called for.
  • Don't give any advance intimation of the indent requirements to friendly parties.
  • Never include dummy firms to increase the number of parties.

DO's

  • The quotes should be invited (especially for raw materials) from the registered/approved vendors.
  • The quotes should be opened immediately after the last date of receipt of quotes is over as per procedure given in the Co.'s Purchase Procedures .
  • List of approved vendors should be appraised bi-annually by the designated committee so as to update the same once every year in accordance with the vendor appraisal procedure as given in the Co.'s Purchase Procedures .
  • Vendors should be given adequate time, as specified in the Company's P.M., to submit quotes. This time limit may be reduced, if the reasons for the same are strong, which should be recorded clearly in the file.
  • Purchase Order should be placed on technically acceptable and lowest vendor based on evaluation of quotes submitted by vendors.
  • Do ensure that whenever needed, the subcontractors are to be engaged only with the approval of the 'Sub-Contract Appointment Committee' as per Company's Purchase Manual.
  • Procurement of materials on proprietorship basis should be made, based on indents, which are accompanied with a proprietary certificate from the user department as per guidelines given in the Company's Purchase Procedure.

DON'Ts

  • Incoming material must not be used, processed or made available to the manufacturing floor until it has successfully passed the Incoming Goods Inspection (IGI).
  • Don't accept material, which is not strictly as per the specifications, and wherever the material supplied is of any inferior specifications but acceptable on technical grounds, the same too should not be accepted till financial implications thereof are sorted out and prior concurrence of Competent Authority is taken.
  • Don't make cash purchases beyond the limits fixed by the Company.
  • Don't give tender documents of approved parties to one party, as it would lead to manipulations.
  • Don't forget that any amendment to the Purchase Order (except for a small variation as provided in the Purchase Manual) is to be initiated by the Materials Management Department and must go through the similar cycle of approval as the purchase proposal.
  • Don't forget that procurement proposal of capital equipment of value more than Rupees One Lakh must be approved by a standing 'Technical Committee' duly constituted by the Competent Authority.

DO's

  • Do maintain all records and generate various reports for effective performance of purchase function.
  • All documents in the purchase files should be serially numbered.
  • For materials of limited shelf life, efforts should be made to get the vendors ship these materials from their latest manufacturing lots and deliveries of such materials should be phased in such a way that these materials are normally consumed before their expiry dates.

DON'Ts

  • Don't miss to undertake periodic review of the systems and procedures and suggest improvement/change, wherever needed.
  • For normal terms of payment to the suppliers, the Finance Deptt. should not process the bills till they are verified with the accepted quantity of ICRRs as per the terms of the Purchase Order.

DO's

  • Give a 'certificate of dependence' only about those of your family members who come under the definition of dependent' as per Company Rule.
  • Always consider whether any indiscreet or anti-social behaviour by an employee could affect the Company's reputation or an individual's ability to discharge his or her duties (e.g. making that person vulnerable to special pressures from outside).
  • he personal claims preferred by the employees should be examined very closely and verified before they are passed or referred to the vigilance department for clarification/ investigation, wherever malafide irregularities are detected.

 

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