purchasing | scientific purchasing | - meaning , principles

meaning of purchasing : 

 simply purchasing means a some kind of acquisition of materials and properly purchasing is a managerial and strategic activity which includes planning , research and policy making .

scientific purchasing includes five Rs :

• right quantity
• right quality 
• right price 
• right time 
• right place (supplier )

scientific purchasing means procurement of right material , machine and equipment in right quantity and quality, at right price, place, and time.

principles of scientific purchasing : 

right quantity :

weather it is a machine material or tool it should be purchased in a right quantity . right quantity means such quantity which can maintain a continuity of production process .it also results into no undue of investment of capital in inventory .right quantity also means no excessive expenses on transportation , storage and insurance .it should be noted that right quantity does not mean larger quantity . most of the time manager purchase larger quantity considering lower price and discount . consequently larger quantity invites different problems such as blockage of working capital , storage and transportation expenses , insurance ,material may become outdated .

right quality : 

generally sale and profit  depends on the quality of the product . right quality means quality which is reasonable or necessary foe the sale i.e. quality which is expected or demanded by the customers . it does not mean high quality i.e. it should be such quality that can maintain cost of production at reasonable level .decision about quality of material is jointly taken be the production management and sales management .

following points should be considered while purchasing right quality of raw material :

• the purchase manager should have the knowledge of technical aspects of the material .
• supplier should be given clear description and specification of material required .
• raw material should be tested having being received . sometimes sample cannot be checked before placing an order for the material . 

in case material is not as per the given specification it should be rejected .so there should be remark in purchase order stating " material will be returned or exchanged in case of defectives or not as per specification and all expenses will be borne by supplier "

right price :

right price does not mean making purchase at lower price .generally quality of material is found inferior if material is purchased at lower price and it will adversely affect units goodwill and product remains unsold .right price means reasonable price at which an unit can get expected quality of material at right quantity . 

a purchase officer must take into account followings while deciding right price :

• comparative study of price of different supplier 
• discount by different trader 
• time of delivery of material 
• actual cost of material and other expenses such as packing , labor charges , taxes , transportation 
• cost of available substitute
• benefits of right price 
• reduction in cost of production 
• no excessive investment of working capital  
• survival in competition 
• proper quality at right price 

right time :

material should be received at right time which is specified in production planning .the material should be purchased at right time so that it may not result into either excess investment in the stocks or may result into stock out . efforts must be made to replenish the material at a point where they are reaching at the recording level . 

in simple words material should be purchase so that inventory should be at definite level and not problem of scarcity of material .

following points should be considered while deciding right time : 

• time specified in production planning 
• time to complete production process 
• customer's commitment date 
• benefits
• flow of production is maintained 
• meeting customer's commitment 
• meeting competition

right place ( supplier ) :

right supplier is one who provides right quantity and right quality of product , at right price and time . a purchase manager should decides as to from whom to purchase . the supplier should be ready to supply required material at right time . at the same time , transportation charges should be taken into consideration otherwise it may results into increase in cost of production .

below matters should be considered while selecting right supplier :

• the goodwill or prestige and regularity of the supplier 
• transportation charges 
• market presence of supplier 
• previous experience of supplier 
• payment terms and condition