This P.P.T focuses on different aspects of Industrial Purchasing System. By this P.P.T I am trying to explain term Auction , Order Placement , Documentation, Purchase Requisition, The Bills Of Materials, The Automatic Order , The Budget , Bidding, Order Placement etc

1. Industrial Purchasing System
A method used by businesses to buy products
and/or services. A purchasing system manages the
entire acquisition process, from requisition, to
purchase order, to product receipt, to payment.
Purchasing systems are a key component of
effective inventory management in that they
monitor existing stock and help companies
determine what to buy, how much to buy and when
to buy it. The purchasing system can not be
actuated until a need is recognized in some form of
document authorizing buying action.

2. Auction
An auction is a process of buying and
selling goods or services by offering them up for
bid, taking bids, and then selling the item to the
highest bidder. In economic theory, an auction
may refer to any mechanism or set of trading
rules for exchange. Auction is used for
requisition for products on low rates for
industrial use.

3. Documentation
The actuating document may take several
forms, such as requisition , a bill of materials ,an
automatic reorder, or a budget . Familiarity with
these documents is small but significant
constituent of the marketer’s information
base, because they will be made.
Documentation work requires all the details
regarding purchase process. In common
, documents includes , requisition, the bill of
materials , the automatic order , the budget etc.

4. Purchase Requisition
Purchase Requisition or Purchase Request is a precise
document generated by an internal or external
organization to notify the purchasing department of
items it needs to order, their quantity, and the time frame
that will be given in the future. It may also contain the
authorization to proceed with the purchase. It is also
called Purchase Order Request.
As part of an organization's internal financial controls, the
accounting department may institute a purchase
requisition process to help manage requests for
purchases. Requests for the creation of purchase of goods
and services are documented and routed for approval
within the organization and then delivered to the
accounting group.

5. The Bill Of Materials
It usually contains a list of items which are
needed to complete a certain project or produce
the products specified in a customer’s order.
This documents typically originates in the
production planning or engineering department
and includes the quantities of materials needed
and delivery shedules desired as well as material
specifications.

6. The Automatic Reorder
In the case of continuing need , particularly for
standard items, suppliers or material bought on
established specifications , an automatic order
authorization is fairly common. This document
defines minimum inventory levels, order points
and economic order quantities for designated
commodities. A buyer is authorized to reorder
such an item in the quantity specified whenever
its inventory reaches the level identified as its
order point

7. The Budget
The budget usually includes projections of the
number of units of each end product the firm
plans to produce during the budget period.
Executive approval of the budget results in the
translation of output figures into requirements
for materials and authorization for the
commitments with suppliers for these
requirements. Such commitments generally call
for delivery of all or some stipulated share of the
total requirements during the budget period.

8. Bidding
Bidding is an offer (often competitive) of setting a price one
is willing to pay for something or a demand that something
be done. A price offer is called a bid. Government units and
most public institutions are required to purchase on the bid
system. A contemplated bid is advertised well in advance so
that any interested supplier may have time to submit a bid.
After a set date , no bids will be accepted and all bids
received by this time are opened usually in the presence of
the bidders themselves. The bids are made public and the
lowest responsible bidder is awarded for the order. If no bids
are acceptable , the purchasing officer ordinarily has no
alternative but to reject them all and initiate the procedure
again , calling for new bids.

9. Order Placement
Placing an order usually involves the use of a
purchase order form even in emergency
situations when usual procedures are set aside.
It is also true that all conditions of the purchase
agreements many not be stipulated in the
purchase order. Order placement must be
specific in terms and it must cooperate with the
present demand and future demand as per
organizational requirements.

10. Follow Up
Ideally it should not be necessary to follow up an
order. Although follow-up procedures in current use
are too varied to permit much generalization
, responsibility for initiating them usually rests with
the buyer who places the order. Follow up procedure
itself may involve no more than a telephone call , a
series of letters or a questionnaire. On the other
hand , it may include a group of specialists , who
spend virtually full time keeping suppliers on
schedule. Expeditors are often vested with
considerable responsibility and spend much of their
time visiting suppliers plants to investigate deliveries
and to keep shipments moving.

11. Receipts
The receiving units commonly reports incoming
shipments some form of “material received”
memorandum. Typically copies of the
memorandum are forwarded to the purchasing
department to be checked against the invoice
, to the stores department for entry in inventory
records and to using department as notification
of fulfillment of its requisition. In addition to
the verification of quantities received , it may be
necessary to verify quality as well. Sample
checking, specialized inspection division are
practices to judge the quality of received goods.