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Industrial Purchase Strategies, Faridabad (2025)

08/11/2021

Purchasing: 6 Major Principles of Purchasing.

Some of the major principles of purchasing are: 1. Right Quality
2. Right Quantity
3. Right Time
4. Right Source
5. Right Price and
6. Right Place.

1. Right Quality:
The term right quality refers to a suitability of an item for the purpose it is required. For producing the goods of best quality, the best grade of raw material may be the right quality whereas for producing items of medium quality, the average lowest grade may be the right quality.

The quality of the item is called as grades. It can be measured by physical tests, chemical analysis or by any other methods depending upon the nature of a product. The use of standard specification, brand name or trade name helps in purchasing the squired qualities of materials. ‘The quality must be built into the product’. It is the duty of the purchasing department to ensure that materials are purchased from those suppliers.

For creating goodwill, right production, standardisation, elimination of waste and for better results, right quality purchases are very essential. Quality for different materials is decided by the concerned departments.

In case of workshop equipment, the decision is taken by the plant engineer and for stationery it is the user department. However, purchase department may question the requirements of the different departments on the basis of its experience and suggest various alternatives. The inspection department must verify whether the goods supplied are in accordance with the order placed.

Thus, the right quality is the suitability of items purchased for a given purpose. The best quality of materials purchased need not be the right quality.

2. Right Quantity:
Materials purchased should be of right quantity. The right quantity is the quantity that may be purchased at a time with the minimum total cost and which obviates shortage of materials. Ensuring and maintaining a regular flow of materials for carrying the production activity is the vital aim of any purchase organisation. Excess purchases should be avoided, it results in overstocking and capital is unnecessarily blocked and inventory carrying cost goes up.

Economic Order Quantity (EOQ) helps in determining the right quantity of materials to be ordered. It is calculated by applying the following formula:

EOQ =

A stands for annual consumption of material, C for cost of placing an order and S for Annual Storage and carrying cost per unit.

For dedicing the amount of right quantity to be purchased, certain important factors must be considered by the management. These are the nature of the manufacturing process, the nature of material to be used, prevailing market conditions i.e., changes in the tastes and preferences of the people, cost of materials to be purchased, cost of possession and storing capacity of the organisation.

Along with the economic order quantity, there are two more concepts, viz.; bulk order quantity and arbitrary order quantity which needs to be understood.

Bulk Order Quantity is the quantity which is larger than the economic order quantity. It combines the ordering quantity of more than one order so as to round off to 3, 6 or 12 monthly requirements and place a single order for the full requirements of a period under consideration.

Bulk order quantity ensures various economies of price, lesser operational cost in the purchase department. Inexpensive and slow moving items are generally purchased in bulk quantity.

Arbitrary Order Quantity is the outcome of the weaknesses of economic order quantity and bulk order quantity. Due to varying market conditions, it is not advisable to always strictly adhere to the economic and bulk order quantities.

Certain factors viz.; uncertain order from the market, uncertain financial position, uncertain production schedule and uncertain lead time are responsible for the adoption of arbitrary order quantity on the part of the purchase manager.

3. Right Time:
The time at which the purchases are to be made is of vital importance. In case of items used regularly, right time means the time when the stock reaches the minimum level. The reorder level of material is fixed for each item under the principle of right time.

Action for the purchase of new supplies should be immediately initiated, when the material reaches the reorder level. Reorder level for each type of material is calculated by applying the following formula.

Reorder level = Maximum Consumption x Maximum Reorder Period. The materials control department sends the purchase requisition to be purchase department for the purchase of materials. In case materials are required for special jobs, the Purchase Department ensures that the materials are delivered in time.

Another important factor to be considered is the delivery of materials from stores to production departments. Any under delay in supplying the materials on different jobs delays the production.

4. Right Source:
Selecting the right source for the purchase of materials is an important consideration in the purchase procedure. The right source for the procurement of materials is that supplier who can supply the material of right quality as ordered, in right quantity as ordered, at a right time at which the materials were required to be supplied, at an agreed price with the supplier, who is in a position to honour the commitment without much follow- up, who has necessary financial resources and adequate man-power to handle the order and who is well established with higher reputation and proven business integrity.

The source of material should be located within a reasonable distance from the buyer’s organisation. This will minimise the delivery delays, higher transportation charges and improve the personal contact between the buyer and the supplier and enable better after-sales service etc.

As far as possible the middlemen and brokers should be avoided in the purchase of materials. A direct liaison should be established with the supplier. It would be helpful in improving the quality of the material in future.

While selecting the supplier certain factors must be kept in mind, viz., location of the supplier, warehousing facilities available with the supplier, relations of the employers with the labour, credit worthiness of the supplier, size of the supplier’s firm and quality control observed by the employer etc. A personal visit to prospective supplier’s premises will be helpful in assessing the capabilities of the supplier.

5. Right Price:
Determination of right price is a difficult task. It is the main object of any organisation to procure the material items at the right price. It is that price which brings the best ultimate value of the money invested in purchasing the materials.

Deciding the right price of a product depends on variety of factors, viz.; quality, delivery time and ultimate life of the material, demand and supply curve, extent of competition, government restrictions, after sales services, discount offered, and terms of purchase etc. It may be pointed out here that the determination of proper price depends not only on market knowledge but also a clear understanding of the pricing process.

The buyer should keep in touch himself with the above mentioned factors in the process of determination of price. He must consider that whether a proposed item to be purchased represents the best value for money or not.

This is known as “value analysis”. The prevailing market prices also provide basis for the price determination. There should be negotiation between the purchase department and the suppliers for the determination of proper price.

6. Right Place:
Besides obtaining the materials of the right quality and quantity from the right source at the right price, it should be ensured that the materials are available at the right place. Transportation and material handling costs are greatly affected by the selection of the right place from where the materials are to be acquired. For minimising these costs, selection of right place for the acquisition of material is of utmost importance. If local as well as outside supplier fulfills these conditions, the former should be preferred.

08/09/2020

अपने किसी भी एक प्रश्न का उत्तर प्राप्त करें।
अपनी D.O.B और जन्म स्थान देना ना भूले।
आप मूझे whatsap के माध्यम से भी पूछ सकते है।

23/05/2020

One of best motivation video

18/05/2020

Hello Everyone
I am very happy to say that ,the only purpose of starting this group is to increase our knowledge and share among ourselves ,so that we can all be borrowed.
Through this group , all the procedures that are used in the automobile industry will be discussed in the very core.
Through this group ,the main focus will be on purchase strategies ,if anyone has any doubts ,they can ask hesitantly.

It is said that knowledge increases through sharing knowledge , i believe the same.

18/05/2020

हमेशा positive कैसे रहे l

17/05/2020

HOW TO REDUCE YOUR SAFETY STOCK USING THE 80/20 RULE:

The 80/20 rule is often used in parts inventory management to identify the 20% of inventory that produces 80% of the profits.

A variant of this rule, called ABC analysis, is commonly used to split inventory into three parts according to their profitability. This allows you to focus your efforts and money on the inventory items that count the most. While this is a good way to put the 80/20 rule to use, there are other equally useful applications of this powerful principle.

Suppose you have already used the 80/20 rule to identify your most profitable inventory items and have eliminated or reduced the least profitable ones. While this is a significant improvement in cutting down your inventory costs, you can go further by applying the 80/20 rule to your safety stock.

So how can you use the 80/20 rule to minimize uncertainties? Let’s look at supplier unreliability. Unreliable suppliers are the suppliers who can’t be relied on to make their shipments on time, and the 80/20 rule says that 80% of your late shipments come from 20% of your suppliers.

So, if you have been keeping records as you should be, you have the delivery dates and times from each of your suppliers for at least the last year. Included in this record will be the number of late shipments for each supplier. With this data, you can use the 80/20 rule as follows:
Choose a supplier. For example, Supplier A. Take the number of late shipments from Supplier A and divide that number by the total number of late shipments for the whole year. Then multiply that number by 100, and what you have is Supplier A’s unreliability score relative to the other suppliers. Do the same with all your suppliers and then sort your list of suppliers in descending order of their unreliability scores, with the most unreliable at the top.

Going down the sorted list, add up the unreliability scores until the sum reaches approximately 80%. The vendors up to this point are responsible for 80% of the late shipments you received over the past year.

If you check, you should find that those vendors comprise about 20% of your supplier pool and, if you eliminated those suppliers, you could substantially improve the reliability of your inventory deliveries, which would allow you to reduce the size of your safety stock. The remaining 80% should be able to make up in shipment volume for the 20% that you cut out.

17/05/2020

Canada Prime Minister

17/05/2020

What is the Digital Supply Chain and how to be successful

The digital supply chain is the next generation of supply chain management. Companies must recognize that “global digital supply chains” or “the digitalization of supply chains” aligns with the notion that the future of business is heavily rooted in a digital transformation revolution: the block chain, the internet of things, advanced robotics, and much more. Here are five ways that progressive enterprises are leveraging blockchain for supply chain success.

Blockchain for smart contracts:

Blockchain unravels the immense complexity and interconnectedness of global digital supply chains. It does this by storing all relevant information in a master ledger (the blockchain). Smart contracts ensure that by storing the terms of a contract in the blockchain and measuring all proposed transactions against it, issues with data redundancy are reduced and trading partners can work together much more efficiently.

Blockchain for sustainable and ethical supply chains:

When a product (or batch of products) is sourced or created, it can be given a unique identifier that’s encrypted. This identifier can be linked to a token that’s time-stamped and follows the product throughout the supply chain. All of this information is stored on the blockchain, enabling supply chain leaders to make sure it was produced or sourced in an ethical, sustainable manner, while concurrently lending operational efficiencies to the overall process of bringing a product to market. Some companies are also harnessing the power of blockchain to support positive and social environmental change, such as the opportunity to say “thank you” (in the form of a blockchain token) to people involved in producing the products they buy.

Blockchain for better security:

Keeping the supply chain secure is a high-stakes issue across enterprises, with valuable inventory and confidential information changing hands at a fast pace across the globe. Because a blockchain ledger is immutable by nature and set up so everyone involved has a complete copy, it’s virtually resistant to hacks and cannot be altered without the sequential permission of pertinent parties. The built-in safeguard of an immutable ledger makes audits easier and data incorruptible. It further decreases the risk of cyber-attacks because it uses a distributed storage system.

Blockchain for greater efficiency:

Right now, millions of products are traveling across the world via global supply chain operations. These products all have information attached to them, such as origin, destination, serial number, and manufacturer. When blockchain is used, it reduces digital supply chain risk by making it possible to track products through every stage of the journey, and eliminates the need for dedicated software or multiple planners dedicated to monitoring the millions of products traveling through the supply chain.

Blockchain for greater efficiency:

Because blockchain is immutable and transparent, all parties involved in the digital supply chain can track relevant information to a product and access that information in real-time. This yields a significant boost to supply chain efficiency. Smart contracts help further raise the efficiency bar, as this safeguard can prevent time lost wrangling over contract issues. Because a collection of terms and conditions travel with a product through the supply chain, this prevents recurring searches for blame when disputes over that information arise.

17/05/2020

Important Supply chain trends

What will the supply chain look like in the future? Here are a few key trends in supply chain management.

Artificial intelligence and machine learning

History-based forecasting is used to drive supply chain planning, but artificial intelligence (AI) and machine learning (ML) are primed to change that forever. AI- and ML-based predictive models will transform processes like demand sensing, shaping, and orchestration, as well as supply planning. AI will begin to drive dynamic pricing, and new-product introductions will be based on predictive market intelligence. AI and ML will also drive new models for product promotions management, as well as responses to disruptions in the supply chain. AI and ML predictions will play a key role in the future of supply chain operations and have a transformative effect on other business processes.

Regulatory challenges and security risks

With the continued risk of high-profile hacks that compromise the information of millions of consumers, companies will need to raise the standards of their privacy and protection protocols this year. New regulations to protect privacy that go into effect this year, such as General Data Protection Regulation (GDPR), will also affect company operations. Tax reform, Brexit, political instability, oil prices, and resource availability will all require action across the enterprise, including within the supply chain. As a result, supply chain planners will need sophisticated modeling capabilities to plan for all potential scenarios.

Blockchain and beyond

Blockchain has already transformed the way trading partner networks collaborate. As 2019 progresses, the technology will continue to remove banks from the picture, leverage cryptocurrency and distributed ledgers, and enable better collaboration. Blockchain will also play a role in making collaboration a bigger factor in supply chain planning and ex*****on. Track and trace, once a radio frequency identification (RFID)-focused movement, uses sensors and devices across assets and machines and will continue to be used in new ways this year. Thanks to the Internet of Things (IoT), data will permeate the supply chain and be used to transform processes once it’s analyzed and consumed by AI and ML.

A dynamic, connected future

Supply chain managers are always looking for new ways to take advantage of opportunities and to overcome obstacles as the modern supply chain evolves. With a connected supply chain planning approach and the use of new technologies, data is brought together, and more people are integrated into decision-making processes. As the supply chain of the future comes into view, these trends will play a key role in supply chain transformation.

17/05/2020

5 supply chain management best practices

To succeed in a growing global market, you need a supply chain that’s connected from start to finish, across your enterprise and beyond. Here are five steps we recommend to achieve connected supply chain planning.

1.Make the move to real-time supply chain planning

When using ERP systems and spreadsheets for planning, companies typically rely only on historical data, resulting in little wiggle room for changes should any disruptions occur in demand or supply. For example, based on the previous year’s numbers, a company can estimate the number of products it will sell in the next quarter. But what if a massive hurricane destroys a key distribution center, leading to too little supply on the shelves? With Anaplan’s real-time connected supply chain planning solution, you can create “what-if” scenarios and plan more effectively so you’re ready when disruptions occur.

2.Unify supply chain planning with enterprise planning

A vital second step is connecting traditionally siloed supply chain planning to sales and operations planning and financial planning. Companies can benefit from synchronizing their short-term operational planning with their wider business planning processes to make real-time updates to inventory forecasts and supply. Deploying real-time S&OP solutions that enable enterprise-wide collaboration means that key stakeholders across the business can create new scenarios and quickly assess how to use their resources to optimize profitability when an unforeseen event happens.

3.Anticipate the demand of the end customer

For consumer packaged-goods companies, anticipating what customers want and when they want it is an ongoing challenge. A solution like Anaplan allows end-to-end visibility across the supply chain and beyond an existing network of wholesalers and retailers to sense demand signals from customers. When changing consumer sentiments can be rapidly identified and changes to demand for the product assessed, the company, partners, and customers benefit from improved profitability, margins, and lead time.

4.Leverage real-time data across all points of the supply chain

Because supply chain planning typically involves a myriad of suppliers, channels, customers, and pricing schemes, models can become large and potentially unwieldy—especially when spreadsheets are the primary planning tools. Incorporating a solution that uses real-time data allows planning with great accuracy and reduces the risk of stock-outs or surplus inventory.

5.Ensure the flexibility to cope with change

When technology facilitates efficient planning and quick reactions, disruptions aren’t disruptive because re-planning and re-forecasting is easy—resulting in time and money saved and increased profitability.

17/05/2020

What is the supply chain management process?

The supply chain management process is composed of four main parts: product portfolio management, demand management, S&OP, and supply management.

1. Demand management

Demand management consists of three parts: demand planning, merchandise planning, and trade promotion planning.

Demand planning is the process of forecasting demand to make sure products can be reliably delivered. Effective demand planning can improve the accuracy of revenue forecasts, align inventory levels with peaks and troughs in demand, and enhance profitability for a particular channel or product.

Merchandise planning is a systematic approach to planning, buying, and selling merchandise to maximize the return on investment (ROI) while simultaneously making merchandise available at the places, times, prices, and quantities that the market demands.

Trade promotion planning is a marketing technique to increase demand for products in retail stores based on special pricing, display fixtures, demonstrations, value-added bonuses, no-obligation gifts, and other promotions. Trade promotions help drive short-term consumer demand for products normally sold in retail environments.

2. Supply management

Supply management is made up of five areas: supply planning, production planning, inventory planning, capacity planning, and distribution planning.

Supply planning determines how best to fulfill the requirements created from the demand plan. The objective is to balance supply and demand in a manner that achieves the financial and service objectives of the enterprise.

Production planning addresses the production and manufacturing modules within a company. It considers the resource allocation of employees, materials, and of production capacity.

Production/supply planning consists of:

Supplier management and collaboration
Demand and supply balancing
Production scheduling
Inventory planning determines the optimal quantity and timing of inventory to align it with sales and production needs.

Capacity planning determines the production staff and equipment needed to meet demand for products.

Distribution planning and network planning oversees the movement of goods from a supplier or manufacturer to the point of sale. Distribution management is an overarching term that refers to processes such as packaging, inventory, warehousing, supply chain and logistics.

3. Sales and operations planning (S&OP)

Sales and operations planning (S&OP) is a monthly integrated business management process that empowers leadership to focus on key supply chain drivers, including sales, marketing, demand management, production, inventory management, and new product introduction.

With an eye on financial and business impact, the goal of S&OP is to enable executives to make better-informed decisions through a dynamic connection of plans and strategies across the business. Often repeated on a monthly basis, S&OP enables effective supply chain management and focuses the resources of an organization on delivering what their customers need while staying profitable.

4. Product portfolio management

Product portfolio management is the process from creating a product idea creation to market introduction. of creating an idea for a product and following through on it until the product is introduced to the market. A company must have an exit strategy for its product when it reaches the end of its profitable life or in case the product doesn’t sell well.

Product portfolio management includes:

New product introduction
End-of-life planning
Cannibalization planning
Commercialization and ramp planning
Contribution margin analysis
Portfolio management
Brand, portfolio, and platform planning

17/05/2020

Based on our “Basic Purchasing Principles”, Sharp Group provides open and fair opportunities for all the suppliers and potential suppliers worldwide, and conducts purchasing activities through fair evaluations.

Proposal to Sharp

If your company wants to do business with Sharp Group, we would like you to check the production items and location in advance on Sharp official website, and product catalogs, etc., and decide what your company wants to introduce and sell to us.

It is very important to appeal your company's quality, price, technical features and service advantages.

The purchasing department at our domestic and overseas production bases will be the contact window for suppliers and potential suppliers.

Initial Meeting
Please prepare for the following materials for the initial meeting;

(i) Company profile, Product catalog
(ii) Data showing your competitiveness for your desired transaction items

Initial Study
We will study the items we are interested in, in terms of price, delivery, and after-sales service, etc.

Quotation and Sample Submission
We will check such various points as your company's price competitiveness, quality, and technical capabilities.

We will conclude a Non-Disclosure Agreement (NDA) in advance, if necessary, so that both parties do not disclose any confidential information that has been obtained through the meeting and/or evaluation process to the third party.

Any feedback on our reviews will be given to your company.

Evaluation / Certification
We will evaluate and certify the submitted samples.

Factory Audit
We will visit your factory and confirm whether your production process, management system, safety and hygiene, and environmental protection, etc. are appropriate.

Final Evaluation
We will comprehensively evaluate quality, price, technical capabilities, production/delivery flexibility, supply capabilities, after-sales service, future growth, etc., and finally decide whether the business can be started with us.

Transaction Preparation / Account Opening
If the overall evaluation results in a success, we will conclude a Basic Purchase Agreement, and Quality Assurance Agreement, etc. with your company.

After signing these agreement / contracts and opening an account, your company will be registered as Sharp's supplier and ready to do business with us.

17/05/2020

10 Tips for Negotiation.

1. Don't be afraid to ask for what you want.

Successful negotiators are assertive and challenge everything – they know that everything is negotiable. I call this negotiation consciousness. Negotiation consciousness is what makes the difference between negotiators and everybody else on the planet.

Being assertive means asking for what you want and refusing to take NO for an answer. Practice expressing your feelings without anxiety or anger. Let people know what you want in a non-threatening way. Practice 'I' statements. For example, instead of saying, "You shouldn't do that," try substituting, "I don't feel comfortable when you do that."

Note that there is a difference between being assertive and being aggressive. You are assertive when you take care of your own interests while maintaining respect for the interests of others. When you see to your own interests with a lack of regard for other people's interests, you are aggressive. Being assertive is part of negotiation consciousness.

"Challenge" means not taking things at face value. It means thinking for yourself. You must be able to make up your own mind, as opposed to believing everything you are told. On a practical level, this means you have the right to question the asking price of that new car. It also means you have an obligation to question everything you read in the newspaper. You cannot negotiate unless you are willing to challenge the validity of the opposing position.

2. Shut up and listen.

I am amazed by all the people I meet who can't stop talking. Negotiators are detectives. They ask probing questions and then shut up. The other negotiator will tell you everything you need to know – all you have to do is listen.

Many conflicts can be resolved easily if we learn how to listen. The catch is that listening is the forgotten art. We are so busy making sure that people hear what we have to say that we forget to listen.

You can become an effective listener by allowing the other person to do most of the talking. Follow the 70/30 Rule – listen 70 percent of the time, and talk only 30 percent of the time. Encourage the other negotiator to talk by asking lots of open-ended questions – questions that can't be answered with a simple "yes" or "no."

3. Do your homework.

This is what detectives do. Gather as much pertinent information prior to your negotiation. What are their needs? What pressures do they feel? What options do they have? Doing your homework is vital to successful negotiation. You can't make accurate decisions without understanding the other side's situation. The more information you have about the people with whom you are negotiating, the stronger you will be. People who consistently leave money on the table probably fail to do their homework.

4. Always be willing to walk away.

I call this Brodow's Law. In other words, never negotiate without options. If you depend too much on the positive outcome of a negotiation, you lose your ability to say NO. When you say to yourself, "I will walk if I can't conclude a deal that is satisfactory," the other side can tell that you mean business. Your resolve will force them to make concessions. Clients often ask me, if you could give me one piece of advice about negotiating, what would it be?" My answer, without hesitation, is: "Always be willing to walk away." Please note that I am not advising you to walk away, but if you don't even consider the option of walking away, you may be inclined to cave in to the other side's demands simply to make a deal. If you are not desperate - if you recognize that you have other options - the other negotiator will sense your inner strength.

5. Don't be in a hurry.

Being patient is very difficult for Indians. We want to get it over with. Anyone who has negotiated in Asia, South America, or the Middle East will tell you that people in those cultures look at time differently than we do in North America and Europe. They know that if you rush, you are more likely to make mistakes and leave money on the table. Whoever is more flexible about time has the advantage. Your patience can be devastating to the other negotiator if they are in a hurry because they start to believe that you are not under pressure to conclude the deal. So what do they do? They offer concessions as a means of providing you with an incentive to say YES.

6. Aim high and expect the best outcome.

Successful negotiators are optimists. If you expect more, you'll get more. A proven strategy for achieving higher results is opening with an extreme position. Sellers should ask for more than they expect to receive, and buyers should offer less than they are prepared to pay. People who aim higher do better. Your optimism will become a self-fulfilling prophecy. Conversely, if you have low expectations, you will probably wind up with a less satisfying outcome.

8. Show the other person how their needs will be met.

Successful negotiators always look at the situation from the other side's perspective. Everyone looks at the world differently, so you are way ahead of the game if you can figure out their perception of the deal. Instead of trying to win the negotiation, seek to understand the other negotiator and show them ways to feel satisfied. My philosophy of negotiation includes the firm belief that one hand washes the other. If you help the other side to feel satisfied, they will be more inclined to help you satisfy your needs. That does not mean you should give in to all their positions. Satisfaction means that their basic interests have been fulfilled, not that their demands have been met. Don't confuse basic interests with positions/demands: Their position/demand is what they say they want; their basic interest is what they really need to get.

9. Don't give anything away without getting something in return.

Unilateral concessions are self-defeating. Whenever you give something away, get something in return. Always tie a string: "I'll do this if you do that." Otherwise you are inviting the other negotiator to ask you for additional concessions. When you give something away without requiring them to reciprocate, they will feel entitled to your concession, and won't be satisfied until you give up even more. But if they have to earn your concession, they will derive a greater sense of satisfaction than if they got it for nothing.

10. Don't take the issues or the other person's behavior personally.

All too often negotiations fail because one or both of the parties get sidetracked by personal issues unrelated to the deal at hand. Successful negotiators focus on solving the problem, which is: How can we conclude an agreement that respects the needs of both parties? Obsessing over the other negotiator's personality, or over issues that are not directly pertinent to making a deal, can sabotage a negotiation. If someone is rude or difficult to deal with, try to understand their behavior and don't take it personally.