With both manual and computerized purchasing systems, the basic documents needed in purchasing are requisition, bill of materials, enquiry form, purchase order, forms, advice note, consignment note, invoice document and goods received note.
1. The Purchasing Requisition
In many companies, a standard purchase requisition is prepared in duplicate by the person needing the item concerned, one copy being sent to the purchasing department and one retained. The information included on the form and its layout vary; however, it should include:
(a) An accurate description of the required goods and services with parts or stock numbers if applicable
(b) Quantity required in multiples of an agreed unitor measure:
(c) Date on which the goods are required;
(d) Account department or job to which they are to be charged;
(e) Space should be allowed for entry by the buyer of the purchase order number and the company from whom the goods are ordered;
(f) Date, signature of requisitioner and authorization where necessary
It is important for the purchasing department to have specified those who have the authority to countersign or issue purchase requisition. In no circumstances should requisitions be accepted from unauthorized sources.
Costly or unusual purchases which may be capitalized are often covered by a special procedure. A capital requisition is the commonly used title for the originating document in such cases. The authority in such cases is often vested in top management, in many instances, the requirement for the chief executive to countersign.
2. The Permanent Order Card Or Traveling Requisition
This document is often used for repeat ordering of supplies or for stock items. Where a manual system is in use and such items are often ordered, it can save a great deal of copying and has the further advantage of obviating possible errors in transcribing information on to an ordinary requisition. In addition, it serves as an ongoing record of transaction in the particular item.
A typical travelling requisition would include the following Information:
(a) A complete description of the item;
(b) The stock or part number if applicable the buyer’s stock or part number if applicable
(d) A list of names and address of potential suppliers;
(e) A cumulative record of quantities ordered on the various suppliers with prices paid.
(f) The re-order level; Quantity used during specified periods
(h) Supplier’s delivery performance against that specified
Generally, the form is one of a pair used by the stock control section, the other being the day-to-day stock card showing issues and receipt. The travelling requisition (TR) carries all the master information required to enable the purchase department to place the order.
When the stock level on the second card drops to re-order level, the stock clerk sends the TR to the purchasing department. In order to indicate that this has been done a coloured signal is attached to the stock card or an ‘on order’card is clipped to it.
The buyer reviews the card on receipt, makes his source and quantity decision on the card and passes it for typing. After the order has been typed, the typist enters the relevant purchase order number on the TR and returns it to buyer with the completed order for signature. Subject to satisfaction, the travelling requisition is then sent back to the stock clerk and is replaced in the appropriate file or, for example, pocket in a visible-edge card system.
3. Bill Of Materials Or Parts List
Description
This is a document that serve the same purposes as a purchase requisition in engineering undertakings when materials and components are bought specifically for each order or contract received.
Such a parts list is either attached to the drawing or printed on the drawing. Engineering buyers check parts against the drawing and indicate in the order number column whether it is to be provided from stock or bought out
Information provided on this document include drawing reference number of each part reference, description of each part, remark column, order number or stock column.
Purpose
i. To notify the purchasing department that need exist,
ії To specify what is required to meet the need
iii To authorize procurement
Iv To provide evidence as to what was requisitioned, when and by whom
Enquiry Form
Description
This is a document used to obtain information from possible suppliers relating to price, quality, delivery and terms of business for bought-out items. A copy of this document is kept for reference in the purchasing department, and two other copies, one for retention, the other for return, will be sent to each prospective supplier who is asked to quote. The enquiry should be accompanied by drawings, specifications and the buyers terms and conditions of purchase.
Information usually entered on this form include: the title (purchase enquiry), name, address, telephone number, etc. of the purchaser, a formal request to the vendor (e.g please quote best price and earliest delivery), name and address of vendor, date, purchaser’s reference, quantity required, short descriptions of items required, delivery date required, place of delivery, etc.) signature of person preparing quotation, requisition reference, order number reference (for us if quotation is accepted).
Purpose
To obtain relevant buying information such as price, quality, delivery and terms of business for bought-out from suppliers.
Purchase Order Forms
Description
This is a document which a buyer “offers’ to a vendor, which the latters may accept or do otherwise. The document is the first legal document ordering or mandating a seller to supply certain goods of which the buyer must have been satisfied with after careful sourcing for suppliers, careful determination of price and laborious negotiation.
A purchase order becomes a legal contract.
1. When it constituted an acceptance by the buyer of a formal quotation submitted by the vendor.
2. When it is accepted unconditionally by the vendor if it is submitted without prior quotation to the buyer.
A copy of the form is sent to the supplier (two where the order incorporates an acknowledgement for the supplier to return). The number of copies made of internal use varies. In addition to those retained in the purchasing department, copies may also be sent to other departments.
Information entered on this form include: the title (purchase order), name, address, telephone number, etc. of the purchaser, order number, a formal instruction to the vendor (e.g please supply), name and address of the vendor, supplier’s reference, purchaser’s references, name and telephone extension of buyer to contact in respect of queries, quantities to be supplied, reference to any drawings, specifications, terms and conditions of purchase prices, terms of payment, delivery date, VAT reference number, delivery address, special instructions for a packaging or transportation, requisition number, signature of person authorised to issue the order, acknowledgement for return by supplier, terms and conditions of purchase on reverse of form.
Purpose
To communicate to the supplier particulars of the purchasers requirements, the price and delivery applicable and the conditions on which the order is placed.
Advise Note
This is a document sent by the vendor which informs the buyer that the goods have been dispatched or are ready for collection, or are awaiting buyers delivery instructions.
The documents is sent separately by post if the consignment is being carried by road, or rail or with the goods if delivered by the suppliers own transport.
Copies of advice note may be sent to relevant department e.g progress and stores. The purpose is to prepare the buying organisation in readiness for taking delivery, inspection and storage.