Purchase control is an element of material control. Material procurement
is known as the purchase function. The functional responsibility of purchasing
is that of the purchase manager or the purchaser. Purchasing is an important
function of materials management because in purchase of materials, a
substantial portion of the company's finance is committed which affects cash
flow position of the company. Success of a business is to a large extent
influenced by the efficiency of its purchase organization. The advantages
derived from a good and adequate system of the purchase control are as follows:
Continuous availability of materials: It ensures the continuous flow of materials. so production work may not be held up for
want of materials. A manufacturer can complete schedule of production in time.
Purchasing of right quantity: Purchase of right quantity of materials avoids
locking up of working capital. It
minimizes risk of surplus and obsolete stores. It means there should not be
possibility of overstocking and understocking.
Purchasing of right quality: Purchase of materials of proper quality and
specification avoids waste of
materials and loss in production. Effective purchase control prevents wastes
and losses of materials right from the purchase till their consumptions. It
enables the management to reduce cost of production.
Economy in purchasing: The purchasing of materials is a highly
specialized function. By purchasing
materials at reasonable prices, the efficient purchaser is able to make a
valuable contribution to the success of a business.
Works as information centre: It serves as a function centre on the materials
knowledge relating to prices,
sources of supply, specifications, mode of delivery, etc. By providing
continuous information to the management it is possible to prepare planning for
Development of business relationship: Purchasing of materials from the best market and from reliable suppliers develops
business relationships. The result is that there may be smooth supply of
materials in time and so it avoid disputes and financial losses.
Finding of alternative source of supply: If a particular supplier fails to supply the
materials in time, it is possible to
develop alternate sources of supply. the effect of this is that the production
work is not disturbed.
Fixing responsibilities: Effective purchase control fix the
responsibilities of operating units and
individuals connected with the purchase, storage and handling of materials.
the basic objective of the effective purchase control is to ensure continuity
of supply of requisite quantity of material, to avoid held up of production and
loss in production and at the same time reduces the ultimate cost of the