purchase and inventory control

PURCHASE AND

INVENTORY CONTROL

Rs 1.00 lakh From Company

30% less than MRP Cash

Rs 50,000 From Company

25% less than MRP Cash

Rs 25,000 From Big Wholesaler

20% less than MRP Cash

Rs 20,000 Local Distributor

18% less than MRP Cash

Rs 10,000 Local Distributor

10% less than MRP

15 days Credit

Quantity Source Price Terms

PRINCIPLES OF PURCHASE

FIVE ‘R’ Right Quantity

Right Quality

Right Price

Right Source

Right Time

PRINCIPLES OF PURCHASE

Carrying cost is more than the additional Margin

PURCHASE SHOULD FOLLOW SALE & NOT VICE VERSA

NOTE THE MONTHLY DEMAND OF SKU’s

2 IMPORTANT FACTORS – LEAD TIME & SAFETY STOCK

WEEKLY SALE 1ST WEEK – 40%2ND WEEK – 30%3RD WEEK – 10%4TH WEEK – 20%

SOURCES OF PURCHASEBIGGER STORES PURCHASE DIRECTLY FROM COMPANIES

WHAT IS CORRECT?

CUT THE COAT ACCORDING TO YOUR CLOTH

AS YOU GROW BIG FOLLOW – BACKWARD INTEGRATION

KOOPRA / SABUDANA – SALEM/COCHIN

ALPONSO MANGOES – KOKAN GROWERS

VEGETABLES – NASIK, PUNE.

GRAPES – NASIK

SUJI/BESAN/MAIDA – FLOUR MILL

MEDICINES – PHARMACEUTICAL COMPANY

RIGHT TIMEPLANNING ACCORDING TO THE DEMAND

SUGAR OTHER FMCG RAVA / SUJI

COCONUT MAIDA

SANKRANTI ITEMS

RAKHEE

GANAPATI ITEMS

HOLI ITEMS

KOOPRA

DIVALI ITEMS

RAMZAN ITEMS

MONSOON ITEMS

BEFORE SCHOOL

VALENTINE DAYCRISTMAS ITEMS

SUMMER SPECIAL

1) NO STOCKOUT OR NO OVER STOCKING

2) PURCHASE & RETAIL PRICES ARE COMPETITIVE

3) SALE IS NOT MORE THAN PURCHASE

4) STOCK LEVEL AS PER STOCK HODING POLICY & STOCK TURN RATE

5) QUALITY OF GOODS MAINTAINED

6) TRADE CREDITOR PAYABLE ACCORDING TO NORMS

7) OLD & DAMAGED GOODS ARE RETURNED

8) PURCHASE FOR SEASONAL DEMAND

9) SCHEMES AVAILED OR NOT AVAILED FOR BEST ADVANTAGE OF THE STORE

PURCHASE REVIEW & CONTROL

SUPPLIER LIST

NAME / ADDRESS / TEL.:/ MOB: / EMAIL IDCOMPANIES / BRANDS / SKUs TERMS OF PAYMENTS, EXTRA CREDIT DAYS

EXTRA SCHEMES IF ANYNAME OF THE OWNERNAME OF TSINAME OF ASMNAME OF ASDM

SHOP CLOSED ON / TIMING

COMPANY SCHEME

BUY WHAT YOU SELL

GOODS WELL PURCHASED MEANS HALF SOLD

NEW PRODUCTS AND CONSIGNMENT ARRANGEMENT

BUY THAT MUCH YOU CAN SELL

2% Saving in Purchase is equal to 16% increase in Sale

PURCHASE OF AGRICULTURAL COMMODITIES

Every State has Agriculture Produce Market Act – Market Yard

Dalals or Brokers

Minimum Quantity

Credit Facilities

Adulteration

Quality AssessmentForeign Material Moisture Damaged Grains Insects

Offence under Prevention of Food Adulteration ActHarvest Season Purchase

Cold Storage

Suppliers can be Classified into

Fresh produce

Dry Grocery(unbranded)

FMCG products

One has to study the market practices

Large Retailers may have Backward Integration

Fruits & Vegetable may be purchased from Farmers

FMCG products may be purchased from the Distributors/ Wholesalers

There may be Backward Integration or Outsourcing

Mutton, Chicken, Beef etc from Abttoir

Fish from Landing Jetty

with reference to these categories

Markup Structure

Discrimination

Advertisement / Display Charges

Credit Period

Return / Exchange –(Replacement)

Schemes

Taxation

INVENTORY CONTROL

WHAT IS STOCK ?

WHAT IS INVENTORY ?

INVENTORY HAS INHERENT TENDENCY TO GROW

COST OF INVENTORY OR CARRYING COSTPAYMENT OF INTEREST INSURANCE GODOWN / WAREHOUSING CHARGES

HIGH STOCK HOLDING IS BAD STOCK-OUT IS WORSE

LEAD TIME

ORDERING COST

SAFETY STOCK

INVENTORY CONTROL

JUST IN TIME (JIT)

TECHIQUES OF INVENTORY CONTROL

MINIMUM MAXMUM RE-ORDER LEVEL

FIXED FREQUENCY ORDERING SYSTEM

FIXED QUANTITY ORDERING SYSTEM

FIXED FREQUENCY & FIXED ORDERING SYSTEM

ABC ANALYSIS

ECONOMIC ORDER QUANTITY (EOQ)

RULE OF 10

NO ENTRY TECHNIQUE

ECONOMIC ORDER QUANTITY (EOQ)No. of Orders

Annual (A)Require

OrderingQuantity

Inventory (I)Carr. Cost

Ordering (O)Cost

Total Cost

Rs Rs % Rs Rs

1 1200 1200 90.00 10.00 100.00

2 1200 600 45.00 20.00 65.00

3 1200 400 30.00 30.00 60.00

4 1200 300 22.50 40.00 62.50

5 1200 200 15.00 50.00 65.00

2 A O

3 1200 400 30.00 30.00 60.00

IEOQ = 2 x 1200 x 10 x 100

15 160000= = = 400100

TRADE CREDITORS PAYABLE

ATLEAST 60 % STOCK HOLDING

PREFERABLY 80 % STOCK HOLDING

IDEALY 100 % STOCK HOLDING

DALAL

WHOLESALER

RETAILER

TRANSPORTER BOX

GODOWN

PURCHASE ACCOUNTSGODOWN

TELEPHONE / POBill / DO / PO CHEQUE

Bill / DO

COMPANY

DISTRIBUTORDISTRIBUTOR’S

REPRESENTATIVE

COMPANY’S REPRESENTATIVE

RETAILER

GODOWN OF DISTRIBUTOR

ACCOUNTS DEPT GODOWN

PURCHASE ACCOUNTSGODOWN

PO PO CHEQUE