Purchasing process of the current products & services

The company has 3 main categories of purchases; they are consumables, raw material purchases and capital equipment. Each of these has its own purchasing procedure and specific DMU (Decision Making Unit).

The organization consume following goods and services in daily basis,
E.g.: stationary items, transport for delivering of the end product, electricity, water, internet services and telecommunication.

• Annually the company establishes a contract with the supplier for the above categories.
• The supplies are contracted taking a forecast of one year requirement.
• Quotations are been requested from several suppliers, for each product category which is addressed to the purchasing manager.
• The buyer analyses the quotations under the supervision of the purchasing manager.
• The rates are negotiated with the suppliers further based on a costing template which is transparent to both the supplier and the company.
• Once price negotiations are done, business will be allocated among suppliers based on their capacities and effectiveness of past service. (Critical services such as transport will always have a back up supplier).
• Contracts are usually valid for a period of one year. Price revisions will take place under changing market conditions.
• Once the contract is establish each department can call of purchases at the contracted rated during the period.

DMU: The contract is approved by the purchasing manger and the Managing Director depending on the value. The call off will be done by the respective departments where the purchase will be approved by the respective department head.

This is the most important and high value purchase of the company. Items under this category are as follows,
E.g.: latex rubber, centrifuged latex, skim latex, skim rubber, chemicals.

• Currently there are about ten suppliers who is delivering latex(raw rubber). they have collected out of which QA (quality assurance) will draw samples from each supplier for testing.
• Testing will be done to measure, Amonia Levels, Dry Rubber content (DRC), Vertical Fatty Acid Levels and Magnesium levels.
• Testing will be carried out in the lab and results will be obtained within 24 hours based on the quality assurance results. Latex quality will be graded as, High quality (grade 01) or Medium quality (grade 2).
• The grade of quality will be informed to the supplier and the price will be set by the Purchasing officer of the company based on the grade index. This price will be negotiated to obtain the best deal with the agreement of the company and the supplier.
• Terms of payment will be decided based on supplier service levels. (Suppliers with high service performance will be given priority when negotiating payment.

DMU: The QA analyst will approve the samples of the respective supplier, from whom the buyer will establish the best deal through negotiations. The final purchase is then approved by the managing directors who will then advice the accounts department to set payment terms.

Latex Purchasing Process